New
ACA Claim Denial Rates: What’s Behind the Numbers
Getting multiple claim denials from patients with ACA insurance plans? It’s not just you. These plans are known for higher denial rates.
According to an older study conducted by Becker’s Hospital Review, up to 80% of medical bills contained at least one error. Even with new software and RCM processes, it’s widely cited that between 10-15% of initial claims are denied by payers.
Even taken individually, claim denials can be costly. It’s estimated that the average denial costs the provider between $25 for simple outpatient claims and $118 for inpatient claims to correct and resubmit. Even small errors, whether it’s patient information, coding, or clinical documentation, can trigger a denial.
A clean claim is a medical billing document that contains complete, accurate data. It meets payer requirements and can be processed on its first submission. A claim can contain quite a few details, including patient information, valid insurance data, appropriate CPT/ICD codes, and supporting clinical documentation. Different payers have specific payment rules such as formatting standards, filing timelines, and prior authorization requirements.
Clean claims pass payer edits and clearinghouse checks without triggering requests for correction or claim denials. A dirty claim, on the other hand, contains errors or missing data. It will be rejected by payers and sent back to the health care provider’s billing department. The billing team must then identify and correct the errors and resubmit the claim. Fixing dirty claims costs money and delays reimbursements, leading to an unstable flow of revenue.
Creating a clean claim sounds simple enough, but different payers have specific payment rules such as formatting standards, filing timelines, and prior authorization requirements. These payer-specific rules are subject to change, so your admin and billing team also need to look out for notifications about changes to claims submissions.
That said, you don’t want the billing team to overcorrect. Sending a detailed email to the payer for every single claim and then waiting weeks to hear back before submitting the initial claim isn’t a recipe for success, either. A high clean claim rate and efficiency in the number of claims submitted are key indicators that your billing team is doing their job well.
At the same time, you should be able to leverage different kinds of provider resources for your patients while also forecasting the financial impact. The best revenue cycle management services can help you answer these kinds of questions:
The typical medical claim includes a huge amount of information. There are many opportunities to make mistakes.
The most common include:
Many of these errors can be avoided. However, with the huge amount of data to be entered, it’s easy to make mistakes or overlook issues. Medical billing workflows are only getting more complicated. It’s come to the point where, in many practices, it’s simply not possible to manage healthcare revenue cycle operations manually.
The patient’s name, date of birth, insurance details, and contact information should be confirmed before services are provided. Also, coverage information should be updated regularly to prevent billing inactive or incorrect insurance plans.
Insurance information should be confirmed before each appointment to ensure coverage is active. Prior authorization for procedures or specialty services should be confirmed to prevent automatic claim denials.
Ensure that your clinical notes and EHR solution clearly supports the services billed and demonstrates medical necessity. Incomplete clinical documentation that may lead to claim denials or payer requests for more information should be avoided whenever possible.
Verify correct diagnosis and procedure codes that accurately reflect the care delivered. Follow payer coding guidelines and ensure codes are updated as regulations change.
AI charge capture tools can recommend the most appropriate codes based on clinical documentation. Technology can also explain why certain codes are recommended to help improve coding accuracy over time. Inpatient physicians and hospitalists often benefit from specialized AI tools like mobile charge capture and hospital rounding software.
Claim scrubbing software reviews claims and catches errors before they’re submitted. This type of automated claims processing isn’t a shortcut that introduces new errors. Instead, these tools help identify missing fields, code mismatches, and formatting issues that may be overlooked when entering data manually.
Your organization’s clean claim rate measures the percentage of claims submitted without errors or the need for correction. While it may seem difficult to achieve, especially when you’re just starting to measure your clean claim rate, 95% or higher is a common industry benchmark and one important sign of a financially healthy practice. Strict quality checks and standardized workflows are critical to achieve this benchmark.
Tracking claim rate trends is an excellent way to identify systemic billing problems. Leaders use regular reporting to monitor performance and implement techniques and systems to improve efficiency and reduce claim errors. Periodic internal audits can also be used to uncover coding inconsistencies and assess medical coding productivity standards and revenue cycle KPIs.
Consistently monitoring your clean claim rate provides a window into your organization’s long-term performance. As you make improvements in this particular metric, reimbursements will arrive more quickly and, as payments become more regular and more predictable, financial stability will improve.
Claimocity identifies billing and coding errors before your claim is submitted. Our charge capture software improves billing accuracy to reduce claim denials before they occur. This helps speed reimbursement and improves the likelihood of submitting a clean claim the first time.
These are some of our results from aggregated, internal data and case studies from our user base:
With fewer coding errors and more complete billing, testing, and eligibility information, organizations can increase cash flow, reduce administrative burden, and achieve better financial performance.
Clean claims are a foundational element of a healthy healthcare revenue cycle. Submitting accurate claims improves every aspect of your RCM. You’ll enjoy fewer claim denials, faster reimbursement, and lower administrative workloads. To improve your clean claim rate, it’s important to strengthen documentation, improve coding accuracy, and optimize your verification processes, all of which can be significantly improved with automated claims processing and revenue cycle management.
To learn more about how Claimocity can help improve your clean claim rate and overall revenue cycle performance, sign up for a free demo today.
Getting multiple claim denials from patients with ACA insurance plans? It’s not just you. These plans are known for higher denial rates.
Learn about the physician-owned multispecialty group model and how to connect inpatient billing with other practice management software.
Learn how Claimocity uses ethical AI in healthcare with HIPAA compliance, coding rationale, and improved accuracy to protect patient data.