Medical billing denial rates in hospitals larger than 250 beds range from 7% to more than 10.5%.1 Any denial can mean a dip in revenue, so these rates are certainly cause for concern.

To minimize medical billing denials, you must fight the war on several fronts. Improving patient data quality at registration, identifying and resolving denial trends and addressing potential denials before claims are submitted are all effective actions. But there is something else you can do to dramatically mitigate and help prevent denials: focus on managing and updating edits in your patient accounting, electronic medical records (EMR), or claims management system workflows.

denial management First things first: find the root cause

Often denials come back with generic coding explanations that can lead to incorrect assumptions about why claims were denied. To keep it from happening again, healthcare organizations with available resources often form denial mitigation teams. They trace claims with the same reason codes and do root cause analyses to find the true reasons for denials. The next step is to add custom medical claims edits or place existing edits earlier in the appropriate system workflow.

Why medical claims edits are important

As payers change their plans and new payers come on board, providers must write edits in upstream patient accounting or claim management software to accommodate the changes. You may also need to apply modifiers not only in the edits but in the clinician’s workflow or with the case management team as they identify services rendered for the claim. Each of these scenarios requires consistent and timely problem-solving to keep edits up to date and claims moving toward adjudication. A team focused on improving edits can increase your clean claims rate and efficiency in resolving rejections and denials.

Persistence required

Denials management and resolution are time consuming and results don’t come overnight. Once a root cause is identified, it can take weeks of follow-up to correct the internal issues that led to the denial. A knowledgeable, dedicated mitigation team; current technology; a sound strategy and constant attention are essential for a robust denials resolution process. If the mitigation team is part-time or only meets occasionally to address the top denials, it’s easy to lose focus. If these employees shift focus back to day to day operations or higher-value hospital revenue cycle management tasks, denials can get backlogged again. Without a dedicated staff or third-party support, denials can chip away at revenue and increase write-offs thus eroding your bottom-line margin.

Another area that requires persistent attention is the pressure of filing appeals in a timely manner so as not to miss deadlines. Procedures should be put in place to have the mitigation team monitor claims not yet submitted related to their filing deadlines. If these dates are missed, some denied claims may have to be written off, even if they were denied in error or simply required additional documentation. Regardless of the reason, denials can cause a drop in your collection percentage as well as actual collections, affecting the hospital’s financial health.

When to look for help

Constantly changing regulations and payer rules make it difficult for hospitals and health systems to manage denials effectively on their own – and nearly impossible without current technology and dedicated staff. Here are some indications that it may be time to consider a different approach for handling your denials:

  1. You have multiple medical necessity denials.
    Payer rules vary, so custom edits for each payer must be adopted in the right areas to help prevent denials.
  2. You have very few proactive edits for Medicare’s National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs).
    It’s frustrating to receive denials from an insurer saying the diagnosis provided does not support the need for the service. A good third-party vendor will have advanced claims management software that edits charges for coverage determinations sourced from insurers, along with other edits sourced from insurers.
  3. Your staff keeps moving edits from one place to another.
    To prevent denials, edits must be placed as early in the process as possible.
  4. You’re not sure standard coding rules are being applied correctly.
    A best practice is to conduct a medical billing audit for Medicare, Medicaid, National Correct Coding Initiative Edits (CCI Edits) and other standard coding rules.
  5. You have too many timely filing denials.
    Denied claims can sit in the work queue until they hit the timely filing denial and are written off. The best practice is to work claims immediately at the initial denial, regardless of the reason code. If they can’t be fixed, they should be written off at that point.
  6. You have a large volume of denials in certain codes.
    This requires root cause analysis to identify and solve the problem, which can take days or months.
  7. You are not meeting your revenue cycle benchmarks like denials rate, clean claims rate, or accounts receivables days.
    If you and your financial leadership team have set benchmarks for your revenue cycle team based on industry benchmarks from HFMA or MGMA and you’re falling short, it may be time to seek outside assistance. By utilizing a partner to help analyze your physician practices and your facility performance, you can hone in on areas that need improvement and then determine what services or solutions might help.
  8. You’re converting to a new EMR system.
    To avoid moving errors or improper edits from the old system to the new, you should review 100% of claims to make sure edits are correct and working properly, then test them before going live. This is a significant undertaking often requiring outside expertise.
Advantages of outsourcing

Outsourcing to a third-party vendor who specializes in medical claim denial and underpayment management can be a good alternative to doing it yourself. They can help establish medical billing benchmarks, reduce backlogs, identify root causes of denials and underpayments, and augment the revenue cycle team.

Denials management vendors have up-to-date knowledge about payers – local, regional and national, information systems and regulatory formats. They know the edits required to help prevent denials, how to review charges and documentation and how to work with coders to identify and resolve issues. A denial management partner can be dedicated to denials and assigned to pursue system edits and other procedural updates to help ensure issues are corrected in a timely manner.

Learn how Studiomaca’s medical coding and denial management services can help reduce denials and improve compliance in your hospital or employed physician practices.


1“ ”. Ayla Ellison. Becker’s Hospital CFO. March 13, 2017.