Claims Software Can Reduce Denials, Maximize Revenue

Medical practices are leaving money on the table by not producing clean medical claims. Incremental improvement can improve cash flow and reduce accounts receivable days, important metrics to determine the health of a medical practice.

A recent MGMA Stat poll showed that two-thirds of medical practices say that Medicare payments for 2019 won’t cover their costs for delivering care. That’s sobering news, not only for physicians, but also for people who are on Medicare and want their doctors to continue to accept the federal insurance.

Alternative payment models in Medicare come with the promise of increased pay, but participation requires that practices spend more up-front with the hope that heightened reimbursement arrives at some future date.

Medical practices are leaving money on the table by not producing clean medical claims. Incremental improvement can improve cash flow and reduce accounts receivable days, important metrics to determine the health of a medical practice.

Patients are important revenue source

Health systems and insurers continue to buy physician practices as a way to control costs and capture revenue. From a health system perspective, owning physician practices creates economies of scale, ensures referrals to its facilities and presents a stronger front when negotiating with health plans. A new survey shows that each hospital-owned physician returns $2.4 million in net revenue, a 52% increase from 2016.

Insurers can save money by dictating where owned physicians can refer patients and what medications they can prescribe.

But as patient payers have become the third-largest source of medical practice revenue—even ahead of insurance companies—practices must focus their efforts on capturing more revenue at the point of care. And that means the ability to produce clean, accurate claims that can withstand scrutiny.

Simply put, better billing practices result in fewer denials, helping a practice secure maximum payments.

High cost of denials

According to the American Academy of Family Physicians, the industry average denial rate is between 5%-10%, which doesn’t sound like a lot until you consider the value of a medical practice and the costs associated with reworking a claim or fighting a denial. Think about the number of patients that flow through a practice in a single workday. If 10% of claims were rejected, how much money could a practice potentially lose through denials?

Another analysis, however, finds that as many as 70% of all claims submitted by providers contain errors that can affect payment. Errors could be as simple as a partial name mismatch or as complicated as missing/incorrect patient identifiers, erroneous codes and improper code for patient type.

In either case, the goal is zero defects in the claims process, which requires both properly trained people as well as the proper software to help analyze and optimize claims before they are submitted. Once a claim is rejected, it can start a long, agonizing process of back-and-forth emails, portal chats, and calls between provider and insurer to request/provide more information.

Software, workflow changes are critical

Pursuing each denied claim is labor and capital intensive, so a better strategy calls for using software to validate claims before they’re submitted. Besides matching names, identifiers and other patient information, software also can match procedures to gender and unearth any potentially fraudulent claims. This approach helps ensure a higher claims acceptance rate, which can speed reimbursement.

But the best software can’t overcome faulty workflow, however. Any software solution must be coupled with a frank examination of claims flow, from patient registration to the receipt of reimbursement from either payer or patient.

Patient demographic information should be verified periodically to ensure address/phone/email information is correct. Insurance cards should be presented at each visit so information can be verified and any anticipated co-pay collected.

Shortly after a visit, procedure codes should be verified to ensure accuracy, with any discrepancies fixed or eliminated from the chart. Quality control would include a final check on all claims before they are submitted.


Earlier in my career, I ran a large medical practice and never lost an appeal. How is that? If you lose an appeal, you simply don’t get paid, and I could never accept that fact because I knew every claim was valid.

Putting the right workflows into place coupled with the proper claims software can help billing staff reduce claims denials in the first place and give them the ammunition to fight the few claims that get denied.

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