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5 Tips for Reducing Your Denial Rate

Reducing claim denials should be an ongoing effort by every medical practice to improve office efficiency and cash flow.


A recent study by the American Medical Association (AMA) found that on average almost $15,000 per year is spent on investigating, appealing and reworking denied claims. Having a high denial rate means more time and money spent on reworking and resubmitting claims to payers. The good news is that there are actions you can take to help your practice reduce denials. The tips below will help you understand how your practice is performing and help monitor denials so you can at a minimum maintain the industry standard denial rate of 3% to 5%.

1. Identify the major reasons for your denials

The first step to getting a handle on your denials is compiling your claim adjustment reason codes and making them easier to identify. This will help provide a foundation on how you can build a denial management strategy. For example, you can categorize denials by common reasons such as:

  • Demographic errors such as an error in the patient’s name or date of birth
  • Incorrect insurer address
  • Incorrect modifier
  • Services not covered
2. Be aware of important changes

Your staff should be familiar with all Centers for Medicare & Medicaid Services (CMS) and private payer coding standards. Encourage your team to share important updates with the entire practice as information becomes available. This will help everyone within your practice to be on the same page. This can also reduce any surprises when it comes to the constantly changing medical coding environment.

3. Authorize coverage ahead of time

An effective method to minimizing denials is to have your front office staff receive prior authorization for every service that is required. This way your staff can work ahead of time to ensure that each patient has the insurance available so that the service can be delivered with the confidence of being covered. This becomes especially important as patients may change insurance providers every so often.

4. Check for accuracy and be cautious of deadlines

Don’t let a small mistake cost your practice time and money. Checking each claim for accuracy may seem like a lot of work, but avoiding the need to rework claims due to errors will pay off in the long term. With that being said, errors may happen but missing a deadline, however, should not. Your denial rate from untimely filing should be 0%.

5. Hire a practice management or medical billing company

Part of the concern when submitting claims is the risk of human error as mentioned above. The chance of this occurring can easily increase if your practice staff is trying to handle too many operations at once. We mentioned the constant need to recheck, but what if there isn’t enough time? Bringing on a medical billing company can take some of this burden away from your staff. These companies have coders in place along with the necessary software that is built to routinely check for errors that can lead to denials.

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posted by OBarros
posted in Healthcare Management,Medical Billing,Medical Coding
posted date Jan 2017