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The practice of denial management initial seems simple enough. Control and reduce the number of patient claims that are rejected or denied by insurance providers. This is a standard practice in healthcare revenue cycle management. However, if a policy of denial management is not faithfully adhered to, a healthcare professional’s revenue cycle will suffer from what is known as revenue leakage. Essentially, healthcare revenue leakage is the difference between the amount of payment that a health provider is entitled to, versus the amount of reimbursement that is received. This means that healthcare providers are not receiving the financial reimbursement that they are entitled to from payers. Basically, these providers are leaving money on the table. Many healthcare organizations realize they are not collecting all their revenue, but are unable to detect the source or extent of the revenue leakage. Healthcare professionals need to follow a comprehensive policy that allows them to identify, address and prevent revenue leakage. If revenue leakage is not contained or eliminated, it will heavily impact a medical facility or practice’s financial performance.

A reduction in collections can occur for a number of reasons, but one of the main reasons is due to inaccurate claims submission and disordered denial management system. In fact, denials of submitted claims are one of leading reasons for the occurrence of revenue leakage in the field of healthcare. According to the Healthcare Financial Management Association, roughly 10% to 20% of a health system’s revenue is forced to remediate denied medical claims. The vast majority of these denied claims are recoverable, but a proper level of focus, as well as an organized system, are needed in order to properly collect on these claims. Otherwise, denied claims will quickly extend beyond their timely filing limits and become write-offs.

Overall, one of the best ways to manage denied claims is to not have any denied claims. A policy of denial avoidance should go hand and hand with the practice of denial management. The practice of denial avoidance is designed to target the primary reason for denied claims. If this is done properly, claims that are written-off are substantially reduced which helps the bottom line. From a denial-avoidance perspective, it is extremely difficult to eliminate all denials. This is especially true for healthcare facilities or practices that offer a wide-range of medical services and must submit claims to a variety of insurance payers. It is a challenge for many health professionals to keep up-to-date on the constantly changing insurance procedures and regulatory requirements. An optimized revenue cycle management system will understand the details and nuances of various medical specialties as well as the different payer requirements. Change is constant, so health professionals must stay ahead of these changes, or a practice’s cash flow may freeze or even decline.

Want more for more information on ways to prevent denied medical claims and revenue leakage? The staff at ABCS RCM can help. For additional questions about this topic or other healthcare-related questions, please contact us. – CONTACT US.

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Denial Management, Healthcare Revenue Leakage, Denial Avoidance,