Denial Management _ Medical Billing

Denial Management is an important part of the medical billing services or revenue cycle management services.

It is a known fact that a medical facility gets it's revenue from two different sources:

a) Insurance reimbursement
i) Primary insurance
ii) Secondary insurance
iii) Tertiary insurance
b) Patient payment

At the time of patient's visit to the medical facility, co-pay is collected from the patient. After the encounter, claim or invoice is generated by the billing staff of the medical facility or the medical billing services provider which is sent to the primary insurer, either electronically or by paper.

The claim is processed by thoroughly checking the details, by the payer. If all the details are to their satisfaction, part of the allowed amount is paid irrespective the claimed amount and balance is transferred either to the secondary insurance or patient as the case may be.

If the details provided in the claim are not satisfactory, the claim is underpaid or denied by them.

Hence denial management is a subsection to Accounts Receivables of any medical facility. It is the methodology of managing denials from payers. There are three key areas to effective denial management.

1. Prevention
2. Analysis
3. Tracking and Trend Management.

1. Prevention: Prevention focuses on actions that can be taken upstream in the patient encounter to prevent denials from occurring in the first place. Prevention can be introduced anywhere in the patient encounter such as: Pre-admit/Pre-registration, Scheduling, Admit/Registration and Billing.
2. Analysis: The process of analyzing and aggregating similar denials is strategic in denial management. Analysis and segregation is a forerunner to follow-up process and hence it is an important step in denial management.
3. Tracking and Trend Management: Besides keeping a track of the denial trend from payers this step also involves tracking the payment patterns from various payers and setting a mechanism to alert when a deviation from the normal trend is seen.

It is important in understanding the causes of claim denials and enhancing long-term efficiency and drastically reducing lost revenue. Many practices now choose to use automation for denial management.