In the ever-evolving landscape of healthcare administration, Revenue Cycle Leaders are facing a daunting challenge: denials management. This complex and often costly process has become a top concern for healthcare organizations across the country. A survey commissioned by AKASA, a healthcare operations company, sheds light on the extent of this issue.

Over 75 percent of Revenue Cycle leaders surveyed reported that denials management was the most time-consuming task for their organizations. This revelation underscores the critical role that effective denial management plays in the healthcare revenue cycle. In this blog post, we will delve deeper into the world of denial management in medical billing and explore why it has become a primary focus for healthcare RCM leaders.

Denial management is the process of identifying and addressing claim denials from insurance companies and other payers. When a claim is denied, it means that the healthcare provider will not receive the anticipated reimbursement for services rendered. This not only impacts the financial health of the organization but can also adversely affect the patient experience.

The survey conducted by AKASA involved 556 chief financial officers and revenue cycle leaders at hospitals and health systems nationwide. Respondents were asked about the most time-consuming revenue cycle tasks for their organizations, and they could choose up to five tasks from a list of 15.

An overwhelming 76 percent of respondents identified denial management as their organization’s most time-consuming task. Denial management is not only labor-intensive but also expensive. It requires dedicated staff and resources to investigate, appeal, and rectify denied claims. Moreover, unresolved denials can result in delayed revenue, affecting the organization’s cash flow.

Denial rates have been on the rise in recent years, negatively impacting revenue performance and the quality and accessibility of patient care. While many claim denials are avoidable and can be prevented through meticulous billing and coding practices, some arise from prior authorization issues, which healthcare providers have limited control over.

The survey also revealed that prior authorization is another significant contributor to the time-consuming nature of revenue cycle management. Sixty percent of respondents reported that dealing with prior authorizations was a laborious task. The burden of prior authorization is not confined to RCM leaders; it extends to physicians as well. According to the American Medical Association (AMA), 88 percent of physicians describe the burden of prior authorization as high or extremely high. This medical billing denial management process demands significant time and resources, with practices dedicating almost two business days each week to navigate the complexities of prior authorization.

In light of these challenges, revenue cycle leaders are seeking ways to streamline their processes and reduce the time spent on manual tasks. One promising path to achieving this goal is automation. A past survey commissioned by AKASA found that using automation for revenue cycle operations could lower health systems’ cost-to-collect by 0.25 percent. Automation can enhance the efficiency, accuracy, and overall effectiveness of the medical billing denial management process.

A report from the Council for Affordable Quality Healthcare, Inc. (CAQH) reinforces the potential benefits of automation. It reveals that automating claims management processes could save healthcare providers nearly $25 billion annually. These cost savings can be redirected towards improving patient care, investing in technology, or expanding services.

Denial management has emerged as the most time-consuming task for revenue cycle leaders in healthcare. This not only consumes valuable resources but also poses financial risks and affects the patient experience. Prior authorization, insurance follow-up, and other revenue cycle tasks also contribute to the workload. However, there is hope on the horizon in the form of automation. Embracing automation technologies can streamline the medical billing denial management process, reduce costs, and ultimately allow healthcare organizations to focus on what truly matters: providing high-quality care to patients.

As healthcare continues to evolve, RCM leaders must adapt by embracing innovative solutions that enhance efficiency and reduce the administrative burden. By doing so, they can ensure that denials management no longer dominates their time, allowing them to allocate resources more effectively and improve the financial well-being of their organizations.

Denial management in medical billing is a complex yet essential aspect of healthcare administration. Revenue cycle leaders must continue to explore ways to optimize this process, leveraging automation and best practices to mitigate the challenges posed by denials and prior authorizations. In doing so, they can lead their organizations toward greater financial stability and improved patient care.