- August 22, 2024
- Posted by: David Smith
- Category: Skilled Nursing Facility Billing
Based on the recent report published by Change Healthcare, the current claims denial rate is 12 percent which is almost a 30% increase from 2016’s denial rate of 9%. Unfortunately, the Pacific Northwest has met the highest denial rate of 17%.
For the majority of skilled nursing facilities and other healthcare practices, denial management is one of the major hurdles. Practices lose a huge amount of revenue due to claim denials. With so many strategies and advancements in the technology sphere, it is shocking to see that rampant denials still persist. According to a recent report, 85% of denials are avoidable and 41% of the appealed denials get rejected. It means healthcare organizations are not implementing proper denial management strategies to prevent denials.
Denial management is a crucial component of your Skilled Nursing Facility billing system as unresolved denials eat up a significant portion of your net revenue. You can prevent denied claims from jumping straight to the write-off bin when you apply a perfect denial management plan in your skilled nursing facility billing services. But first, you need to know what denial management is.
What is denial management in skilled nursing facility billing?
Denial management is a holistic approach to preventing, analyzing and resolving denied medical insurance claims. Skilled nursing facilities lose a large chunk amount of money every year due to denied claims that could have been prevented with a robust denial management plan. According to “The Change Healthcare Revenue Cycle Denials Index,” fixing a denied claim costs between $25 and $117. If you appeal 100 denials each month, it will cost your organization between $2,500 and $11,700. By managing denials effectively, your practice can concentrate on providing quality patient care and getting paid promptly and accurately.
Here is the step-by-step denial management process that you need to know about to ensure a healthy revenue stream for your practice.
6 perfect denial management strategies for skilled nursing facility billing:
Step 1: Scrutiny all the aspects of denials
The first thing you need to do is examine the particular areas where denials occur. You need to pinpoint the types of denials and the payors that deny claims for the particular procedures. Following this procedure not only helps you find out the common areas where denials are occurring but also enables you to identify areas where you can communicate with payors them to inform of the reasons behind denials. Pinpointing the root causes allows your staff to rectify them efficiently.
Step 2: Analysis of the claim denial reasons
Most skilled nursing facilities encounter claim denials because of coding errors, missing data, late submissions, out-of-network care, lack of prior authorization, and lack of medical necessity. You must cover all these areas carefully to prevent your claims from going south. Identifying these root causes helps in crafting a perfect denial management plan and an efficient workflow. By addressing these issues proactively, you reduce the risk of denials and streamline your revenue cycle management. This approach ensures smoother operations and better financial outcomes for your facility.
Step 3: Categorize your denials
Categorizing your denials enables you to develop a robust strategy to prevent similar kinds of denials. You should categorize denials based on specific causes, such as:
- Prior Authorization: If you need approval before providing or prescribing a service and do not get it, the claim might be denied.
- Incomplete Information and Coding Errors: Claims can be denied if there is missing information or if the coding is wrong.
- Claim Filing Delays: Claims must be submitted within a specific time frame. Missing this deadline can lead to a denial.
- Coverage: Claims for services not covered by insurance or deemed not medically necessary can be denied.
There are other types of categories as well-
Soft denials: It is a kind of temporary denial that doesn’t require you to make an appeal.
Hard denials: Such denials cause revenue loss and require appeals.
Preventable denials: Such denials occur because of silly or avoidable reasons such as coding mistakes, insurance eligibility mistakes, etc.
Clinical denials: It is a kind of hard denial that occurs because of a lack of medical necessity.
Administrative denials: It is a soft denial where insurance companies tell you the reasons.
Once you are done with the categorization of denials, you should assign respective teams to take proper measures to avoid those denials. Make sure you allocate your resources wisely.
Step 4: Provide adequate supportive facts, documents and appeal
Once you identify and categorize the denial reasons, you can fix the issues and resubmit the claim for payment. This step is crucial because many denials can be reversed, helping you recover money that is rightfully owed to your organization.
Appeals can be successful. Although 67% of denials can be recovered, 65% of claims are never resubmitted, according to the Change Healthcare report. This shows that healthcare organizations often lack the staff or systems to manage denials effectively.
Step 5: Track the results
The fifth step is to develop a process for an efficient tracking mechanism to monitor the real-time statuses of denied claims. You can avoid missing deadlines when you keep track of your denials against time.
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Step 6: Develop a preventative method
Create a checklist of the top reasons for denials based on common mistakes made by clinicians, administrators and payors. Work with your team to put strategies in place to prevent these denials from happening.
Outsource denial management
The truth is that most skilled nursing facilities lack adequate resources to handle denial management properly. To avoid all the hassles of denials and billings, practices often outsource SNF billing to third-party RCM companies. Outsourcing allows practices to completely focus on patient care while the billing partner amplifies your revenue by taking care of end-to-end revenue cycle management.
If you are looking for a perfect skilled nursing facility billing company to handle your denial management, look no further than Sunknowledge.
At Sunknowledge, we guarantee an 80% reduction in billing costs, a 97% improvement in collections, and strong account management support. Plus, our dedicated medical billers are available to work for you at just $7 per hour, with dedicated account managers to provide full updates on your accounts at all times.