Does it feel like you are short 20% to 30% in your bank account?
If it feels that way, you may need to first evaluate if you recently enjoyed a nice vacation, purchased a new vehicle, paid for college or perhaps something less exciting that caused dollars to fly out of your wallet. However, if none of that sounds familiar, it may be time to look closer at your denial recovery rate in your revenue cycle process. This is an all-too-common place for receipts to go up in flames.
When a claim is submitted for reimbursement on behalf of a provider and processed by an insurance company, there are three main outcomes:
- The claim is adjudicated and paid. This is the exciting one and all providers wish this would happen 100% of the time.
- The claim is denied or at least delayed.
- The claim falls in a black hole (AKA they are lost).
As a provider or practice manager you may believe that most claims processed fall into items two and three from the list above. In truth, more than 70% to 80% of claims submitted and adjudicated are paid. Whether or not they are paid correctly, we will have to leave that for another time.
You might be wondering, what happens to the other 20% to 30% of the claims? These claims might make up the missing dollars in your bank account. They do require extra work but are often overlooked or swept aside because the cost of doing the work is more than the revenue generated by working the lost, delayed or denied claim. Regardless of your billing being performed in-house or outsourced, you must monitor your denials to ensure they are worked timely, properly and overturned for payment.
What can you do to check to see if denials are being worked effectively?
- Monitor denial recovery dollars by RVU and compare it to your overall collections by RVU.
- Routinely review reports for non-paid, zero balance claims that were denied.
- Trend your denials to see the top 10 reasons claims are not being paid on initial adjudication, then validate payments were recovered.
- Monitor your write off amounts to ensure denials are being worked.
If you still can’t determine what is happening, perform an in-depth review or audit of denied and delayed claims. It is critical to ensure your in-house or outsourced billing company is working all denied claims, not just the easy-to-fix denials. It is also important to look at those claims that have been submitted to the insurance without a response which is that extremely black hole that drops claims into oblivion.
Perhaps you don’t mind burning money and giving an extra 20% or 30% of your revenue to the insurance companies. But if you do, it is worth asking your in-house or outsourced billing company to provide you with the necessary reporting for you to perform your own analysis. As has been said by many over the years and by former President Ronald Reagan, “Trust, but Verify.”