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Denial management- understanding definition, types, challenges, and beyond


Claim denials are one of the prime reasons millions of dollars are lost every year. To reduce and manage denied healthcare claims, providers often look for better options in the market. However, they fail to realize that they already own the best tool-denial management.
Denial management can be integrated or availed in the facility itself, and it does not require looking for extra solutions. A strong denial policy and affirmed procedures often lead to a reduction in medical denials.
Denial management- definition
The process of claim denial management is formed of two parts-first is the identification of denial, and the second is its investigation. Together, these two steps form a strong basis for the performance of denial’s root cause analysis. This also incorporates monitoring denial patterns and uncovering trends by insurance careers. As the final step, claims denial management should seek to redesign the process of the system to prevent and eliminate the risk of denials in the future.
There may be different reasons why a claim is denied. Until a provider investigates it, the reasons and the scope of improvement cannot be visualized. For instance, a no payment denial may sound an alarm and should be investigated using the system, leading to better optimization of your revenue cycle.
Types
Till now, we know that denials lead to a loss in money. But to know more about the process, you need to realize the types of denial management, which is vital to prepare the strategy as per the type of denial.
The few main types of denial management are:
Hard denial – a written-off revenue loss resulting from a claim denial which also requires an appeal
Soft denial – a soft version where the loss can be compensated if the corrective action is taken. No appeal is needed in this denial.
Clinical denial is a hard denial in which the denial is due to a lack of revenue for mandatory medical facilities.
Preventable denial is also a hard denial type where there is a lack of practice. This is due to invalid codes used or ineligibility by the insurance.
Admin denial – this soft denial occurs when the patient often sends a notification to the provider about why and how the claim is denied. An appeal is possible to rectify this type of denial.
Prerequisites for a clean claim
Using the process of denial management, healthcare providers can streamline clean claims to a large extent. They can address the payer about the prerequisites to avoid denials. A clean claim usually:
Includes affiliation and identifying numbers along with the details of the health professional, health facility, medical equipment provider, and home health care provider
Is capable of identifying the best health plan for the subscriber
Takes into account recovered services for an eligible individual
Has required information that can help with prior authorization where it is required
Contains all additional documentation as per the rendered services in the health plan of the claim
Uses the best technological tools and accepted system, taking into account the source coding

Challenges
Denial management might appear to be easy on paper. But it comes with lots of challenges. First, it is important and complicated to calculate the denial rate. Secondly, it takes a lot of effort to investigate every denial on the provider’s part. Some other reasons can cause a hindrance in your revenue cycle. Some of these include:
Lack of trained staff who can help in and are capable of using the advanced system software
Shortage of new tech tools such as machine learning, artificial intelligence, and automation
Lack of finances for developing, integrating, and using a full-fledged digital denial management system

Conclusion
Though there are many obstacles in the road to a successful system, there are also hopeful points to consider. The management of revenue is the foremost advantage many companies are eyeing. Then, the factors like the increase of conviction amongst patients, better patient care, digital healthcare provision, and better medical claims provide a way to improve and face the challenges.


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