How to Beat Increasing Denials with Better Revenue Cycle Management Practice

For hospitals to get paid for their care, revenue cycle management (RCM) processes must evolve along with the healthcare system. According to a recent study, claim denials have increased by nearly 50% over the last five years, costing hospitals billions of dollars in lost revenue each year.   

There are many reasons for an increase in denials, but often it’s the result of a lapse in the hospital revenue cycle management (RCM). To combat this trend, hospitals need to have a well-functioning RCM system. When denials occur, the hospital did not receive payment for a service rendered, and the payer denied the claim.   

Hospital denials can significantly impact the bottom line, so it’s essential to take steps to reduce them. You can minimize denials and maximize revenue by improving your claims management process and understanding the denial process well.  

The Importance of a Strong Revenue Cycle Management Practice  

The revenue cycle is the process companies use to track and manage their income and expenses. It starts with the creation of invoices and ends with the collection of payments. A strong revenue cycle management practice is essential for any company that wants to be successful.  

A strong revenue cycle management practice helps healthcare in many ways.  

  • Track Income and Expenses, which helps make sound business decisions. 

  • It helps companies improve their cash flow. By tracking invoices and payments, companies can ensure they are paid promptly. It can help them avoid late fees and interest charges.   

  • A strong revenue cycle management practice can help companies avoid fraud and waste. By carefully monitoring their income and expenses, companies can ensure their money is being spent wisely.  

Denial Management Services

Denials and Revenue Cycle Management  

Medical billing is a complex process, and it’s not uncommon for billing errors to occur. When they do, it’s imperative to take action quickly to mitigate the damage and avoid further issues.   

One of the most common obstacles businesses face when trying to overcome billing errors is denial from insurance companies. Denials can happen for various reasons, but they often refer to mistaken identity, incorrect coding, or missing paperwork.   

While it can be frustrating to deal with denials, there are ways to overcome them. Implementing Denial Management practices will reduce denials and improve your services’ chances of getting paid.   

What are the Best Denial Management Practices in the Healthcare System?

As the healthcare system continues to evolve, so too must how we manage denials. With an ever-changing landscape, it can take time to keep up with the latest best practices. However, by staying informed and keeping up with the latest trends, you can ensure that your denial management practices are as effective as possible.  

One of the latest trends in denial management is the use of data analytics. By analyzing data, you can identify patterns and trends in denials. The collected data is used further to develop strategies for reducing denials. For example, if you notice that denied claims are often for a specific type of procedure, you can establish a protocol for that procedure that will help to reduce the number of denied claims.  

Another trend in denial management is using artificial intelligence (AI). AI can help identify denials that are likely to be appealed to and develop strategies for appealing to those denials. It can also automate the denial management process, which can help improve efficiency and reduce errors.  

Finally, it is essential to keep up with the latest changes in the healthcare system. New laws and regulations can impact how denials are managed. By staying up-to-date on the latest changes, you can ensure that your denial management practices comply with the latest rules and regulations.  

The Power of Technology in Healthcare Revenue Cycle Management

The revenue cycle management industry in healthcare has exploded from $5 billion in 2011 to $89.66 billion in 2023. With the rapid infiltration of complex technologies across the industry, it is estimated to grow exponentially further.  

The concept of revenue cycle management (RCM) stems from accounting. It is described as processes to manage the revenue recognition of a healthcare center from the initial engagement of a customer through the processing of orders, the billing, and collections process, revenue recognition, revenue processing, and dunning management. Although its functions appear to reside mainly in the accounting department, healthcare revenue cycle management is spread across essential functions such as patient registration, medical coding, and billing. Technology can be critical in how effectively a healthcare organization can manage its RCM process.  

The Role of Data Analytics in Effective Revenue Cycle Management

The revenue cycle management (RCM) of healthcare organizations is a complex and critical process that requires the use of data analytics to be effective. Data analytics can help healthcare organizations to optimize their RCM by providing insights into the financial and clinical performance of the organization. By understanding the relationships between various data points, healthcare organizations can make more informed decisions about improving their RCM.  

Data analytics can also help healthcare organizations identify potential waste and fraud areas and better understand the root causes of denials and other issues. By using data analytics, healthcare organizations can improve their RCM processes and ultimately improve the quality of care they provide to patients.  

The use of data analytics in healthcare organizations can help to identify potential errors and fraud in the revenue cycle. Additionally, data analytics can help improve billing and claims processing efficiency.  

