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Twenty Percent. This is how much of your practice or facility’s collections you are allowing payers to keep if you are not properly tracking and pursuing medical billing denials. This is a lot of money during the best of times, but particularly during tough economic times. Your practice needs an effective Revenue Cycle Denial Management system if you want to recapture this lost income.

Revenue Cycle Denial Management has become a universal and often abused term in medical billing. Some individuals use the term to describe a means of addressing claims denied for medical necessity. Others use the term to describe how some information is tracked for a specific payer, set of procedures or a place of service. Still others try to use it to describe what they do daily in the physician’s office.

To find out if your billing department or a current billing company is deploying a Revenue Cycle Denial Management System on your behalf ask them: (1) What is their Revenue Cycle Denial Management strategy; (2) What process do they use to methodically measure it and (3) what are the quantifiable results of it. If you do not receive rapid, concise answers with clear metrics then there is not a proper denial management system in place for your medical billing.

Few billing departments appreciate the value a good Revenue Cycle Denial Management system can bring to a medical practice or facility. A robust Revenue Cycle Denial Management system provides methodical management data for the billing process; the data are then used to (a) increase and (b) accelerate cash flow.

The system accomplishes this needed service by tracking, quantifying, and reporting on every claim billed for which any payer denied the service. The reporting should be comprehensive, tracking all denials (not just selected denials). If used properly, the system can reduce first-time claim denials by over 50 percent. Many practices have no way of monitoring if payers are denying their claims at excessive or unwarranted rates, or even for what reason. These practices are probably losing 10 to 20 percent of their total revenue.

Three elements are typically missing from a practice or medical billing company’s denial management process: data, filtering/sorting methodologies and feedback to systematically correct errors. Most practice management systems do not properly track denials - at least not in the form in which they are typically used (i.e., they may have the capability, but only if properly implemented and used). Those PMs that do track denials typically overwhelm the practice with data that is difficult to utilize for high level denial management. Finally, even if the data is captured and can be properly utilized, most billing groups do not have a systematic way to get the information back into the billing process in a manner that prevents the denials from occurring again in the future.

A proper medical billing denial management system tracks every claim that has denied and can report this by payer, by CPT, by physician and by diagnosis. This information must be presented in a manner that allows fast identification of trends. With this powerful combination in hand, the medical billing department of medical billing service can then utilizes claim rules and edits that are specific enough to dramatically drive up the first pass claim acceptance and stop the flood of denied claims.

The in depth analysis described above also allows payers that are habitual violators of Clean Claim Rules to be identified and pursued. The data and analysis will allow many opportunities for process improvements and revenue enhancement for the practice.

A real Revenue Cycle Denial Management system gives you a way to optimize and accelerate cash flow. It also prevents your practice from falling victim to the games that insurance companies play with your reimbursements. An established and proven denial management system will improve your revenues between 5 and 20 percent.

Copyright 2008 by Carl Mays II