Denials Prevention: Workflow Tweaks that Increase Clean Claims

When denials can deplete five percent of net patient revenue, of course healthcare leaders prioritize addressing them. Recouping much of that five percent loss can make a hefty difference in the typically razor-thin margins at healthcare organizations (2.3 percent at hospitals in 2024).  

Match this revenue drain with the fact that 85 percent of denials are avoidable, and it’s no wonder denials are one of healthcare organization leaders’ top frustrations. 

Denials stem from mistakes in patient documentation, eligibility, prior authorizations, coding, deadline misses, and more. In an ideal world, organizations have sufficient staff to take the time to double and triple-check all patient data input, keep up on changes to payer contracts (to confirm coverage), know all the relevant CPT codes, and get claims in on time. It takes all of these factors to prevent denials. If just one is off, payers are happy to slap a code on your claim and refuse to pay. 

Unfortunately, most provider groups face administrative staffing shortages and a shortage of seasoned talent necessary to impart competency and skills to new hires. Further, most providers fall far behind on contract management. An MGMA survey reveals that 17 percent never review their contracts in a given year and 16 percent review only every two to three years. When staff is not aware of changes to contracts, eligibility mistakes that lead to denials result. 

Even with these challenges, healthcare organizations can take steps to limit the denials that diminish their revenue. Given the additional revenue involved,  the time and effort necessary to take these preventative measures are justified. This article covers every place where the errors that lead to denials occur and how to prevent them. 

What is denials prevention?

Denials prevention is a strategic approach undertaken by revenue cycle managers and organizations to ensure that healthcare claims are paid upon the first submission. Getting prior authorizations and claims submitted correctly initially avoids the need for costly and time-consuming rework that comes with appealing denied claims. Denials prevention differs from denial management – the process that focuses on appealing claims after they have been denied by payers.

Root cause analysis – the critical first step in denials prevention

Because every healthcare organization has unique challenges as well as strengths in their workflows, staff, and resources, root causes from location to location. Conducting a denials root cause analysis is the first step in determining which of your services most often get denied and why. 

This process starts with the CARC codes that come in with current denials. Payers use Claim Adjustment Reason Codes (CARC) to indicate the cause of the denial or underpayment. These CARC codes don’t necessarily identify the root cause, however. Identifying the root cause requires internal analysis of the medical record, charges and the billed claim. For instance, a payer could deny a knee replacement using code 50, an indicator that medical necessity wasn’t demonstrated. It’s up to the provider to examine the medical record and discover that prior conservative treatment documentation was not included in the initial submission. To prevent this denial from occurring again, the provider must then train staff that all knee replacements must include all initial treatments. 

While all existing denials will have to be addressed with appeal letters, examining what occurred to prompt the denial uncovers the insights to prevent dozens even hundreds of similar future denials. Workflows then need to be created around avoiding the mis-steps that lead to the initial denial. 

Common root causes of denials

The top sources of denials according to Becker’s Healthcare are:

1. Prior authorizations — 48 percent 

2. Provider eligibility — 42 percent 

3. Code inaccuracies — 42 percent 

4. Incorrect modifiers — 37 percent 

5. Failure to meet submission deadlines — 35 percent 

6. Patient information inaccuracy — 34 percent 

7. Missing or inaccurate claim data — 33 percent

8. Not enough staff to keep up — 33 percent 

9. Formulary changes — 27 percent 

10. Changing policies — 27 percent 

11. Procedure changes — 26 percent 

12. Improperly bundled services — 22 percent 

13. Service not covered — 19 percent

Avoiding denials issue by issue

If your claim received code 197, it means the treatment required prior authorization but your office never secured one before peforming the service. 

Prior authorization

Prior authorization issues cause so many denials that the American Medical Association has made limiting their necessity one of that four tenets in its AMA Recovery Plan for America’s Physicians. Prior authorizations delay care and often prompt patients from pursuing care altogether. Physicians protest that lengthy prior authorizations cause patient hospitalizations and even death. 

