Medical practices and hospitals are currently facing increasing financial pressures. Reimbursements are declining while operating costs continue to rise. As a result, optimizing revenue cycle management has become more crucial than ever for healthcare organizations to maintain positive cash flow. One of the biggest challenges is the high denial rates from insurance payers, which can significantly impact an organization’s bottom line. This is where a proactive approach to claims auditing can make a major difference.
The Impact of Claims Denials on Revenue
Claims denials lead to loss of revenue and negatively affect cash flow. Common reasons for denials include missing documentation, coding errors, coverage issues, and timely filing rules not being met. Denials frequently require staff resources to resubmit claims or file appeals. The follow-up process creates further administrative burdens and delays in receiving payments. Overall, denials can cost healthcare organizations 2-5% of net patient revenue each year. Implementing measures to reduce denials must be a priority for financial sustainability.
Establishing an Internal Claims Audit Process
An effective way to lower denials is to conduct regular internal audits of claims prior to submission. This allows errors to be identified and corrected proactively before claims reach the payer. It also enables staff education on recurring issues. Key steps in the internal workflow include:
- Selecting a random sample of claims for review on a consistent basis (e.g. weekly)
- Evaluating claims against payer policies and identifying any red flags
- Verifying the accuracy of coding, modifiers, billing rules, and medical necessity documentation
- Checking for timely filing and eligibility criteria
- Identifying trends and providing feedback to billing staff
- Correcting any errors or deficiencies before claims submission
Utilizing Automated Claims Auditing Solutions
Technology-enabled claims auditing solutions can optimize results while minimizing staff time spent. Cloud-based software with rules engines will automatically flag a high percentage of errors and validate against payer requirements. Dashboards and analytics provide visibility into denial root causes. Automation makes it feasible to audit every claim before submission versus sampling. Additional features like automated work queues and status tracking enable more efficient denial prevention workflows.
Partnering with External Claims Audit Firms
For deeper auditing and added quality assurance, practices can partner with third-party medical claims audit firms. Experienced auditors manually review claims in greater detail and identify issues that technology solutions may miss. Outsourced auditing also brings leading practices gleaned from working with multiple clients. Firms can offer education and training to billing staff on top denial reasons and resolution approaches. They provide an independent and unbiased assessment to enhance internal capabilities.
Proactively auditing medical claims before submission is a best practice that healthcare organizations must embrace to prevent revenue losses from avoidable denials. A denial prevention strategy including internal audits, automation, and third-party auditors can significantly improve cash flow while reducing administrative waste. In today’s environment, leaving money on the table from denials is no longer an option. Proactive medical claims audit processes enable organizations to maximize appropriate reimbursement and better withstand financial headwinds.
