blue connect dots

Myndshft Blog

blue connect dots

January 23, 2022

Claims Denial Prevention in an Age of Prior Authorization

by Developer | Healthcare Administration, Revenue Cycle Management


Claims Denial

The prior authorization process is a textbook example of the law of unintended consequences.

Created for sound reasons — as a utilization management tool for healthcare insurance companies to control costs and protect patients from surprise bills —  it has unintentionally paved the way for a corresponding surge in administrative burdens, claim denials and rework. All of which have taken a toll on the revenues of healthcare providers. Not to mention the psyche of revenue cycle teams and patients.   

The obvious answer to reducing claim denials and ensuing denial write-offs is to prevent them from occurring in the first place. But denial prevention is not that easy. And the volume and velocity of denials generated by prior authorizations only complicates matters.  

Getting Started 

To create the optimal denial management strategy, you first need to determine your current denial rate and the root causes that contribute to the problem. 

If you are a CFO or otherwise involved in medical billing, you’re probably familiar with how to calculate your denial rate. If not, simply divide the total dollar amount of the claims submitted by the dollar amount of the claim denials. 

If you are part of a medical practice, you’ll likely average denial rates between 5-10% (source: MGMA). If you are part of a medical category that experiences a disproportionately large number of prior authorizations — like genomic labs or specialty pharmacies — the denial rate may be higher. 

The Challenges 

Your claim denial rate will be influenced the most by missing, incomplete or incorrect data (like patient ID numbers or CPT codes), patients with ineligible or terminated insurance coverage, and prior auth requests that call into question the medical necessity for a prescription or treatment. The latter being the most time-consuming and convoluted to remedy due to: 

  • A lack of standards governing the prior authorization process.
  • The vast amount of unproductive manual administrative work involved on both the provider and payer side. 
  • Inconsistent, always-changing payer rules pertaining to eligibility verification and prior auth.  

The revenue cycle challenges these present can’t be understated, especially for alternate sites of care like diagnostics labs and home infusion services that have to work through a referring provider.  

Understanding Your Options   

Once you’ve calculated your denial rate and identified some of the major factors contributing to it, you can evaluate your options as part of a denials management strategy.

Option 1: Try to improve the efficiency of your manual processes

The first place that revenue cycle management teams often start is by trying to improve the status quo. 

Some will outsource all or part of the medical billing function to a lower-cost service. The process will still be largely manual and prone to human error, but the cost for each person performing administrative tasks is theoretically reduced. 

Another approach is to appoint individuals on the revenue cycle team to become the resident experts for a particular carrier, responsible for staying on top of fluctuating payer rules for specific insurance companies. Of course, if a team member assigned to a monitor and service a particular payer leaves the team, the institutional knowledge leaves with her. 

Some healthcare organizations create prebill denial units; specialized teams tasked with identifying and working claims that are particularly susceptible to denials. This group flags vulnerable claims and prioritizes them within a workflow. The weakness with this strategy is that revenue cycle personnel within this specialized unit are usually still left to contact payers the old fashioned way — fax, phone, email — if they need to track down codes or provide additional information. 

Most healthcare providers that focus on improving the efficiency of manual processes usually come to the realization that it’s still a reactive strategy at best. It may improve collections a bit on the back end but any gains are hard-fought. This strategy still won’t proactively reduce claim denials or generate more clean claims.   

Option 2: Digitize the current prior authorization process

For those health systems and practices looking to at least liberate themselves from faxes, phone calls, and email, digitizing claims management can be a step forward in denials prevention. 

This might involve something as simple as a web portal that allows providers to create, validate, and submit healthcare claims electronically. It may also aggregate forms and paperwork from all the health plans, and provide some rudimentary tracking capabilities.

While this option is a step up from option #1, it is still hamstrung by some pretty serious deficiencies. Foremost among them is the notion of a portal itself. 

At the exact time that healthcare organizations are clamoring for interoperability, connectedness, and coherence, free-standing portal solutions check off none of the boxes. They introduce yet another system that medical billing specialists need to master, and often disrupt workflows by requiring users to jump in and out of applications, cutting from one and pasting to another. 

Nor are these solutions sophisticated or integrated enough to address the complexities involved with a typical prior auth request. To do so they would need to process transactions in real-time; integrate with essential clinical and financial systems, connect directly with payers, and incorporate a comprehensive payer rules library. Most have none of these capabilities. 

Option 3: Automate part of the prior auth process and leave part of the process manual

Automating even part of the prior authorization process will usually yield dividends as part of a denials management strategy.   

Providers will often start by automating eligibility and benefits verification checks. By determining at the point of service whether a patient is eligible for a prescribed treatment, patient access specialists can resolve potential conflicts upfront that could otherwise trigger a denied claim. They can also instantly access plan and patient details like co-insurance, copay, deductible, insurance ID, and date of birth.

Some providers will extend upon these eligibility capabilities to also be able to determine patient financial responsibility at the point of care. This enables them to better collect payment upfront if necessary or extend financing options to improve the likelihood of being reimbursed. 

When vetting these kinds of solutions, you’ll want to focus on criteria such as integration capabilities with other systems, the number of payers and health plans to which it connects, and the response time. The ideal solution being one that can access most covered lives, integrates with your EHR of LIMS, and responds within a second or two. With patient financial responsibility solutions, you’ll also want to determine how fresh the data is and if the calculations are merely estimates or actual monies owed. 

Option 4: A fully automated and orchestrated electronic prior authorization solution 

As a final step to option #3, providers can add automated prior authorization. Doing so builds on eligibility and patient financial responsibility capabilities, but also adds functionality like the ability to automatically identify whether prior authorization is required and to determine the optimal submission route. 

This requires a fully-integrated, end-to-end approach that includes:

  • A master patient index (MPI) that can accurately, programmatically identify each unique patient. 
  • Direct, real-time connections to most payers in order to automatically check eligibility, verify benefits, and calculate patient financial responsibility.
  • A comprehensive payer rules library that synchronizes eligibility and prior auth rules, so you always have the most up-to-date data. 
  • Integration with core health IT systems like EHRs, LIMS, HIS, and revenue cycle solutions. 
  • A sophisticated AI engine. 
  • A self-learning system that dynamically updates automated workflow and rules engines based on the actual responses and results from submitted prior authorizations.  
  • Future-proofed technology that is blockchain-enabled. 
About Myndshft

Myndshft is a software-as-a-service that automates and simplifies time-consuming healthcare administrative tasks associated with prior authorization, eligibility verification, and patient financial responsibility, freeing providers and payers to concentrate more fully on patient care again. Myndshft was founded in 2015, and works with leading providers, payers, and health information exchanges.  

See Also:

The Twin Challenges of Claim Denials and Prior Authorizations

Why Automation is the Key to Fixing Prior Authorization

Diagnostics Lab Execs Reveal Their Biggest Revenue Cycle Challenges