As we look back on 2023, it’s evident that the denial industry has experienced a significant increase in claim denials. Nearly half of providers indicated that they saw a rise in denials compared to 2022. TREND Health Partner’s data supports this by indicating an increase of 30% more denied dollars, year over year, on a fixed client basis.
Identifying the problem and understanding the root causes of these denials is essential so that healthcare organizations can implement effective denial prevention and revenue cycle management strategies.
So, why did denied claims increase in 2023?
Errors in Patient Access & Registration
One of the prominent factors contributing to the increase in claim denials in 2023 was the prevalence of errors in patient access and registration. Inaccurate demographic information, insurance details, and other essential data led to claim rejections and denials. These errors easily stem from manual data entry processes, inadequate staffing, and outdated registration systems. As simple as this problem sounds, the repercussions of inaccuracies are felt throughout the revenue cycle, causing delays in reimbursement and hindering the financial stability of the revenue cycle.
Solution
Siloed technology, incomplete training, and lack of resources are shared, and valid causes for documentation intake errors and simple human error all contribute to the rising rates of denials. Providing the tools doesn’t always equal success if the team lacks time or resources to implement or consistently use the tools effectively. To combat these errors, healthcare organizations prioritized the implementation of advanced registration systems equipped with real-time eligibility verification, automated data validation, and error-checking algorithms, in addition to enforcing staff training programs to ensure proficiency in data entry and registration processes. Staff conducted regular audits to identify and rectify inaccuracies in patient information.
Increasingly Complex Pre-Authorization Requirements and Missing Documentation
Another significant contributor to the surge in denied claims was the lack of comprehensive documentation to support the medical necessity of services. Insufficient or ambiguous clinical documentation, including the rationale for procedures, treatment plans, and diagnostic testing, resulted in hefty claim rejections from payers—for example, medical records missing physician signatures or incomplete progress notes. In addition, authorizations are becoming more and more complex. This remained one of the top pain points in 2023, and some health systems even reported the need to reallocate staff from patient care areas to focus on the increase of prior authorization requests. This trend underscored the importance of robust clinical documentation improvement (CDI) programs and the need for effective communication between healthcare providers and coding professionals to ensure accurate representation of the care provided.
Solution
Addressing the lack of documentation to support medical necessity involved the implementation of robust CDI initiatives. Healthcare providers focused on enhancing the specificity and completeness of clinical documentation, fostering collaboration between clinicians, coders, and CDI specialists. Training programs and ongoing education initiatives were instrumental in reinforcing the importance of comprehensive documentation for accurate coding and billing, thereby reducing denials associated with medical necessity.
Physician Documentation Errors
Physician documentation issues significantly contributed to the upsurge in claim denials in 2023. Incomplete, illegible, or non-specific documentation from healthcare providers posed challenges for accurate coding and billing. Insufficient detail in clinical notes and encounter documentation led to claim rejections, requiring additional resources for appeals and remediation. Addressing physician documentation issues became paramount for healthcare organizations to mitigate denials and optimize revenue capture.
Solution
Efforts to rectify physician documentation issues involved targeted physician education programs, emphasizing the critical role of detailed and precise documentation in minimizing claim denials. Collaboration between clinical leadership and coding professionals fostered a culture of documentation excellence, with a focus on enhancing the clarity, specificity, and comprehensiveness of clinical notes. Streamlined documentation workflows and adopting technology-enabled documentation solutions were instrumental in addressing physician documentation challenges and reducing denials.
Utilization Management
The utilization management landscape witnessed notable shifts in 2023, impacting the rate of denied claims. Health plans implemented stringent utilization review processes, scrutinizing the appropriateness and necessity of healthcare services. Denials stemming from utilization management focused on services deemed as not meeting medical necessity criteria, exceeding authorized limits, or lacking pre-authorization. Healthcare providers were compelled to enhance their utilization management strategies, leveraging evidence-based guidelines and proactive communication with payers to navigate these challenges effectively.
Solution
Healthcare organizations re-evaluated their utilization management protocols, leveraging evidence-based guidelines and clinical pathways to optimize the appropriateness and necessity of services. Enhanced communication with payers, proactive pre-authorization processes, and comprehensive utilization review mechanisms were instrumental in aligning service delivery with payer requirements. Integrating advanced utilization management tools and analytics empowered healthcare providers to proactively identify and address utilization-related denials, ensuring optimal reimbursement, increased patient satisfaction, and operational efficiency.
Duplicate Claims
Repetitive claims submission for the same services, often from system errors, operational inefficiencies, or manual oversights, resulted in claim rejections and added administrative burden. Healthcare organizations confronted the need to implement robust controls and automated checks to identify and prevent duplicate claim denials, safeguard against unnecessary denials, and optimize revenue realization.
Solution
The mitigation of duplicate claims necessitated implementing automated controls and real-time claim validation mechanisms within the revenue cycle. Healthcare organizations leveraged advanced claims management systems equipped with duplicate claim detection algorithms and system integrations to prevent redundant submissions. Ongoing monitoring and audits and staff training on identifying and resolving duplicate claim issues were pivotal in curtailing denials associated with duplicate requests.
Untimely Filings
Failure to submit claims within health plan-specific stipulated timelines, administrative delays in claim processing, and challenges in monitoring filing deadlines contributed to an increased rate of denials in 2023. Healthcare organizations faced the imperative to enhance their claims submission processes, implement proactive tracking mechanisms, and leverage technology solutions to ensure compliance with timely filing regulations and mitigate denials.
Solution
Addressing untimely filings involved the implementation of proactive claims submission and tracking protocols within the revenue cycle. Healthcare organizations adopted robust claims management solutions with built-in timely filing alerts, automated reminders, and compliance monitoring capabilities to ensure adherence to filing deadlines. Additionally, streamlined communication with payers and proactive resolution of administrative delays facilitated timely claims submission, mitigating denials attributed to filing deadlines.
Payer Adoption of Software leveraging AI Denials Technologies
Health systems are constantly learning and becoming more efficient at dealing with claim denials, but health plans are learning, too. Health plans are refining their processes and leveraging technology to identify potential denial causes more easily and accurately.
Solution
In response, health systems ideally would be leveraging similar technologies to ensure they provide health systems with clean claims. Stagnancy has no place in an ever-evolving industry propelled by technology. Health systems that don’t continue to grow and adopt new ideas are in real danger of severe financial impact – missing out on millions, if not billions, of dollars in revenue.
In response to the multifaceted challenges that fueled the surge in claim denials in 2023, healthcare organizations sought comprehensive solutions to address the root causes and bolster denial management strategies. Proactive measures were essential to mitigate denials, optimize revenue cycle performance, and reinforce financial sustainability.
How TREND Can Help
TREND Health Partners provides strategic business intelligence reporting through TREND’s Optics reporting platform. Optics gives clients access to valuable, real-time reporting based on previously disparate denial management data. Create intuitive dashboards with Optics’ flexible framework to display insightful information and pave the way to discovering actionable data points to improve denial management and denial prevention programs.