{"id":22463,"date":"2021-06-24T14:21:41","date_gmt":"2021-06-24T18:21:41","guid":{"rendered":"http:\/\/www.carecloud.com\/continuum\/?p=22463"},"modified":"2025-10-23T14:57:23","modified_gmt":"2025-10-23T14:57:23","slug":"how-much-are-denials-really-costing-you","status":"publish","type":"post","link":"https:\/\/carecloud.com\/continuum\/how-much-are-denials-really-costing-you\/","title":{"rendered":"How Much are Denials Really Costing You?"},"content":{"rendered":"

As a medical professional, you\u2019re well acquainted with the constant struggle of submitting clean claims that result in efficient reimbursement. You likely have capable, trained staff assigned to targeting denials – working hard to make sure you don\u2019t let any money owed slip through the cracks.\u00a0<\/span><\/p>\n

That being said, are you aware just how deeply denied claims are affecting your bottom line? The stats on how much money is actually lost on medical claim denials for physician offices might actually alarm you. The Healthcare Financial Management Association (HFMA) <\/span>reported<\/span><\/a> earlier this year that \u201c<\/span>out of $3 trillion in total claims submitted by healthcare organizations, $262 billion were denied, translating to nearly $5 million in denials, on average, per provider.\u201d\u00a0<\/span><\/p>\n

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Having staff assigned to claim resubmission isn\u2019t as effective as submitting a clean claim on the first attempt. You\u2019re dealing not only with the cost of the denial, but also the cost to pay staff to keep reworking them. How much of your resources are being redirected to recoup money lost? How much are denials really costing you? Read on to learn where you can fill the gaps in your practice\u2019s claims management processes.\u00a0<\/span><\/p>\n

The hidden cost of denials<\/b><\/h3>\n

When it comes to how denials impact your practice, there\u2019s more to consider than dollars and cents. Revenue flow is critical for the overall health of a medical practice, of course, but it\u2019s not as black and white as you may think. Other resources potentially drained by inefficient claims management include staff workflows and overall practice productivity. Many practices assign resubmission of claims to staff with already bloated workloads, which not only increases stress, but also triggers what psychological researchers call \u201c<\/span>task switching cost<\/span><\/a>.\u201d\u00a0<\/span><\/p>\n

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\n<\/span>Task switching is the new term for multitasking. Studies have shown that human brains are not designed for heavy-duty multitasking, so they switch back and forth between focusing on two separate tasks. Employees confronted with more work than they can reasonably handle often resort to task switching to get everything done, which has been proven an inefficient use of mental energy. This cost also affects your practice\u2019s costs down the road, when you factor in the hourly rate you pay your staff to spend all those extra hours task-switching. You could also be facing a potentially higher employee turnover rate due to administrative burnout.\u00a0<\/span><\/p>\n

The value of effectively scrubbed claims<\/b><\/h3>\n

So what can you do to improve your claims process and avoid a bottleneck of denials? First, take the time to ensure a clean, correct claim is sent on the first pass. The HFMA <\/span>notes<\/span>, \u201c<\/span>For a provider processing 100,000 claims per month, a variance as small as 1 percent in the first pass rate (FPR) can mean an additional 1,000 claims that must be manually reviewed.\u201d As you can see, having an efficient claims management process in place to encourage clean claims submission and quick turnaround time on resubmissions can make a massive impact on your practice, both in terms of productivity and revenue flow.\u00a0<\/span><\/p>\n

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Getting prior authorization processes in place<\/b><\/h3>\n

Equally as important as submitting clean claims is ensuring a streamlined, consistent prior authorization (PA) process is in place. Front-office administrators may seem like the best people to task PA to, but in reality, every staff member should have at least some basic understanding of how to verify a patient\u2019s eligibility. This should include how prior authorization is done and what to do if mistakes are made.\u00a0<\/span><\/p>\n

Clinical staff who recognize discrepancies within prior authorization should have administrative staff double-check PRIOR to treatment, in order to avoid providing non-covered services and an unpaid claim. Confirming that a patient has an active insurance policy is only the bare minimum of PA – consider how your staff can take extra steps to confirm deductibles, copays, and service coverages at patient checkpoints.<\/span>
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\n<\/span>As an example, one step in an efficient prior authorization process could be collecting patient insurance information before their scheduled appointment. While you\u2019re confirming their details, research their policy to confirm that the policy is active and coverage includes the services ordered. Don\u2019t procrastinate – this is just one of several pieces of <\/span>information<\/span><\/a> you should already have before the patient arrives at your practice. The last thing you want is a denied claim because the PA wasn\u2019t as thorough as it should have been. <\/span>
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\n<\/span>If it turns out a service isn\u2019t covered, or is out of network, be upfront with the patient so he or she knows that all, or a portion, of the balance will be their responsibility to pay. Not only could unexpected expenses cause the patient to lose trust in your practice, you\u2019ll also lose revenue if they jilt the bill. Even worse, you could be facing a poor review if they feel they were blindsided with a bill that they believed their insurance would cover. When it comes to payment responsibility, communication is key.\u00a0<\/span><\/p>\n

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Avoiding common denials<\/b><\/h3>\n

It\u2019s never too late to get a better handle on your claims process. Think of your billing process as a task that needs constant attention and fine-tuning. Most denials are the result of technical errors or simple oversights that could be prevented with a thorough review process. Taking the time, on the front end, to make sure claims are as accurate as possible before going to the payer will save you from the lengthy, tedious appeals process. <\/span>
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\n<\/span>Avoiding <\/span>common claims denials<\/span><\/a> is a great way to reduce your overall denial percentage and help heal your RCM process. Here are some of the most common reasons claims are denied:<\/span>
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