Do You Know the True Impact Denied Claims Are Having on Your Practice?
Denied insurance claims are a silent drain on the financial health of medical practices, but their impact often goes unnoticed. For many practices, the true cost of denied claims extends beyond the surface of lost revenue—it also includes wasted time, strained resources, and a diminished ability to focus on patient care. Let’s break down the pain point of denied claims for a medical practice.
The Financial Cost of Denied Claims
Denied claims are an unfortunate reality in healthcare billing that can significantly hurt a practice’s bottom line. Let’s explore the two most impactful ways this occurs:
Failure to Rework Claims: Studies show that 50% to 65% of denied claims are never reworked. That’s money left on the table, month after month, because the process to recover it is either too cumbersome, too costly, or both. With each unresolved claim, your practice is forfeiting potential revenue that could easily be recovered with the right systems and resources in place.
Cost of Resubmitting Claims: On the flip side, if a practice decides to resubmit denied claims, it incurs an average cost of $25.00 per claim for the resubmission process. While this may seem minimal at first glance, the volume of resubmissions can quickly add up. For instance, if your practice deals with 100 denied claims each month, the cost to resubmit those claims would be $2,500 per month—a staggering $30,000 annually. This is a significant cost that could be better spent elsewhere to enhance practice operations or reinvest into patient care.
However, the financial implications don’t stop there. Each denied claim diverts significant time and resources from other critical areas of the practice.
The Time You Can’t Afford to Lose
Denial management isn’t just a financial burden—it’s a time sink. Each denied claim that is resubmitted requires meticulous review, adjustment, and resubmission. This process pulls staff away from other essential tasks, such as:
Providing excellent patient care.
Engaging in proactive revenue cycle management.
Following up on aging claims to prevent further financial losses.
The time spent reworking claims is time not spent enhancing patient satisfaction, growing the practice, or ensuring compliance with the ever-changing regulations in healthcare billing. Medical billing staff could be more productive focusing on other operational areas, but instead, they are bogged down with denied claims. This not only affects practice efficiency but can also result in missed revenue opportunities.
Are You Tracking Your Losses?
Shockingly, many practices aren’t fully aware of the financial and operational toll of denied claims. Without comprehensive tracking, it’s easy to underestimate the cumulative impact. For instance:
Revenue Left on the Table: If 50% of your denied claims go unresolved, you’re effectively giving away thousands of dollars every month. This is money that could directly boost your bottom line.
Opportunity Cost: Time spent fixing avoidable errors is time that could be spent increasing the volume of clean claims or improving patient care. The longer you take to address denied claims, the greater the opportunity cost becomes, as your practice loses both time and money.
Taking Action
To combat the costly cycle of denied claims, practices must adopt a proactive approach. Addressing denied claims can seem daunting, but with the right steps, your practice can reduce the negative impact.
Track Denial Rates: Regularly review denial trends on a monthly or quarterly basis to identify recurring issues. This will help you address common problems proactively and avoid future denials.
Invest in Training: Equip staff with the knowledge to minimize errors during claim submission. Proper training can help prevent denials from happening in the first place, saving time and money down the line.
Leverage Technology: Implement billing software that flags potential errors before submission. By automating claim checks, you can reduce the likelihood of denials and resubmissions, saving both time and money.
Consider Outsourcing: A specialized billing partner can help reduce denial rates and ensure swift rework of denied claims, allowing your team to focus on patient care. Outsourcing this aspect of your practice’s operations can provide a more efficient and cost-effective solution to denial management.
Every denied claim is more than just an administrative hiccup—it’s a direct hit to your practice’s profitability and productivity. With the average cost of resubmitting a claim far outweighing the cost of filing it correctly the first time, ignoring denied claims can no longer be an option.
By understanding the true costs and taking proactive steps to address them, your practice can reclaim lost revenue, free up valuable time, and refocus on what matters most: delivering exceptional patient care. Don’t leave money on the table—take control of your denied claims today!