The organization has been sponsoring legislation and lobbying legislators to cut the overall volume of prior authorizations required by payers. Hope for reform abounds. Currently, most U.S. states are considering legislation to fix time and care delays involved in prior authorizations. In 2023’s legislative session, nearly 90 prior-authorization reform bills were considered across 30 states. Some passed and others have good potential for passage.

To avoid code 197, staff must remain perpetually up-to-date on which payers require them for which services. If, as mentioned above, payer contracts go unreviewed, staff can easily overlook when a prior authorization is required. In addition to missing submitting a prior authorization, overburdened staff can make errors when completing prior authorization forms. 

Use these tips to avoid common prior authorization errors

• Fully detail why the treatment is recommended 
• Outline any more conservative treatments the patient has already tried and failed 
• Back up all claims with evidence-based clinical guidelines 
• Outline why you recommend the service using evidence-based clinical guidelines 
• Describe all the different care methods used for the patient prior to this course of action 
• Proofread the paperwork to check spelling, billing codes, and other dates

Documentation

Anything from making errors and omissions during registration or providing a wrong address to lacking prior authorization can cause an insurer to reject a claim. Unfortunately, patients themselves can hand over driver’s licenses with old addresses, old insurance cards with incorrect ID numbers, and even ID with incorrect birth dates. No matter the source, it’s always the provider that pays the price for documentation errors. 

Tips to avoid documentation errors

• Double-check the spelling of the patient’s name at the time of registration. Using two forms of ID helps catch errors on the patient’s end.
• Keep in mind that the DOB is a primary patient identifier; insurance companies quickly deny for an incorrect DOB.
• Verify whether the patient’s address has changed before every appointment.  Patients move frequently without updating their information on ID cards. 
• Checking every patient’s eligibility before each appointment. Even better, verify the patient’s insurance coverage a day or two before the appointment. If the insurance has expired, there’s still time to get updated insurance or work out other payment options. 
• Should patients complain that you’re asking for too many forms of ID too often, remind them that getting their data accurate ensures insurance will pay and they won’t be stuck with the bill. 
• Double check insurer address. Insurance carriers, especially larger ones, often have multiple payment addresses. 
• Depend on your EMR system. Some catch errors by limiting the number of characters in fields or identifying spelling errors. 

Coding inaccuracies

A code 11 on your claim means the diagnosis code you submitted on the claim doesn't align with the procedure or service performed. Studies indicate that 80% of medical bills have coding errors, and over 25 percent of these mistakes stem from simple typos. 

Because the complexities of medical coding trip up even the best coders, many providers outsource this onerous job to expert medical billers and coders. In addition to knowing all long-standing codes, these professionals must stay current with the yearly changes. In 2024 alone, the AMA made 230 additions, 49 deletions, and 70 revisions. 

Tips to avoid coding errors

In addition to intensive staff training and using only seasoned coding experts, one of the best ways to avoid coding errors is to use software that acts as a guide for entering codes.

 Coding complexities include upcoding and downcoding, bundling, and use of modifiers. The medical specialties with the most complex codes are cardiology, nephrology, orthopedics, pediatrics and radiology. In these cases, it takes a seasoned expert to get the subtleties of codes and modifiers to accurately describe the treatment in a way the payer can understand and pass. Coders who focus on these specialties pay for themselves when their claims pass on first submission. 

Meet submission deadlines

It’s an unfortunate truth that payers are looking for any legitimate reason to deny a claim. Even postponing payment gets them ahead as they leverage the time-value of money. If you miss a deadline, you’ll receive rejection code 29. Commercial payers’ filing deadlines are often 90 to 120 days from date of service. Medicare claims, on the other hand, can be submitted up to one year from the date of service. 

You then have to examine records and bills to determine which of your staff missed the deadline. Retraining could be required.  Remind them that a miss of a filing deadline leaves you with no recourse to appeal. You lose the denied amount. 

