Prevent Revenue Loss Through a Better Denial Management Process in DME Billing

Unaddressed denials can silently drain your DME business’s revenue. It’s like a slow leak, unnoticed until it’s too late. With constant changes in documentation and regulations, effective denial management is crucial.

Is denial management a top priority for your DME business? Let’s discuss how to tackle this complex process and safeguard your revenue.

Understanding Denial Management in DME Billing

Denial management is the organized process of identifying and analyzing claims and reprocessing them after being denied. As a DME billing practice, it involves correcting any mistakes during the first claims process, making sure to adhere to all payer guidelines, and pre-empting any problems that may cause denial to occur.

A properly managed denial management process not only minimizes lost revenues but also increases efficiency in the billing process. According to a survey by the American Medical Association (AMA), the average cost to rework a denied claim is around $25. With about 65% of denied claims being recoverable on the first appeal, robust denial management could directly improve the revenue outlook for DME providers

Common Reasons for Denials in DME Billing

The first step in an effective denial management process is to analyze and identify root causes. Among the common causes of claim denials in DME billing, the following are discussed below:

• Incomplete or Incorrect Documentation: Missing required documentation, such as physician prescriptions, and certificates of medical necessity (CMNs) can result in denials.
• Lack of Prior Authorization: Many DME items require prior authorization. If no such approval is attached to a claim, such claims will probably be denied.
• Incorrect or Expired Codes: DME billing is based on HCPCS codes. Incorrect or obsolete HCPCS codes result in claim denial.
• Insurance Eligibility Issues: Submissions of claims on patients without ascertaining the availability of current insurance and eligibility before submitting claims becomes a headache when the coverage has been changed.
• Non-Compliance with Payer Guidelines: Each insurance company has its rules, and non-compliance to those specific rules is one of the most common reasons for denial.

Denial Management is an Important Prevention Measure for Revenue Loss

The revenue impact of claim denial is enormous as providers lose considerable revenues because claims may need to be corrected and resubmitted for reimbursement. A well-defined denial management process can help reduce revenue loss by increasing:

• Cash Flow: There is minimal disruption in cash flow, and financial bottlenecks are avoided with timely denial management.
• Efficiency in Billing: A defined denial management process ensures better workflow efficiency and reduces the time lost in error-prone processes.
• Patient Satisfaction: Denial management ensures claims are processed correctly to avoid cases of patients receiving surprise bills, thus creating trust.

Denial Management Strategies in DME Billing

Denial management needs both preventive and corrective measures to be effective. Here are some best practices to help you minimize denials and revenue retention.

Verify Eligibility Benefits for the Patient

Obtain verification of the patient’s insurance coverage before delivering DME services. Verify which benefits the DME needs will be covered under the patient’s plan. The more detailed the eligibility and benefit information obtained during verification, the fewer denials that are attributed to coverage problems and the more responsibility the patient will take for their financial responsibilities.

Documentation Improvements

Documentation is a frequent cause of denials. Improve your documentation practices in the following areas:

• Complete and sign all forms, including the Certificate of Medical Necessity (CMN).
• Each support document should validate the medical necessity of the related DME item.
• Audits documentation processes periodically to verify that payer requirements are met.
• Accuracy in documentation does not just cut down on denial rates but increases the chances of a facility getting its claims processed faster, ensuring faster reimbursement of claims.

Create a Claims Resubmission Process

To control revenue, you should have a standardized procedure to resubmit denied claims. Make sure your resubmission process includes the following:

• Identify Why Claims Were Denied: Before resubmitting, find out why it was denied and correct it appropriately.
• Secondary Review: Secondary review will help catch issues at the resubmission time.
• Follow up at the Right Time: Payers set specific timeframes for the resubmission. Therefore, follow up on it in due time to receive reimbursement.

Monitor the resubmitted claims periodically to identify trends and what to change in the processes so that the same denials do not recur.

Staff Education and Accountability

When it comes to denial management, there is a need for adequate staff training. Coach your staff continuously about:

• Payer-specific billing guidelines and requirements
• Proper techniques in documentation and coding
• Common reasons for denial and how to prevent it.

A well-informed team is best suited to process claims correctly the first time around and, thus, minimize the risk of denial and have a smoother revenue cycle.

Monitoring Denial Management Success using KPIs

To measure the effectiveness of your denial management process, track key performance indicators regularly. Some critical KPIs for DME billing denial management include:

• Denial Rate: Percentage of the claim denied at the first pass. A lower rate means denial practices are effective.
• First-Pass Resolution Rate (FPRR): This expresses the number of claims approved on the first submission, representing billing efficiency.
• Days in Accounts Receivable (A/R): These represent the average days that it will take for the claims to be paid. Fewer A/R days represent a faster revenue cycle.
• Appeal Success Rate: The percentage of appealed denied claims paid. A high rate of appeal success indicates an efficient appeals process.

Many practices lack the capital or know-how to implement these strategies. In these cases, the best solution is to outsource DME billing services to a specialized service that will manage the entire process. Not only is this cost-efficient but also it delivers better results than in-house DME billing denial management. A better denial management strategy can turn your DME billing process into a secure, efficient, and financially strong part of your business operations.