How to avoid 'unclean' claims

By Amber Taufen, MA
March 28, 2014
Body of Knowledge Domain(s): Financial Management

How to avoid unclean claimsDenied claims can become a huge waste of time and money for any practice manager; according to a recent MGMA Connection article the average cost to rework a claim is $25. When you multiply that cost by dozens of denied claims, it quickly adds up.

However, “most practices don’t analyze the claims that come back,” says Frank Cohen, MBB, MPA, MGMA member, principal and senior analyst, The Frank Cohen Group LLC, Spring Hill, Fla. Although it’s time-consuming, analyzing denied claims will save you time and money if you can identify a pattern that’s causing the insurance company to reject your claims. “When you have to rework a claim, you add 20 to 30% to the cost of that claim. So when a claim is sent back because you’re missing critical information, even one of those is intolerable because it’s something that can be easily addressed on the front end.”

To tackle “unclean” or denied claims you need to conduct an analysis, and many practice management systems can run these reports. “In these situations, I analyze the reason and remark codes by payer for each of those rejections and denials,” Cohen explains. “I do a correlation analysis, and I’m trying to see if there’s a pattern.

“Let’s say I always get rejections with a particular diagnosis,” he continues. “Then I can look and see if there’s a pattern. If that’s the case, then I can fix it once — and I’ll be fixing it for all the other times that rejection or denial comes through. Maybe I’m getting denied because there’s a certain modifier I’m not using when I should be. Then all you have to do is adapt to whatever the appropriate action would be.”

Cohen also notes that by conducting this type of analysis, you can often trace the denied claim back to the specific department or person in your practice who might be inadvertently causing the problem. “We had this happen where we had one coder who was creating the issue,” he says, “so if you can educate the one coder, you’ll solve the problem across the board.”

But that’s not always the case. “Sometimes denied claims are the result of a practice-wide policy,” and other times, he says, “the payer is the problem! … If you’re analyzing all of this, you’ll know where the problem is.”

The most important thing to do when it comes to denied claims, Cohen adds, is taking the time to address them. Many practice management systems can run clean claims ratio reports.

“Take the time to do it,” he says. “And if you are not capable of conducting the analysis, there are a lot of third-party vendors who do a good job.

Some practice professionals might say, “We don’t want to get involved with the cost of an analysis,” but it pays for itself, Cohen notes. If the average cost to rework a claim is $25, and your practice has 100 claims each month that require rework, you will be saving your practice $2,500 each month by addressing the issues that cause your claims to be sent back.

More resources:
Better Data, Better Decisions
Financial Management Bootcamp: The Revenue Cycle

Amber Taufen, MA, assistant editor, Corporate Communications, MGMA

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