86% of denials are potentially avoidable: Strategies to better prevent, manage denials

Denials, a pain point for hospitals across the U.S., erode margins, hinder timely reimbursement and hemorrhage staff time.

In an effort to better understand national denial trends and help providers get a plan in place to prevent denials, Change Healthcare analyzed 102 million claim remits with charges totaling $407 billion from 1,500 U.S. hospitals. The results were published in its Change Healthcare 2020 Revenue Cycle Denial Index Report.

In the report, Change Healthcare found that the national average denial rate is up nearly 2 percent since 2016. Further, the report found that 86 percent of denials are potentially avoidable, but once denied, one in four (24 percent) cannot be recovered.

In an Oct. 29 webinar, sponsored by Change Healthcare and hosted by Becker's Hospital Review, two industry leaders discussed the key findings from the Change Healthcare index report and strategies providers can use to better prevent and manage denials. 

The panelists were:

  • Nick Raup, assistant vice president of product management-revenue cycle at Change Healthcare
  • Giliane Poole, performance improvement consultant at Change Healthcare

Here are five key takeaways from the webinar:

1. Half of denials are front-end revenue cycle issues. The top cause for denials remains registration and eligibility, causing about 26.6 percent of denials analyzed, Mr. Raup explained. "This continues to shine a spotlight on the need for innovative solutions that drive greater intelligence and automation into the front-end of the revenue cycle," Mr. Raup said.

2. A denial prevention strategy can save time and money. "At a cost of $25.20 per claim to work a denial, it is always best to try to avoid the denial before it happens rather than try to recover what is owed," Mr. Raup said. 

3. Use analytics to inform a denials strategy. The first step in setting up a denial management or prevention strategy is analysis, Ms. Poole said. Providers should use analytics to figure out where denials are occurring most frequently and where a mitigation strategy would have the biggest impact, Ms. Poole added. "Armed with analytics, you can begin to prevent and manage denials in a more strategic way," Ms. Poole said. 

4. There are several reasons for the national uptick in denials. Denials are increasing across the U.S. for several reasons, including lack of expertise to manage denials, lack of denial prevention strategies, challenges in training, hiring and retaining top talent, and lack of optimized or automated workflow solutions, among others, Ms. Poole explained. 

5. Providers should address denials in six key focus areas: Eligibility and registration, authorizations and pre-certifications, medical necessity, medical coding, missing claims and not covered services. To address the top cause for denials of registration or eligibility, Ms. Poole recommends providers ensure the registration team is trained to probe for more information from the patient and that errors are fixed in real time to prevent downstream denials. In addition, hospitals should utilize technology to confirm benefit eligibility prior to the service and at the time of the service and apply business rules to examine registration data to ensure consistency.

To listen to the full webinar, learn more about national denial trends and hear strategies to address denials in all six focus areas, click here

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