According the Medical Group Management Association, on average, U.S. medical practices are failing to collect 25% of the money they’re owed for treating patients. That means $125 billion is left on the table every year.
The convoluted processes of revenue cycle management and accounts receivable allow too many underpayments, denials and ignored claims to fall through the cracks.
To identify missing funds and reclaim the money they’re owed, practices must streamline their execution of RCM and AR.
Innovative practice management technologies on the market today can simplify reimbursement and collection methods, but managers may not know which system features are needed to improve AR operations.
Power Your Practice is here to help. Every Wednesday for seven weeks, we’ll describe each of the must-have features managers need to look for in practice management systems to track, measure, manage and collect all of their receivables.
Prevent Claim Denials Automatically
When a claim isn’t paid the first time it’s submitted, the likelihood the practice will ever receive money for that work drops significantly.
The Centers for Medicare and Medicaid Services (CMS) found that only 70% of claims are paid the first time they’re submitted. The other 30% are either denied (20%) or lost or ignored (10%).
Of those claims, 60% are never resubmitted to payers. That means medical practices never collect on a full 18% of claims.
Therefore, one of the best ways for practices to improve their billing efficiency is to catch potential denials before the claims are submitted to payers so that more claims are paid the first time around.
The right software can help practices accomplish that with a robust rules engine that can automatically identify claims that are likely to be denied.
It’s not enough to set the rules and then forget about them – the top available software solutions use an intelligent engine that constantly updates and adapts its rules so practices can stay on top of the latest claim denial trends and continually improve their collection rates.
The software collects data about claims and denials from not just your practice, but every practice in the vendor’s network. The system learns why other practices’ claims have been denied recently, so it can proactively prevent similar denials for your practice in the future.
The impact of billing software with a robust rules engine includes:
1. Higher first pass resolution rate (FPRR) – Since potential denials are caught before the claims are submitted, practices have a much better shot of getting paid on the first submission. A system with a strong rules engine can help practices improve their FPRR from the national average of 70% to over 90%, with the rate going even higher as the rules are improved.
2. More collections at a greater speed – Catching potential denials early allows practices to submit cleaner and more accurate claims that get processed faster, improving the average time it takes for practices to get paid. And since many denied claims never end up being paid, improving the FPRR keeps practices from leaving a lot of money on the table.
3. Less work for practice staff – Getting more claims paid the first time eliminates the time-consuming task of reviewing denials and going back and forth with payers to resolve issues. That makes practices more efficient overall and gives staff more time to take care of what’s important – helping patients.
How much do you need to improve your first-pass resolution rate?
Next week, we’ll highlight the value of payer contract management tools embedded in the best practice management systems.
