Denial Management: Outsource or Work In-House?

For the typical health system, as much as 3.3% of net patient revenue was put at risk due to denials, which is an average of $4.9 million per hospital. Even though an average 63% of those claims were recoverable, that effort came with a price tag of roughly $118 per claim, or as much as $8.6 billion in appeals-related administrative costs according to Healthcare Finance News.

Insurance denials of all kinds continue to plague the healthcare provider:

denial management

Denials are a double-edged sword for the hospitals. The extra cost associated with appealing the claim and when a positive appeal outcome cannot be secured the provider often ends up writing off the account balance.

Should hospitals try to work with denials and appeals within their own business office, or is it more cost efficient to outsource the appeals to a denial specialist?

In-house Denial Management:

The resources needed to appeal claims in within hospital’s business office can be extensive. The following departments and staff will be needed to create a successful appeals rate:

A unit dedicated to working and appealing all denials with an automated system to track and trend denials

Case Management
Specially trained registered nursing staff for medical necessity denials

Staff dedicated to work edits and send out re-bills

Certified medical coders dedicated to reviewing coding issues

Physician Office
The office staff will need to cooperate in a review of their records to determine if a clerical error on their part caused the denial

Outsourced Denial Management:

Outsourcing your denials to a specialized vendor can allow your employees to focus on billing, collections and ultimately denial prevention.

Once the decision has been made to outsource, there are certain elements that will be the key to a successful denial overturn rate:

  • Consider the vendor part of your organization.
  • Obtain correct system access and create processes that will allow the vendor staff to be effective.
  • Educate all departments on the need to cooperate with the vendor.
  • Expect the denial vendor to be part of the goal of lowering your denial rate.
  • Contractual terms of the vendor payment should be value based.

Working the denials in your own business office or outsourcing them to a denial vendor? The choice is yours, just make sure you have a solid plan!

A blue and orange logo with a sun in the middle.

Sunlit Cove Healthcare Consultants

We provide management and consulting services to help healthcare businesses run efficiently. Navigating the dynamic and complex revenue cycle management is a challenge for many health plans, health care vendors, and providers. Our consulting services are available to assist with your day-to-day operations and provide expertise in growth and change management. We manage all aspects of your enterprise from the development of the revenue cycle management process to the completion of your business cycle.

Related: Audit and Reconciliation