Accurate coding is a critical part of medical practice that has a significant impact on revenue. Preventing coding denials is essential for practices to ensure financial stability, maintain efficient operations, and provide high-quality patient care.
Here, we will guide you through understanding coding denials, their causes, and actionable strategies to prevent denials, ultimately increasing your revenue.
Understanding Coding Denials
Coding denials occur when insurance companies refuse to reimburse healthcare providers for services due to issues related to the coding and billing of those services.
Medical coding denials in ambulatory services can occur for various reasons, often related to the complexities of medical coding, insurance policies, and the documentation process. These claims denials indicate that the claim submitted does not meet the criteria set by the insurance company for payment.
Here are some of the primary reasons why coding denials occur in medical billing:
- Incorrect Coding: Using incorrect or outdated codes for diagnoses and procedures can lead to denials. Medical coding is complex and requires precision to ensure that the codes accurately reflect the services provided.
- Lack of Medical Necessity: Insurance companies may deny claims if they determine that the services provided were not medically necessary. This determination is based on the documentation and coding submitted.
- Insufficient Documentation: Incomplete or inadequate documentation can result in denials. Documentation must support the codes used and provide a clear rationale for the services provided.
- Eligibility Issues: If the patient’s insurance coverage is inactive or does not cover the specific service provided, the claim will be denied. Verifying patient eligibility before providing services is crucial to avoid this issue.
- Authorization and Pre-certification Requirements: Some services require prior authorization or pre-certification from the insurance company. Failing to obtain the necessary approvals can result in denials.
- Duplicate Claims: Submitting multiple claims for the same service can lead to denials. Duplicate claims often occur due to administrative errors or miscommunication within the billing department.
- Coding and Billing Errors: Simple errors in the coding and billing process, such as typos or incorrect patient information, can lead to denials. Attention to detail and accuracy are essential in preventing these errors.
According to a 2020 study by Change Healthcare, more than 11% of medical claims were denied following the original submission, while another study found that coding errors accounted for approximately 63% of medical billing errors. According to the American Medical Association, the 11% denial rate translates to 110,000 unpaid claims for an average-sized health system.
Change Healthcare also found that 86% of denials could have been avoided and that nearly a quarter (24%) of these claims were not recoverable. Additionally, the average cost of medical billing errors is approximately $100 per mistake. So, overall, medical billing errors have a significant impact on revenue, making the prevention of coding denials a critical part of practice management.
Strategies to Prevent Coding Denials
Here are some important strategies that can help your medical practice prevent coding denials.
Accurate and Detailed Documentation
First, accurate and detailed documentation is the foundation of preventing medical coding denials. Thorough documentation supports the codes used and provides a clear rationale for the services provided.
Here are some ways to maintain accurate and detailed documentation to prevent coding denials:
- Implement Standardized Documentation Procedures: Ensure consistency and completeness by adopting standardized documentation practices.
- Train Healthcare Providers: Educate providers on the importance of detailed documentation and how it impacts coding and billing.
- Utilize Electronic Health Records (EHR): Use EHR systems to streamline documentation and ensure that all necessary information is captured accurately.
Regular Training and Education
Regular education and training for staff and healthcare providers is essential to ensuring everyone is up-to-date with the latest coding standards and guidelines.
Organize training sessions to enhance your staff’s skills and keep them informed about the latest industry trends. And regularly update staff on changes in coding standards, insurance policies, and billing practices
Additionally, support staff in obtaining and maintaining relevant coding certifications to ensure a high level of expertise.
There are online courses that medical staff can complete to keep them up-to-date on medical coding, such as through AAPC (American Academy of Professional Coders).
Utilizing Advanced EHR Features
Advanced EHR features can significantly reduce coding errors and improve overall efficiency in the billing process. Harris CareTracker’s Electronic Health Record (EHR) system is designed to enhance the accuracy and efficiency of healthcare operations, particularly in coding and billing; some of these features include:
- Automated Coding Assistance: Built-in coding assistance suggests appropriate codes based on the documentation.
- Real-Time Alerts: Real-time alerts can provide alerts about missing or incomplete information, ensuring that claims are accurate before submission.
- Integration with Billing Systems: Ensure that your EHR system is integrated with your billing software to streamline the claims submission process.
Audit and Review Processes
Regular audits and reviews help identify and correct coding errors before they lead to claims denials. Here are three ways to review your medical billing process to help prevent code denials:
- Conduct Pre-Submission Reviews as part of the regular billing process to catch potential errors.
- Conduct Internal Audits to review coding and billing practices, identify patterns, and correct errors.
- Hire External Auditors to provide an unbiased review of your processes and gain insights into areas for improvement.
Clear Communication Channels
Clear communication plays a vital role in preventing claim denials in healthcare by ensuring accurate documentation, coding, and billing processes. Effective communication between providers, billing staff, patients, and insurance companies helps identify and address potential issues before they lead to denials.