Artificial Intelligence for Denial Management: 

AI is used in healthcare denial management systems in several ways. For example, AI is used to identify patterns in denial, appeals, and payment data. AI can generate attractions based on these patterns automatically. Finally, it can develop predictive models to help healthcare providers anticipate and avoid denials.  

What are the Top Five Reasons for Claim Denials in Healthcare Revenue Cycle Management?  

1. Lack of Proper Documentation:  

Documentation ensures billing and reimbursement go smoothly in the healthcare RCM process. Providers failing to document patient encounters properly can lead to denials from payers. And as anyone who has worked in healthcare knows, denials can be a real headache.  

So, providers must make sure that their documentation is up to par. When documentation is clear and concise, it minimizes the chances of denials and makes the revenue cycle management process run more smoothly.  

2. Incomplete or Incorrect Patient Information:

Patient information that is incomplete or incorrect can lead to denials in healthcare revenue cycle management. To avoid rejections, healthcare organizations must ensure that patient information is accurate and complete.  

There are a few ways to do this. One way is to have a dedicated staff member responsible for inputting and verifying patient information. Another way is to use data validation software to verify patient information automatically.  

Either way, healthcare organizations must ensure that patient information is accurate and complete. Otherwise, they risk having denials in their healthcare revenue cycle management.  

3. Coding Errors:   

A coding error can result in a denial of reimbursement from a payer. It can happen if the provider uses the wrong code or if the documentation needs to support the regulation used. Coding errors can also occur when providers need to remember to include a required code or miscode the service.  

If a provider receives a denial based on a coding error, they must appeal the decision. The first step in the appeals process is determining why the claim was denied. Once the reason for the denial is known, the provider can take steps to correct the error and resubmit the claim.  

Coding errors are a common occurrence in healthcare revenue cycle management. By taking the time to correct these errors, providers can avoid denials and ensure that they are reimbursed for the services they provide.  

4. Billing Mistakes: 

Various factors can cause denied claims, but one of the most common reasons is billing mistakes.  

Billing mistakes can occur for various reasons, such as incorrect coding or patient information. These mistakes can lead to claim denials, leading to lost revenue for the healthcare organization.  

To avoid lost revenue due to claim denials, healthcare organizations need to have a robust system in place for billing and coding. Additionally, it is essential for staff to be trained on billing and coding procedures to ensure that mistakes are not made. By avoiding these mistakes, healthcare organizations can avoid lost revenue and ensure that claims are paid on time.  

5. Lack of Prior Authorization:   

In healthcare revenue cycle management, one of the most common reasons for claim denials is a lack of prior authorization. Prior authorization is when a health insurance company approves or denies coverage for a specific medical procedure, test, or medication before it is provided.  

Having prior authorization is essential because it helps ensure that both the patient and the provider know what is covered and what is not. If prior approval is not obtained, the provider cannot reimburse for the service, and the patient may be responsible for the total cost of treatment.  

Lack of prior authorization is often the result of human error, such as when a provider needs to remember to obtain it or when the patient needs to be made aware that it is required. However, there are steps that both providers and patients can take to ensure that prior authorization is obtained before treatment is rendered. By working together, providers and patients can help to avoid claim denials and ensure that all necessary treatments are covered.  

Tips for Streamlining your Revenue Cycle Management Process in Healthcare Systems  

As the healthcare landscape continues to evolve, so does the revenue cycle management (RCM) process within healthcare organizations. With an ever-changing reimbursement landscape, increased patient financial responsibility, and the move to value-based care, a regular update of the medical billing codes is essential.   

Healthcare leaders must continually assess their RCM process to ensure it operates as efficiently and effectively as possible. Here are a few tips to streamline your RCM process:  

1. Automate as much as possible.  

2. outsource RCM tasks to experienced and reputable vendors.  

3. Continuously monitor and assess your RCM process.  

4. Use data to drive decision-making.  

Following these tips ensures your healthcare organization’s RCM process runs smoothly and efficiently.  

Wrapping Up:  

Hospital Revenue Cycle Management (RCM) is a complex process often subject to increasing denials. However, a few practices can help beat increasing denials, such as early RCM intervention, comprehensive patient engagement, and robust data analysis. Early intervention can help identify issues before they lead to contradictions, while complete patient engagement can help ensure that patients understand their responsibility in the RCM process. Finally, robust data analysis provides that all necessary parties have correct and actionable data.  

The most effective way to beat increasing denials is to invest in a comprehensive RCM solution like MHRCM. With MHRCM, you can take advantage of features like automated claim scrubbing and real-time analytics to improve your overall denial rate.  

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