How Denial Management Improves Revenue Cycle Management


How does denial management improves revenue cycle management? Revenue Cycle Management (RCM) is the process of managing and monitoring a hospital’s revenue cycle, which is the period between a patient receiving care and payment being received. This includes claims submission, negotiating rates with insurance companies, and collecting outstanding balances.

The goal of RCM is to reduce bad debt while maximizing reimbursement. Denial management is a specialized form of RCM that aims to minimize the number of denied claims.

It is used to prevent fraudulent claims from reaching the insurance company. Denials’ goal is to prevent accidental and intentional paying for unnecessary care. Here are ways in which denial management improves the revenue cycle:

1. Denial Management Improves The Relationship with Insurance Companies

A hospital can improve its relationship with an insurance company through denial management. Denial management allows the hospital to provide more information to the insurance company about a past claim.

This often involves sending a copy of tests and billings submitted for prior claims. As a result, hospitals are more likely to get paid on time and avoid lost revenue due to billing disputes and unpaid claims. Denial management also eliminates the stress of explaining why the lost revenue is due to an error.

2. Denial Management Improves Submitting Claims

Denial management reduces the chances that a patient will be denied an insurance company’s coverage or for payment of a claim. It does so by preventing patients from making unnecessary claims, which can lead to unnecessary anxiety and loss and costs for the hospital if paid out of pocket.

It also prevents claims from being paid when they are not needed. In addition, denial management prevents fraudulent claims from being submitted and therefore paid. As a result, revenue cycle managers can better manage the budget, plan for upcoming expenses, and provide valuable services to patients.

3. Denial Management Prevents Fraudulent Claims

Revenue cycle management is used to prevent fraud in the hospital setting by minimizing patients’ ability to submit claims that are unnecessary or should not be paid.

Many of the same tools used in RCM can be used to prevent fraudulent claims from being paid. Denial management companies can perform numerous checks on claims before they are paid to prevent fraudulent claims. For example, denial management companies can credit a claim when a patient is given the wrong medication or when the wrong procedure was performed.

4. Denial Management Complements Revenue Cycle Management

Like many revenue cycle management programs, denial management is not a stand-alone measure by which the hospital will achieve a specific ROI or positive outcome.

Instead, it must be managed along with other measures such as prior authorization, charge capture, and care coordination. This ensures that all steps of the RCM process are evaluated and that no gaps are left in between where fraud could occur. This allows a hospital to process claims and collect reimbursements faster while reducing the amount of money they spend on unpaid claims.

5. Denial Management Ensures Revenue Cycle Management’s Effectiveness

Revenue cycle management is how a hospital performs financial aftercare to ensure all payments are collected, no fraudulent claims are paid, all billing documentation is correct, and all out-of-network services have been pre-approved by the insurance company. It is the hospital’s way of ensuring that it was compensated for all services delivered to a patient.

Denial management helps to ensure the accuracy of claims and bills before payment is received so that these claims are not denied after payment. Denial management is an important aspect of an effective revenue cycle management program because it ensures that all bills, including those for out-of-network services, are paid on time and handled correctly.

6. Denial Management Helps to Reduce Bad Debt

Bad debt is not necessarily a bad thing. It is simply a term that refers to the cost of unpaid claims. Bad debt is the amount of money lost due to unpaid claims, and these costs can be substantial.

Proper denial management can significantly lower bad debt by preventing it from being paid in the first place. Denial management also decreases unpaid claims and prevents expenses for collection efforts, late charges, and other costs associated with filing for payment.

Conclusion on Denial Management

Many hospitals have started utilizing denial management to improve their revenue cycle and prevent losses due to unpaid claims. There are many ways in which denial management improves the revenue cycle.

When used along with other forms of revenue cycle management, denial management can help a hospital ensure that all claims are paid correctly, canceled before payment is made for fraudulent claims, and care is provided and billed only when needed.

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