Leveraging Technology to Improve Coding Accuracy
EHR Integration
Integrations with billing and coding systems can create a seamless workflow that enhances accuracy and efficiency. EHR integration ensures patient information, clinical documentation, and coding data flow smoothly between systems. These integrated systems maintain consistency in patient records, coding, and billing, which minimizes discrepancies and errors.
Additionally, providers and other medical staff have real-time access to patient information, which aids in accurate coding and timely claim submissions.
Integrating Harris CareTracker’s EHR with billing and coding systems enhances accuracy with documentation and billing. For example, when a provider documents a patient visit, the EHR automatically updates the billing system with accurate codes and patient information, eliminating the need for duplicate data entry.
Customizable Alerts and Reminders
As we mentioned, EHR software has customizable alerts and reminders that can notify coding and billing staff of potential issues in real time, allowing them to address problems before claims are submitted.
Some important alerts that can help prevent medical coding denials are missing information and coding discrepancy alerts. For example, If there is a mismatch between the documented treatment and the assigned procedure code, the EHR software alerts the coder to review and correct the discrepancy.
Improving Revenue Cycle Management
Unfortunately, it isn’t possible to prevent all claim denials but improving revenue cycle management can help prevent other errors and respond to claim denials quickly and efficiently.
Proactive Denial Management
First, in the case where medical claims denials do occur, proactive denial management is critical for maintaining financial stability and operational efficiency in healthcare practices. Therefore, it’s important to form a dedicated team to handle denied claims and ensure issues are resolved efficiently.
The role of this team is to monitor and analyze denials, engage with payers, and appeal denials efficiently. Here is what this looks like:
- Develop standard operating procedures for handling claim denials.
- Monitor and analyze denials: Use EHR software to track and categorize all denied claims. Use data analytics tools to gain insights into denial trends.
- Engage with payers: Stay informed about payer policies and updates to avoid denials due to changes.
- Appeal denials effectively: Prepare well-documented appeal letters that address the reasons for denial with supporting documentation such as medical records, coding guidelines, and relevant payer policies. Ensure to track deadlines, submit appeals promptly, and follow up with payers until a resolution is reached.
- Improve documentation and coding practices: Use the information gathered from audits and analysis of denials to improve documentation and coding practices to reduce the number of denials.
Performance Metrics and KPIs
Monitoring Key Performance Indicators (KPIs) is essential for evaluating and improving coding and billing performance in healthcare practices. KPIs help identify areas for improvement, ensure healthcare compliance, and enhance overall revenue cycle management. Here are some crucial KPIs to track:
- Claim Denial Rate measures the percentage of claims denied by payers compared to the total claims submitted, highlighting overall issues with coding or documentation.
- Days in Accounts Receivable (AR) tracks the average time it takes to collect payment after a claim is submitted, indicating the efficiency of the billing process.
- The Clean Claim Rate reflects the percentage of claims accepted without errors on the first submission, which can help reduce denials and speed up reimbursement.
- The Coding Accuracy Rate assesses the correctness of coding practices, ensuring claims are submitted with accurate codes.
- Average Reimbursement per Claim monitors the average amount received per claim, helping to evaluate billing effectiveness.
- Patient Payment Collections measures the percentage of patient payments collected relative to the total billed, impacting cash flow.
- Charge Capture Accuracy tracks the percentage of charges correctly billed compared to the services rendered, ensuring all billable services are captured.
Patient Engagement
Accurate patient registration and scheduling are the first steps in the healthcare revenue cycle. Ensuring patient information is correctly entered and verified reduces the risk of claim denials and billing errors.
Utilizing patient portals with EHR software and educating patients on the billing and coding process can significantly enhance the registration experience and minimize misunderstandings.
Patient portals provide a platform for patients to view and manage their appointments, access their health records, and review their billing statements. This keeps patients informed and engaged throughout the revenue cycle.
The patient portal integrated with Harris CareTracker allows patients to schedule appointments, confirm insurance details, and access billing statements online. Before their visit, patients receive a notification explaining their expected copayments and any potential additional costs based on their insurance plan.
After the visit, the portal provides a detailed breakdown of charges and offers an easy way to pay online. By understanding their financial responsibilities in advance, patients are less likely to encounter surprises or lodge disputes over billing.
Conclusion
Preventing coding denials is essential for ambulatory services to ensure financial stability, operational efficiency, patient satisfaction, healthcare compliance, and high-quality care. By implementing effective strategies to reduce denials, healthcare providers can improve their revenue, reduce administrative costs, and provide better care to their patients.
Harris CareTracker’s EHR system provides a robust set of features designed to prevent coding errors and improve the accuracy of billing processes. Automated coding assistance, real-time alerts, integrated systems, comprehensive documentation tools, regular updates, and extensive training resources all contribute to reducing coding errors and denials.
Schedule a discovery call today to learn how Harris CareTaker can improve your revenue cycle by helping to prevent coding denials.
