OS inc. President, Lori Zindl, presented Changing the Conversation on Denials at the 2023 AAHAM Annual National Institute in Los Angeles. For those that couldn’t attend, we’ve taken some key points from that presentation and put them in this article. We hope you find value that can be utilized in your organization’s revenue cycle.
In the complex realm of healthcare revenue cycle management, one term often stands out: the clean claim rate. It's a metric widely tracked and celebrated, representing the percentage of claims submitted without errors or issues. However, as healthcare organizations delve deeper into the intricacies of revenue cycle denials, a stark realization emerges—the clean claim rate can be misleading. In this blog, we'll explore the fallacy of the clean claim rate, dissect denial types that impact claims getting paid on first submission, and examine the profound impact of denials on the revenue cycle.
At first glance, achieving a high clean claim rate appears to be a considerable accomplishment for healthcare providers. It signifies that claims are ready for prompt processing, with no glaring errors or issues. However, the fallacy lies in the fact that a high clean claim rate doesn't necessarily translate into a high percentage of claims being paid on the first submission (First Pass Yield). In reality, it’s the latter metric that holds more weight in assessing the efficiency of your revenue cycle. If a clean claim denies, that creates a cost and a burden to your accounts receivable.
When looking to improve your First Pass Yield, it’s important to understand and identify where to look for the types of denials that most commonly affect claim denials. These include:
The Impact of Denials
The impact of denials on an organization's revenue cycle is profound, affecting both financial stability and operational efficiency. Astonishingly, roughly 90% of denials are preventable, with the following breakdown: 61% due to demographic and technical errors, 16% due to eligibility issues, and 12% due to medical necessity. The cumulative effect of these denials can result in a significant financial loss for healthcare providers.
The cost of a single denial has been estimated to range from $25 to $118. This cost includes the administrative overhead of handling denials, resubmitting claims, and the delay in revenue collection. Even if you apply the low end of this range and considering the sheer volume of denials, it becomes evident that addressing this issue is essential.
Strategies to Improve Your First Pass Yield Rate
1. Enhance Authorization Rate: Implement robust pre-authorization processes to ensure that all necessary approvals are in place before delivering services. This step minimizes the risk of denials based on lack of authorization. Design and implement edits to look for payers/services that require authorization. Stop those claims before they get billed.If you’d like more information, or if you’d like to speak with one of our experts, you can get in touch with our experts today, call 800-799-7469 or contact us here.
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