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Health Care Accounting: Three Steps to Managing Denials in your Revenue Cycle

By: Denise Smith, CPA, CGMA- Senior Accountant

Does your health care practice analyze and manage claims denial? Do you know what your claims denial rate is?

1.       The first step in lowering and avoiding denials is to know where you are currently.  If you don’t track denials, it may be time to create codes in your billing software to track how many denials you are getting and the reasons why claims are being denied. Once the codes are created, it is just a matter of asking your billing staff to enter a $0 payment with one of those codes, when a denial is received.  Try to set up codes for any frequent claims denials, such as past the filing claim deadline, wrong CPT code, incorrect modifier use, submitting bundled codes for a diagnosis code that does not support the bundling, or possibly an insurance carrier who seems to be denying claims to delay payment.

2.       Step two would be to accumulate data so that you know what claims denial rate you are starting with.

3.       Step three, is to then use the data that you have accumulated to put into action a plan for reducing the number of claims denials. For example if claims are being submitted late, research with staff to find out why this might be a problem.  You might institute a review of reports to check timeliness of billings or cross train employees to ensure that billings are going out in a timely fashion.  If you are finding that errors in CPT codes are the problem, some further training may be in order.  The goal is not just to correct each error, but to find a way to improve the system used to bill, so that denials are minimized.   This might even involve tracking the different denial reasons and corresponding rates, and making a small contest of lowering the rates.

 Holbrook & Manter can help you determine how your health care business measures up and provide insight as to where to focus your efforts.  Contact us today.

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