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ACA Claim Denial Rates: What’s Behind the Numbers
Learn how Claimocity uses ethical AI in healthcare with HIPAA compliance, coding rationale, and improved accuracy to protect patient data.
According to this survey conducted by Premier, Inc., inaccurate claims and payer denials cost U.S. healthcare providers an estimated $25.7 billion in administrative costs in 2023, a sizable increase from $19.7 billion in 2022. This increase is mostly due to a higher average cost to fight the initial denials, $57.23 per claim in 2023 vs $43.84 in 2022. Meanwhile, many healthcare providers continue to report denial rates between 10-15%.
So, what’s the answer? Submitting clean claims with an efficient claims scrubbing solution.
Claims scrubbing is a proactive process that improves clean claim rates, accelerates reimbursement, and stabilizes cash flow for inpatient facilities and large practice groups. Payer-specific rules and compliance standards evolve every year, making it nearly impossible for revenue cycle management (RCM) teams to keep up. Scrubbing is the most effective frontline defense in medical billing. It helps providers catch preventable errors before submission to protect revenue and reduce delays.
The best claims scrubbing process typically involves a combination of automated and manual review of medical billing claims to validate coding, data, and payer information before submission to the payer. Scrubbing tools are used within the RCM process after charge capture and before claims are transmitted to clearinghouses or payer systems. These scrubbing tools are designed to ensure CPT/ICD coding accuracy, demographic data completeness, insurance eligibility, and compliance with payer-specific rules.
Scrubbing claims is a multi-step process that will begin saving your team time and your practice money as soon as the first reimbursements start rolling in.
Here is a step-by-step breakdown of the process:
Step 1: Claim creation from EHR and billing systems. This includes patient demographics, coding, and documentation inputs.
Step 2: Automated software applies rule engine checks for payer-specific requirements, coding mismatches, and missing data.
Step 3: Edits and alerts flag potential errors. These errors may include invalid codes or incomplete payer information, for example.
Step 4: Exception-based workflow routes flagged claims to billing staff for correction and validation.
Step 5: Secondary review ensures compliance with payer policies and internal quality benchmarks.
Step 6: Clean claims are submitted to the clearinghouse or payer for adjudication.
There are several types of errors and denials that can be avoided with effective claims scrubbing.
Coding inaccuracies are very common because of constantly changing rules and overall complexity. Incorrect or outdated CPT/ICD coding can lead to invalid code or medical necessity denials. Regular coding updates and automated claim checks help catch these issues before submission.
Missing or incomplete data such as patient demographics or insurance details will trigger rejections. Front-end verification and required field checks help ensure claims are complete before submission.
Payer-specific rule violations are also very common. Mismatched coverage policies or benefits limits will cause denials. The solution is software that applies payer-specific rules to identify claim issues before submission.
Duplicate claims will also trigger automatic denials. Be sure to use an automated solution that will detect and notify your team when it identifies a duplicate claim.
Missing insurance approvals or referrals can lead to denied claims. Checking authorization requirements before services are provided helps avoid reimbursement delays.
Missing or incorrect modifiers can cause claims to be denied or underpaid. Automated claim checks help catch these mistakes before claims are submitted.
Providers can run into problems when they bill separately for services that insurers consider part of an earlier procedure. Claims scrubbing tools help flag these billing conflicts before submission.
Documentation gaps or documentation that is not sufficient to support billed services will also cause claims to be denied. The solution is to align coding with clinical notes and audit trails.
Inpatient care billing is one area where creating a clean claim depends on more than just the hospitalist’s own clinical notes and patient encounter documentation. That’s because the physician’s claim must be congruent with the facility diagnostic notes, the ongoing justification for providing inpatient care services, and other physicians’ clinical notes. From initial hospital services to discharge management, every inpatient claim must be indexed to the day and the patient’s admission status.
For this reason, claims scrubbing is a routine process for most every inpatient claim. It’s also why advanced medical billing software with facility integrations and the ability to cross-reference EHRs with HIPAA compliance has become essential. Add hospital rounding software support, and hospitalists can find professional fulfillment while also hitting their revenue cycle benchmarks.
Simply put, payers have started using AI tools to identify errors and deny claims with a particular focus on prior authorization requests. This report from the U.S. Senate Permanent Subcommittee on Investigations shows that some payers are using AI to fix a patient’s length of stay or even whether they should be admitted to an inpatient setting at all. In one instance, a payer was denying prior authorization requests for post-acute care at a rate 16 times higher than their overall denial rate.
You need to fight fire with fire. New AI software quickly catches potential errors before submission, and trained staff review flagged claims to make sure everything is accurate and compliant. This combination of automated tools and human expertise provides the best chance of meeting the ultimate goal: clean claims that meet payer requirements on the first submission to reduce rework and improve first-pass acceptance rates.
Reducing the number of denials improves your clean claim rates and speeds up your reimbursement cycles with more accurate first-pass submissions. Claims scrubbing also helps providers stay current with payer rules and healthcare regulations, reducing compliance risks. Clean claims are, by definition, in compliance with CMS and HIPAA requirements.
Fewer billing delays and clearer financial communication improve the patient experience with increased transparency. Finally, claims scrubbing enhances providers’ financial performance with more stable cash flow and reduced revenue leakage.
An effective clean claims process doesn’t just run itself. It needs to be constantly monitored, measured, and optimized. With periodic maintenance, you’ll see your clean claim rates improve, and your denial rates continue to fall.
A claim scrubbing process that balances automation and human expertise gives you the best of both worlds. Leverage outsourcing services for specialized expertise and RCM scalability.
Claimocity is an industry leader in automated and manual RCM services. We provide integrated solutions that combine software and expert services for optimized medical billing. We specialize in accurate coding, real-time claims scrubbing, and proactive denial prevention. Whatever the size of your practice, we tailor workflows for providers to improve reimbursement and reduce administrative burden.
There are other automated RCM tools out there, but nothing can match the scalability and precision of pairing cutting-edge AI with decades of RCM expertise. In particular, our charge capture software is a great way to fight revenue loss by maximizing the complexity and scope of care that can be effectively billed to payers.
Book a Demo to explore how Claimocity can enhance your RCM performance.
We’ve tried to focus on the claim scrubbing process in this resource, but we’ve also created a comprehensive guide to the claim submission process for inpatient facilities and care providers. This guide includes more details about the complexities of coordinating hospitalist claims with the facility’s diagnostic and institutional codes.
How do you find the sweet spot between automated software and human review? We’ve created this resource explaining the proper scope and benefits of automated claims processing.
Advanced AI capabilities are increasingly accessible and easy to use. You don’t have to let our AI tool run for hours overnight to get reliable outputs. Our AI charge capture software quickly delivers curated recommendations from your clinical notes to your mobile device.
With Claimocity, you can also connect your medical billing and claims scrubbing solution to the rest of your practice management tools. From medical charting software to business compliance and tax accounting, here are the best business management features for hospitalists and other medical practices.
Learn how Claimocity uses ethical AI in healthcare with HIPAA compliance, coding rationale, and improved accuracy to protect patient data.
Learn how Claimocity uses ethical AI in healthcare with HIPAA compliance, coding rationale, and improved accuracy to protect patient data.
Learn how Claimocity uses ethical AI in healthcare with HIPAA compliance, coding rationale, and improved accuracy to protect patient data.