Tips to meet all submission deadlines

• Optimize your claims submission workflow to reduce delays and inaccuracies. Whenever feasible, employ electronic submission methods to speed up the process and lower the risk of missing deadlines.‍
• Stay current on the latest payer policies and deadlines. Regularly revising your policies ensures compliance with payer expectations.‍
• Use automated alerts to remind staff of imminent claim submission deadlines, aiding in timely submissions and minimizing denial risks due to late filings.
• ‍Monitor the progress of your claims actively to identify and address any processing delays promptly. This vigilance helps in addressing any issues before they impact your revenue cycle.‍
• Train your billing team on the importance of adhering to payer-specific submission deadlines and the financial implications of delays. 

Insufficient staff

The industry-wide staffing shortage lies behind nearly all workflow breakdowns. Most healthcare leaders today are urging physician groups, health systems, and hospitals to turn to technology to handle the jobs that staff typically completes manually. Not only does automation get the work done, it often completes it faster, more accurately, and at lower cost.  

According to the 2023 CAQH Index:

• Electronic eligibility and benefits verification saves staff 16 minutes per transaction
• Electronic prior authorization saves staff 11 minutes per transaction
• Claims submission saves staff 5 minutes per claim

Changing policies

In the provider - payer relationship, it’s most often payers changing policies. Banking on the assumption that providers can’t keep up, payers will change a policy, wait a prescribed amount of time and then put that change into effect whether the provider expressly agrees to it or not. The legality of this freedom is all written into the contract. Too often, providers are operating on the original policy. When a claim doesn’t comply with a new restriction, payers do not hesitate to deny. 

Tips to stay current as policies change

Above we mentioned that providers are currently too overburdened to stay current on their contract renewal dates or on any proposed changes coming from payers. While some outsource contract management to a specialist or third-party partner, many have no way of monitoring their contracts. That means they miss notices about changing policies and have their contracts renewed without ever reviewing payers’ updates. Payers take advantage of this overwhelm to write contracts with terms that favor them and fees that may not even meet Medicare rates. 

Tips to avoid denials due to changing policies

The only way to gain control of your contracts is to set up a contract management system. The steps involved are:

1. Embrace your self-concept as an equal partner in contract creation and updating. You have every right to negotiate terms and fees.
2. Find all contracts
3. Centralize them in one location using either spreadsheets or contract management software
4. List all renewal dates and create reminders for them

How AI- and machine-learning-driven RCM analytics optimizes claim submissions and prevent denials

Applying innovative, advanced technology complete with analytics enables providers to find where denials occur and why. Here’s how it works:

• Predicting Potential Denials. RCM software applies machine learning to a practice’s historical remittance data to identify patterns associated with denied claims. When you submit a claim, the software examines it for the patterns of data indicating claims prone to denial. It flags any tricky claims to alert staff to the need for extra examination. Keep in mind that staff can still go ahead and submit the claim, hopefully after double-checking that all aspects of the claim meet payers’ restrictions. 

• Root cause determination. When a potentially problematic claim is flagged, AI analyzes 14 subcategories to find the root cause. With the root cause identified, staff edits the claim before it goes to the payer. As part of the overall claim workflow, AI doesn’t create any additional work for staff. Instead, it supports  existing staff. It may take a couple of extra minutes to ensure a claim is error-free on the front end, but early catches upfront avoid denials which take 15 to 45 minutes in staff time to appeal. 

With today’s AI and automation software, you can modernize your approach, minimizing the errors that plague manual administrative workflows. 

Use denials prevention protocols to preserve your revenue and staff bandwidth

Successful revenue cycles rise from the synergy of thousands of daily tasks. When you get the support you need to optimize each step, you lower costs and preserve net revenue. Your support may take the form of internal specialists, third-party partners, or RCM software. The foundation of administrative accuracy is efficient contract management and upkeep. 

MD Clarity's RevFind modernizes payer contract management. It not only centralizes your contracts for easy access, but it also scrutinizes each payment against contract terms, highlights any discrepancies for prompt action, and allows for straightforward comparison of your reimbursements with national standards, including Medicare. RevFind doesn't just offer insights for proactive negotiation but also aids in the recovery process and identifies underlying issues to prevent future underpayments. Get a demo to see it in action.

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