What if I told you that you have been paying $48,000 a year, every year, for the privilege of chatting with your patients about their ailments, and treating them at no charge? You’d tell me I was off my rocker and that you’ve never done such a thing.
Well, statistics show that is exactly what’s happening in most typical medical practices around the country who follow a business model that includes in-house billing. I’ve read that 47 percent of all denials are never appealed. (See: The Physician Billing Process – Avoiding Potholes in the Road to Getting Paid) That might not mean much until you delve a little deeper into the math. One nationwide electronic data interchange company, Gateway EDI, says that about 8 to 12 percent of all claims are denied. If roughly half of that is never appealed, that means that about 4 percent of all claims go unpaid. As an example, if a practice submits $100,000 a month in claims and 4 percent is lost to denials ($4,000), that’s $48,000 a year. That is a staggering, unnecessary, and preventable revenue loss.
So how does a physician recoup this loss when employee time and attention are at a premium? We have been providing billing and coding services for years, and we typically find that reviewing and resubmitting of denials tends to be neglected in medical offices for two common reasons. The first reason is lack of time. Most offices are hectic and understaffed. Since working a denial doesn’t affect daily patient activity, paperwork is usually set aside for later, but in most offices, later never comes. The second reason these denied claims sit untended is that many in-house billers don’t like working the rejections and often don’t understand the complete appeals process.
Claims get denied for a variety of reasons: typographical errors, incorrect or incomplete coding or billing, terminated contract numbers, incorrect demographic information, etc. It is common to simply resend a claim over and over again, but without proper review of the denial reason and appropriate editing, it’s unlikely that this tactic will end up getting the claim paid. Unfortunately, this method also burns valuable time in the timely filing limits set by payers.
There are multiple good methods of claim preview, review and revision that can help to get claims paid on the first submission, or on a subsequent submission, should the claim be denied the first time around. My best recommendation is to hire a billing service that works on commission, which means you pay the service only on claims that are actually paid. Better billing services have systems in place that a small medical practice often simply can’t afford, including claim scrubbers that automatically check for payer specific criteria on each and every claim submitted. All claims are “scrubbed” prior to initial submission, and if the scrubber detects a potential reason for denial, the system instantly identifies the error, which can then be corrected before submission. Use of this technology lowers the industry average denial rate to between .5 and 5 percent, down 3 percent from the low end of the range for claims submitted without scrubbing. Furthermore, billing services have a vested interest in actually reviewing and editing claims that have been denied, because they don’t get paid until the claim gets paid. Reputable, stable billing services generally employ certified billers and certified professional coders, who have been specially trained to navigate the claims submission process and who remain up-to-date on current guidelines, codes and fee schedules—education not generally possessed by the average practice biller. Billing services help increase practice revenue by following appropriate protocol when resubmitting denied claims. Since 70-75 percent of denials appealed are reversed in favor of the provider, this alternative sure beats taking a match to $48,000 a year. (Advanced Health Analytics "Denial & Appeal Survey" March 2010)
Whatever the reason a claim goes unpaid, the choice of how to respond to the denial lies with the provider--after all it is their money that is being lost. In this economy, physicians simply can’t afford preventable revenue loss. Growing expenses, declining reimbursements, and higher patient write-offs make this a challenging environment, to say the least. Making sure denials are handled properly is one way providers can reduce their level of lost revenue. And at the end of the day, if a claim goes unpaid, it is the provider who loses that money, not the employee, not the carrier, and not the patient, but the provider. Outsourcing the billing function to a trustworthy partner is often the best way to mitigate that loss.
In order to begin the process, please also see other resources on this website that will help you understand what to look for in a medical billing company, how to calculate the cost of your in-house billing operation, and what common mistakes billers and office staff make that cost practices money on the front end.
