The Growing Problem of Denial Rates and What It Means
As of 2022, a survey suggests the average claims denial rate has increased by 3% since 2016, standing at 12%. Almost 31% of claims denials are unnecessarily avoidable. Of those, 43% cannot be recovered - highlighting the importance of prevention to prevent any loss of profit.
According to another study, staffing, volume, and dated technology are among the top root causes of increasing denials. The study, conducted by the Healthcare Financial Management Association (HFMA), looked at data from more than 1,000 organizations across the country.
HFMA's study found that some of the biggest contributors to increasing denials are:
- Staffing shortages
- Higher volumes of claims
- Dated technology
While all of these factors contribute to increasing denials, staffing shortages are often the most challenging to address. To help mitigate the impact of these root causes, the study recommends a number of strategies, including:
- Cross-training staff to help fill in gaps
- Implementing new technology to automate repetitive tasks
- Reviewing your denials process to identify and correct errors
The healthcare industry is facing a number of challenges when it comes to staffing and training. The tight labor market is making it difficult to find and retain qualified staff, and the complexity of denials is requiring robust training and education programs. Clinical staff are also required to manage a growing number of clinical denials, and there is inadequate access to data for root cause analysis and expertise on interpreting it.
During peak seasons and due to staffing challenges, many organizations experience an influx of denials. This is often compounded by timely filing deadlines, which can further expand denial backlogs.
Unfortunately, many organizations take a reactive approach to denials, focusing on remedying individual denials rather than analyzing root causes. This fails to reduce the volume of denials and ultimately puts a strain on resources.
To effectively reduce denials, organizations need to take a proactive approach by implementing strategies on the front end and mid-cycle. This will help to prevent denials from occurring in the first place and ultimately reduce the overall backlog.
The denials backlog is a growing problem for healthcare organizations. With ongoing regulatory changes and the constant need for updating of RCM/HIS systems, workflows are not automated for clinical attachments or to manage highest priority denials. This lack of automation results in a growing backlog of denials that becomes increasingly difficult to manage.
Investment in modern analytics and AI can help flag denials presubmission relative to payers, which would help reduce the backlog and improve overall efficiency. However, many healthcare organizations do not have the necessary investment in these modern technologies. As a result, the denials backlog continues to grow and poses a significant challenge for the healthcare industry.
How Centaur Billing Can Help
Centaur Billing provides a comprehensive revenue cycle management solution that incorporates innovative technology and industry-leading services to optimize issue resolution. Our exception-based workflows make it easy to identify denials and speed up payment. Our advanced analytics, powered by our talented team of experts, help you improve your organization's performance and increase ROI.
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Please note that the information in these materials is for general informational purposes only. It is not intended to constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials. Neither Centaur Billing nor any of its employees are your lawyers. If you have specific legal or compliance questions, please consult with your own legal counsel or compliance professional.