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The most compelling reason to recoup more revenue from insurance payers is that by doing so, patients pay less and stick with treatment longer.
Reducing claim denial rates are good for your agency’s bottom line. Higher revenues mean behavioral health, mental health, and substance use treatment agencies can continue to stay in business and help people heal. However, the most compelling reason to take steps to recoup more revenue from insurance payers is because by doing so, patients pay less.
When patients pay less out-of-pocket, they stick with their mental health treatment plans longer and have a less stressful experience. Paying less for mental health literally saves lives but people are often unable to find a provider who accepts their insurance.
These barriers to care have resulted in suicides and drug overdoses skyrocketing. In Minnesota alone, suicide rates have risen by 79% over the last two decades. The Mental Health Parity and Addiction Equity Act of 2008 was a great step forward to ensure that insurance companies cover mental health services. Unfortunately, a decade later, there continues to be a growing gap between mental health and medical coverage with out-of-pocket expenses for behavioral health growing 13 times faster than all inpatient care.
Before you can reduce your claim denial rate, you have to know what it is. We built a calculator to help you. All it takes is 5 easy steps!
Use Our Denial Rate Calculator It’s easy-to-use and a quick way to find out how much you could be saving!
Grab Your Accounts Receivable (AR) Report It should be in your internal accounting system. Or, if you use an external biller like BillCare, they should be able to send it to you if you need a copy. Enter it into our calculator.
Identify Your “Total Receivables” This is the total amount you have billed. It is not what you have already been paid. Enter it into our calculator.
Find Your “Over 90 Days Receivables” Total It may be identified as “>90 days.” We use this number because after 90 days, the probability of you being paid shrinks significantly. Enter it into our calculator.
Highlight Your “Over 365 Days Receivables” You may need to break this out from your “greater than 90 days” total. Enter it into our calculator.
Now you have your claim denial rate!
If it’s more than 10%, something isn’t quite right. While you should never expect to get your rate down to 0%, it should be close if your agency is financially healthy.
Behavioral health agencies, like hospitals, struggle with the same root causes behind denial write-offs. Here are seven of the most common. Use this list as a checklist to see which might be causing issues for you. Once you pin down what reason, or multiple reasons, your rate is what it is, you can begin implementing process and system changes to address it.
Utilization Accounting for 25% of denials, insurance payers deny claims that they deem unnecessary. To solve: Get pre-authorization from the insurance provider before prescribing a course of treatment, especially when you’re unsure if it will be covered.
Coverage Making up 21% of denials, this number includes both real and assumed errors about what’s covered by insurance, or not. This is especially true if there are multiple payers involved. To solve: Track your patient’s symptoms to the source to ensure you’re billing the right payer from the beginning.
Contractual Misunderstandings Coming in at 17% of denials, these are caused by payer underpayments, confusion about per diems, bundled payments in error, carve-outs, stop-loss limit, or inaccurate fee schedules. To solve: Make sure your staff is trained to know about and adhere to filing and appeals deadlines. Even better, automate how you track these deadlines to make sure you don’t miss any.
Coding and Billing Mistakes At 15% of denials, these mistakes are caused by things like outdated patient information, filing errors, or typos when codes are entered. To solve: Check that all your data systems are regularly updated, your codes are correct, and software coding errors are fixed.
Submission and Re-Billing Errors Also at 15% of denials, this category includes errors such as not including the primary EOB or missing medical records or software bugs. Often there are mistakes at the clearinghouse that cause issues too. To solve: Communicate consistently with the clearing house, include primary EOB, and make sure insurance and medical records are updated and in place.
Cash Posting One of the easiest categories to fix, unapplied cash makes up 4% of errors. To solve: Regularly check if you have unapplied cash from overpayments and refunds or unspecified funds.
Process Delays At 3%, delays may not seem like an important part but simply following up with payers can help you recoup this revenue. To solve: Follow up with payers that are taking a long time to process your claims to see if the challenge is related to the claim or something else happened.
Between 2011 and 2019, denial write-offs increased by 79%. However, of claims rejected by insurance payers, only 35% are reworked and resubmitted. Paying attention to your claim denials can help you increase your profit margin and help your patients heal.
Focusing on the administrative side of your business can seem like it’s taking too much time away from your mission of helping people heal. Yet when you are able to reduce claim denials, you’re looking out for your patients’ financial wellbeing which often plays into their mental health. Partnering with an external billing service, like BillCare, can reduce how much time you spend chasing down payments while also boosting your agency’s finances.
