Denials management is a growing issue in physician practices nationwide, and your practice could be losing tens of thousands of dollars yearly if you do not have a denials-management strategy in place.
Reports have shown that more and more physicians are turning to denials management to maximize their bottom dollar. The reason is that there is a 5–8% denial rate in most practices nationwide, and reports show 50% of denied claims are never refiled.1 In the denials-management process, 90% of denials are preventable, and 67% are recoverable. For example, a practice with a $1,000,000 revenue stream could potentially have $50,000 to $80,000 in lost revenue if they do not pursue denials.2 Given the magnitude of the numbers, a targeted denials-management strategy is crucial and, with a well-thought-out approach, should result in a significant revenue increase to the typical practice.
It is important to create a combination approach to effectively manage denials. Forming a denials-management team as well as a front-end claims-management team will help minimize denied claims. The workflow for each group should be specific and detailed.
The front-end claims-management team will be vital to the process. Members of the team should include coders, billers, and the medical records department. Their key responsibility is to make sure no claim is filed without verifying the patient’s name, date of birth, and insurance information and validating the diagnosis and procedure codes. Many claims are denied on the first round of submission due to incorrect spelling of name, no modifiers on procedure codes, or improper insurance information. Managing the charge entry and claims on the front end has great bearing on the magnitude of denials received in the office.