How the Healthcare Insurance Industry Should Deal With Claim Denials

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TL;DR
Claim efficiency is a notable element to any healthcare organizations success and well being. The AMA has shown different rules between health insurer and healthcare practitioners.

Claim Denials

Claim denials can have a real impact on cash flow and the financial state of a practice, making them a major source of frustration for physicians and practice managers.

According to the American Medical Association (AMA), claim denials dropped 47% in 2013 after a sudden increase in 2012 among commercial health insurers. Overall, the rate of claim denials decreased from 3.48% in 2012 to 1.82% in 2013.

The National Health Insurer Report Card, launched in 2008, was designed to improve the medical billing and payment system and has made notable progress in improving the accuracy, efficiency and transparency of claims processing. However, the health insurance industry still has a long way to go when it comes to properly addressing claims efficiency. The AMA report card has shown time and again that problems arise when health insurers use different rules for processing and paying medical claims.

These inconsistencies make it necessary for doctors to maintain a claims management system for each individual health insurer. These systems can be very costly. Although the AMA has been campaigning for a standardized system, health insurers continue to hold on to their unique processing regulations.

The Medical Group Management Association (MGMA) has found that the percentage of claims denied on first submission is 3.8% and more claim denials are imminent. Denials are usually due to inaccurate or incomplete data, duplicate claims, and services provided before coverage started or after termination.

Providers should not be surprised by an increase in denied charges for coding and billing errors once ICD-10 is implemented. With the diagnosis codes becoming more specific, there are going to be mismatches with medical necessity and provider payment guidelines. According to the Centers for Medicare and Medicaid Services, claim denial rates could increase by 100% to 200% in the early stages of adapting to the new coding.

It is up to healthcare providers to improve the accuracy and efficiency of claims payment. Healthcare administration needs to be streamlined in order to reduce paperwork, improve efficiency, and ultimately lower costs. To decrease the likelihood of problems with reimbursement, office staff training should be paramount. Staff members should be well-prepared to submit clean claims and understand why certain claims are denied in order to avoid problems in the future. It is not uncommon for staff members to feel like claim denials are not a priority. However, ignored claim denials can be extremely costly to a physician.

Author: Lauren Daniels

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