January 29, 2016 Ask Owen

3 things That Can Help Prevent Claims Denials

The transition to value-based care and the implementation of ICD-10 will continue to stress healthcare provider revenue cycles throughout the new year.

Coping with this ongoing financial challenge will require providers to effectively manage claims denials. Given the nearly five-fold increase in medical and diagnostic codes under ICD-10, along with new quality measures imposed by the Centers for Medicare and Medicaid Services, getting a handle on claims denials undoubtedly can seem like an overwhelming task.

But as Jason Williams, vice president of business analytics and strategy at RelayHealth Financial, writes, “Managing denials requires insight, technology and understanding of processes.”

The “insight” part of that formula essentially means identifying the most likely sources of claims denials. Healthcare providers that focus on the following three areas can possibly reduce claims denials and their negative impact on the revenue cycle:

Registration processes

Claims denial problems can begin even before the first medical code is recorded. Of the total amount of claims dollars denied, 15.5% can be traced directly to registration-related processes, according to data from RelayHealth Financial. Of those, 8.5% of denied claims dollars result from registration errors and eligibility issues, while 7.0% are from authorization and pre-certification problems.

There are several steps providers can take to head off claims problems stemming from registration processes. These include:

  • Conducting regular quality checks on registration data
  • Checking for eligibility early and throughout the billing process
  • Confirming pre-authorization requirements
  • Confirming pre-authorization is on file with the payer

In addition, providers can reduce the amount of registration problems created through human error by automating as many registration steps as possible. Automation enables providers to keep up with the latest medical policies as well as prior-authorization and medical necessity rules.


Reimbursement claims submitted to Medicaid comprise 13% of all denials, RelayHealth Financial data shows. Again, some analysis reveals that a small set of codes lead to a disproportionate number of these denials. As Williams notes, “Ultrasound Performed in the Outpatient Setting (Medicaid Revenue Code 402) accounts for 34% of denials in the top five most frequently denied revenue codes under Medicaid.”

Other top sources of Medicaid denials include ambulance (19%), emergency room (15%), and operating room services (10%).

To reduce Medicaid denials from these and other sources, providers should:

  • Check eligibility
  • Check medical necessity
  • Confirm if pre-authorization is required and on file
  • Ensure Medicaid edits are current and accurate

High-impact specialties

Expensive orthopedic surgeries account for 7% of all claims denials, including 9% of Medicare denials, according to RelayHealth Financial data.

Other specialties also contribute to high amounts of denied dollars per payer type. For example, 11.75% of Medicaid denials come from pediatrics claims, while 4.75% of Blue Cross Blue Shield denials also can be sourced to high-cost orthopedic procedures.

As with the registration processes and Medicaid claims, providers can reduce the denials stemming from high-impact specialty procedures by confirming eligibility and ensuring the prior authorization requirements for these procedures are met. Providers also should make sure their clinical documentation improvement teams continue to offer training to staff focusing on areas the denial data highlights as opportunities

The increasing complexity of healthcare services, dramatically changing reimbursement rules and requirements, and plain old human error guarantee that claims denials will never fully vanish. But by zeroing in on the most common causes of claims denials and implementing quality-control measures, providers can reduce the impact of denials on their revenue cycles.

This article originally appeared here.

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