iPatientCare Blog - How to improve Medical Claim First-pass acceptance ratio

How to improve Medical Claim First-pass acceptance ratio?

Practices have to go through rejections even though they have excellent billing staff. The claims are rejected by the insurance company due to erroneous inputs inpatient or insurance information.

Some of the most common claim rejection reasons are:

  1. Adding or missing proper diagnostics (ICD and CPT codes) – Sometimes having incomplete and invalid codes or codes that do not match the treatment rendered by the providers.
  2. Waiting for a long time to file the claim – Most insurance companies allow 60-90 days from the time of service to file a claim. When claims are filed after a long gap from the date of service, they get rejected.
  3. If you provide two services in one day – There is a policy of ‘One service per day’ for behavioral health. This means that even if a patient has ten sessions of therapy, the practice will not be paid for the second session if two are done on the same day.
  4. When the patient does not acquire a referral from a provider – For some insurance plan, it is essential to get a referral from the patient’s primary care provider (PCP) before the service is rendered. The referred provider should not provide the service before the referral authorization is confirmed by the insurance company, or else the claim will be denied.
  5. The practice loses track of sessions – The authorization is usually granted for a limited number of services/appointments. When you lose track of how many sessions are provided or how many appointments were approved, then you might not get paid for those sessions.
  6. The Authorization Timed-out – The time frame for authorizations is as short as 30 days. So, in addition to authorizations being for a specific number of sessions, they are also time specified.
  7. If a patient changed his/her Insurance Plan – If a patient changes his or her insurance plan, then the patient must render a new plan and get new pre-authorization. Failing to do so will lead to claim rejection.
  8. Services rendered at the wrong location – It is important for the providers to make sure that all locations, wherever the patient was served are enrolled with all insurance companies they work with.
  9. A patient has an out-of-state Insurance Plan – If the patient has an out-of-state insurance plan, then the claim can be denied depending on the patient’s specific plan.

In reality, most practices struggle to come close to the clean claim rate. There are approximately 20-25% claims that are rejected monthly. Most practices still do not know what clean claims rate is. Many practices keep resubmitting the rejected or denied claims multiple times, resulting in loss of revenue for the practice. To improve the first pass acceptance rate, there should be an improvement in Key Performance Indicators such as net collections and days in AR.

What are the damages for the rejected claims?

The hidden costs of these claims are when the biller is unable to keep up with the volume of rejections and denials and simply ignores those. On another hand, the cost of writing off claims is often missed because the accounts receivables appear clear and the days in AR also fall within industry standard. This habit or practice of ignoring rejected claims has a direct impact on the net collections of the practice.

How to reduce the cost of unclean claims?

There is always more focus on denial management after claims have been processed. Focusing first on rejected or denied claims can improve overall clean claims. Always try to monitor these claims on a weekly basis. Once there is a visible improvement, your practice may give more gap and monitor it monthly. Some ways to identify problem areas and reduce the costs of rejected claims are:

  • Review Clearinghouse reports and validation reports before sending the claims.
  • Make sure that claim scrubbing tools are set up in a proper way so that it can catch as many rejections and prevent it as soon as possible.
  • Identify top rejections by dollar amount and volume
  • Look for patterns in rejections such as ICD codes, CPT codes or modifiers.
  • Create practice-wide awareness showing how it affects the whole organization financially.
  • Also, make sure the practice management system works effectively when it comes to coding audits, check on eligibility, and demographic edits.

What happens when one accesses practice management systems?

The software should provide all the required details to measure clean claims ratios (not same as first-pass ratios) when accessing the practice management systems. The first pass-ratios refers to the ratio of claims that makes it through a clearinghouse and are passed on to the payors. Of course, there is no guarantee that those claims will be paid. It is helpful to get a detailed description of how companies measure clean claims and what tools they offer because clean claims and first-pass ratios are defined differently.

How to avoid claims rejections and denials?

All the coding errors are supposed to be checked beforehand, as the clearinghouse does not always catch hold of coding errors. Therefore, make sure the medical billing software is compliant with current regulations so that there is no room for errors. This is where iPatientCare billing software can be extremely handy because it is updated and compliant with all the current healthcare regulations. iPatientCare’s practice management software too is highly recommended as it can easily look for trends in the percentage of claims denied and common reason leading to rejections.

Another way to avoid rejection in claims is to have updated patient information. This is done by making sure that each time a patient visits, he/she fills the form with the right type of treatment information. It should also be kept in mind that insurance payors require timely filing and can deny claims based on time limits, so it is extremely important to process claims reliably and quickly. Clearing claims in first go reduce cost and increase revenue which is the ultimate goal in surviving everchanging healthcare system, but at the same time should not rush into it and create unnecessary problems for which your practice can end up paying heavily.


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