As every home health agency knows, claim denials are an inescapable reality. It’s just the nature of the business. How an organization chooses to handle them, however, can make or break their cash flow. When denials are improperly managed or completely ignored, agencies may be leaving thousands or even hundreds of thousands of dollars on the table.
To put it simply, the best strategy for managing claim denials is to eliminate them altogether. Realistically though, an acceptable denial rate for home health agencies typically hovers around 3%. If your current denial rate is unpleasantly higher, do not fret—this goal can be achieved and sustained when best practices are implemented and carefully followed. And better yet, you may be able to see results sooner than you think (30 days or less).
There are many reasons a claim could be denied by an insurance company or fiscal intermediary, so agencies need to establish a tracking system to help identify, categorize and manage these workflows accordingly. Once the problem can be identified, steps must be taken to correct it, and then the problem should be analyzed to prevent it from reoccurring.
The following steps should be:
Identifying the Issue of Home Health Denied Claims
As we previously stated, there are plenty of reasons why a claim could be denied, so efforts should be concentrated on the most common denial reasons. These can occur during different stages of a claim’s cycle, from intake, EMR set up, to clinical, and claim submission.
During the intake process (also referred to as admissions or onboarding), information is collected about the patient, which is the driving force behind the claim’s life cycle. Mistakes made during this stage can account for a large portion of an organization’s denials, depending on the agency’s operating rhythm. Common mistakes may include listing the wrong payer, eligibility issues, failure to obtain authorization and missing information.
A patient’s electronic medical record (EMR) can also be a source for denials, if the software is setup with invalid codes, missing claim requirements, allows duplicate claims, or fails to implement system updates after regulatory changes.
In the clinical stage, the claim is assigned specific codes that correspond to the treatment received. This is what initiates the charges to the patient/client. Mistakes made here translate to improper coding, invalid diagnosis, missing documentation to support services and duplication of service charges.
With the claim submission process, agencies must check for eligibility and demographic information, while paying close attention to timely filing guidelines.
Correcting the Issue of Home Health Denied Claims
After the reason for a claim denial is detected, agencies need to work diligently for a speedy resolution, paying special attention to insurance payer deadlines if they want a chance at obtaining reimbursement. Don’t allow your denials to pile up in the work queue, as they should be reviewed, corrected and resubmitted ideally within 14 days. If resources are strained, prioritize your denials by the dollar amount and work the larger balances first.
Every denied claim should be addressed, and you should expect some claims to be reworked several times before finally being accepted. Depending on the situation, an appeal of the rejected claim may also be necessary. Agencies which have had the greatest success in minimizing denial rates have a dedicated team whose sole purpose is to resolve unpaid claims.
Denial Prevention for Home Health Agencies
Even after a denial has been resolved and the claim has been paid, your work should not end. The issues you previously identified will continue to occur unless you take proactive measures to change your processes. Unfortunately, many home health agency leaders never even recognize they have a problem with their processes until they experience the ripple effect that high denial rates have on their bottom line.
At a minimum, home health agencies should aim to:
Home health agencies who struggle with recurring denials they are unable to resolve would benefit from a process review. To inquire and learn more about how your home health agency can implement a customized denial management strategy, contact Richter’s home health consultants here, or call us at 866-806-0799.