The healthcare industry is a complex ecosystem where the success of practices often hinges on efficient revenue cycle management. One critical aspect of this is the management of claim denials, particularly for Durable Medical Equipment (DME) and Home Medical Equipment (HME) providers.
The Impact of Claim Denials
Claim denials can significantly affect a DME/HME practice’s profitability. It is estimated that out of the $3 trillion in claims submitted in 2016, 9 percent were initially denied. This translates to an average loss of $4.9 million in cash flow for health systems. For DME/HME providers, denials result in higher accounts receivables, uncollected payments, and eventually, write-offs.
The Cost of Appeals
While appeals can be used to recover funds lost in claim denials, the process is complicated, time-consuming, and expensive. Statistics show that only 63 percent of denied claims are actually recoverable, and the administrative appeal costs across the country amount to $8.6 billion.
Preventing Denials
Preventing denials requires a thorough understanding of the reasons behind them. Common causes include improper coding, non-covered beneficiaries or services, and claims submitted after deadlines. Providers must ensure that there has been no significant change in the beneficiary’s medical condition that would necessitate a different type of similar item or replacement for a lost, stolen, or irreparably damaged item.
Tips for Preventing Claim Denials
- Verify Insurance Coverage and Eligibility: Confirm patient insurance coverage and eligibility prior to delivering DME/HME services. Ensure that the patient’s policy covers the specific equipment and services being provided.
- Accurate and Detailed Documentation: Maintain thorough and accurate documentation for each patient, including detailed medical necessity documentation, physician orders, and proof of delivery. This documentation is crucial for supporting the claim.
- Proper Coding: Use the correct Healthcare Common Procedure Coding System (HCPCS) codes and modifiers for all equipment and services. Stay updated on coding changes and ensure that all staff involved in coding are properly trained.
- Timely Claim Submission: Submit claims within the insurer’s designated time frame. Delays in submission can lead to automatic denials. Establish a tracking system to monitor claim submission dates and follow up promptly on pending claims.
- Preauthorization and Prior Approval: Obtain preauthorization or prior approval from the insurance company before delivering certain high-cost or frequently denied equipment. This can prevent denials based on medical necessity or coverage criteria.
- Regular Training for Staff: Conduct regular training sessions for billing, coding, and administrative staff to keep them updated on the latest regulations, coding practices, and payer requirements. This helps in reducing errors that could lead to denials.
- Implement a Robust Claims Management System: Utilize an advanced claims management system that can automate eligibility checks, track claims status, and alert staff to potential issues before claims are submitted. This can significantly reduce the risk of denials.
- Perform Internal Audits: Regularly audit your claims to identify common denial reasons and areas for improvement. Use these audits to refine your processes and reduce future denial rates.
- Stay Informed on Policy Changes: Keep up-to-date with changes in insurance policies, coverage guidelines, and payer-specific requirements. Changes in policies can affect coverage, documentation needs, and claim submission protocols.
- Foster Good Relationships with Payers: Build and maintain positive relationships with insurance payers. Having direct points of contact can facilitate quicker resolutions for denied claims and provide insights into common denial reasons.
- Focus on Patient Communication: Educate patients about their insurance benefits and any potential out-of-pocket costs. Ensure they are aware of the importance of providing accurate information regarding their coverage and medical history.
Leveraging Technology
Technology can play a crucial role in managing and preventing claim denials. Advanced systems can check for all necessary codes and return data to providers, enabling them to properly bill their claims. Additionally, outsourcing medical billing to professionals or partnering with specialized entities can offer robust and reliable billing assistance.
Claim denial management is a critical aspect of revenue cycle management for DME/HME providers. By understanding the reasons behind denials, leveraging technology, and implementing effective strategies and preventative measures, providers can minimize denials, improve cash flow, and ensure the sustainability of their business.