Misunderstanding the Cause of These Denials May Cost Your Practice $$$

Sixty-nine percent of healthcare leaders reported increased insurance claim denials in a poll by the Medical Group Management Association (MGMA) last year. The average cost to rework each denied claim is $25.20. Claims denials must be effectively addressed to avoid missing timely filing deadlines and losing revenue. Over time, the cost adds up.

Most claim denials can be avoided—if underlying administrative challenges are addressed.¹  This blog post will help you understand and protect against a significant but lesser-known cause of claim denials.

When does the revenue cycle start?

The industry considers the patient’s earliest interactions with the medical practice to mark the start of the revenue cycle. After all, this is when the practice obtains necessary information—such as key demographics, insurance payer, financial responsibility, and reason for visit—to set up a clinical appointment and prepare for billing of services.² Not surprisingly, errors at the front desk are responsible for about half of all claim denials.³

However, is this underlying assumption correct? Are the first patient-practice interactions really the start of the revenue cycle?

An earlier, often overlooked phase

In fact, a critical component of the revenue cycle occurs before the patient even contacts your practice. Onboarding healthcare providers with payers—referred to as enrollment or credentialing—is when the stage is (or isn’t) set for efficient revenue collection.

Provider enrollment sets the groundwork for your revenue cycle. From this perspective, enrollment also includes steps taken to maintain credentialing for established healthcare providers.

Inefficient enrollment plays an important factor in denials. What’s more, it can be tricky to uncover.

Why does the risk for claim denials increase?

Practices want to fill the schedules of new physicians and care providers. Patients need access to care. This puts pressure on the practice to provide healthcare to patients before their provider is enrolled—a process which can take from 60 to 120 days.

During enrollment, each provider must be linked to the right organization, service locations, and service lines in payer contracts—these links must be established with a high level of accuracy. Following up with payers and monitoring the status of new providers in multiple contracts is a labor-intensive process. Until provider enrollment with payers is complete, risk for denials increases.

When payments start coming in, it can lead to a false sense of security. Many practice administrators are surprised to learn that denials for a particular location or service line result from incomplete provider credentialing.

Getting to the root cause

Perhaps you think enrollment-related denials don’t impact your group. Think again. It isn’t always easy to tell based upon denial reason codes.

Some payers give lack of prior authorization as a reason for a claim denial. This is interpreted to mean that a service didn’t receive prior authorization. But the root cause may be unrelated to the service provided; prior authorization may be needed because a provider is not properly credentialed and, therefore, is considered non-network.

Consider performing root-cause reviews with top payers to uncover the true reason for denials attributed to lack of prior authorization or non-coverage. Contacting the payer and asking for a review on an audited sample of denied claims will provide greater insight into the basis for denials.

Tactics to prevent denials

Here are some tactics to minimize denials related to provider enrollment:

• Make sure sufficient staffing resources are dedicated to provider enrollment
• Provide information on newly hired providers to your practice’s enrollment manager in a timely manner
• Provide clear policies to front desk staff regarding how to schedule appointments when an onboarding provider is not yet fully enrolled or linked to your organization in payer contracts
• Track key metrics by payer to monitor denials and discern any patterns which may warrant further investigation
• Provide guidelines to staff for investigating out-of-network denial reason codes, which may indicate underlying issues with credentialing
• Consider providing staff with software designed to help staff manage credentialing and provider enrollment
• Contract with a dedicated, professional service to manage enrollment, such as NextGen Healthcare’s credentialing services

Why provider enrollment is now more important than ever

This year, the No Surprises Act, a component of the Consolidated Appropriations Act of 2021, went into effect. New regulations require ambulatory medical practices to offer uninsured or self-pay patients good faith cost estimates for services. These regulations also establish guidelines for when insured individuals receive health services from an in-network facility, but the provider rendering the service is out-of-network. Failure to comply can lead to civil monetary penalties of up to $10,000 per violation. In the future, the Department of Health and Human Services (HHS) may expand these requirements. Centers for Medicare and Medicaid Services (CMS) have published resources for providers and patients at https://www.cms.gov/nosurprises.

Enrollment delays or errors in the amount you estimate for cost of services or bill the patient may lead to violations of the No Surprises Act. Such violations may lead to penalties under new regulations.

Timely, accurate enrollment is the foundation for efficient reimbursement. Each time your practice signs a new provider, think to yourself, ‘the revenue cycle starts now.’

[1] “6 keys to addressing denials in your medical practice's revenue cycle.” MGMA, March 18, 2021. https://www.mgma.com/resources/resources/revenue-cycle/6-keys-to-addressing-denials-in-your-medical-pract.

[2] Hagenow, C., & Fox, M. “We’re all in this together: Connecting the front end to the back end,” National Association of Healthcare Access Management. Retrieved May 15, 2022. https://www.naham.org/page/ConnectionsAllinThisTogether.

[3] Filipek, D. “Healthcare News of note: National index shows denials are up 11% since the onset of COVID-19.” HFMA, July 21, 2021. https://www.hfma.org/topics/news/2021/07/healthcare-news-of-note--national-index-shows-denials-are-up-11.html.