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Myndshft Blog

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July 12, 2019

The Twin Challenges of Claim Denials and Prior Authorizations

by Patrick | Revenue Cycle Management

Revenue cycle departments at diagnostics labs face some really daunting challenges when it comes to managing patient co-pays and billing. 

We wanted to get a better understanding for the pain points that they face on a day-to-day basis, so we commissioned a market research firm to conduct a series of interviews with revenue cycle executives from across a spectrum of lab services types. This is the second in a series of five blog posts that will reveal the findings from these interviews. To read the first installment, click here. You can also download the full report

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Claim Denials 

For diagnostics providers, complexity is one of the biggest issues in denials management. 

For starters, the volume of health plans can number in the thousands for national labs, so just establishing up-to-date payer rules and price schedules for each payer can be a really taxing process. Every payer will also have its own rationale to justify a denial and how it prefers to communicate that information to the provider. 

But things only get more complicated from here. 

Diagnostics labs typically also deal with huge volumes of low dollar accessions; the opposite of hospitals, which deal with far fewer procedures but charge at higher rates.  

The combination of scale and variability from all these factors can pose big problems for the revenue cycle management team. It’s not possible for them to rework all the denials — there are just too many to review — so they are forced to write off as much as 15%-20% of potential revenue due to denied claims. 

Lack of automation only intensifies the difficulty in addressing these challenges. 

It’s just not practical to manually check claim errors or missing information before they are submitted for reimbursement. It’s also not sensible to sift through all the denials by hand, figure out the problem and manually resubmit if the claim is only for $50. 

Prior Authorizations

Most of the RCM execs interviewed as part of our research also cited the rise of prior authorization requests as a significant challenge. This comes as little surprise when one considers all the things that have to go right for a prior authorization request to be resolved quickly and accurately.

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Siloed systems and lots of handoffs between the rendering diagnostics lab, referring provider, payer and patient need to be connected and synchronized to have a successful outcome.

This kind of challenge is common in other industries but is exponentially more difficult in healthcare. Factor in privacy laws, regulations and the small sums being collected by diagnostics lab, and it often doesn’t justify all of the additional effort to make the plumbing work. 

Time, or lack thereof, also plays a part. 

Because orders are often placed shortly before testing must begin, there isn’t enough time to check benefits eligibility or to determine whether a prior authorization is needed. Instead, the revenue cycle staff is forced to “fly blind” and submit claims that haven’t been properly evaluated. The result being high denial rates from payers. 

 

Conclusion:

Huge volumes of low dollar accessions, fluctuating payer rules, a Byzantine prior authorization process, and a lack of time to verify eligibility prior to service conspire to siphon revenue that diagnostics labs should rightfully collect. 

This revenue leakage — and the time-wasting activity that accompanies it — can be greatly reduced by automating processes like eligibility verification, patient financial responsibility, and prior authorization.    

To download our entire report, “Diagnostics Lab Execs Reveal Their Biggest Revenue Cycle Challenges,” click here

To learn more about how Myndshft automates and accelerates patient intake and revenue cycle management, please click here