CLDPP copyAMA’s 2012 National Health Insurer Report Card provides interesting insight into what the revenue cycle might look like in the next few years (Learn more about the AMA 2012 Report Card, here). There are two interesting observations on the data that need to be considered with respect to what types of tools provider organizations will need in the future to maximize reimbursement dollars and minimize days in AR.

The first observation is the percentage of denied claims increased in every private carrier except Humana. These denial rates had been declining since 2008. The second observation is the volume of payor-specific edits; over 62,226 for Aetna, Anthem and United Healthcare. As payment reform is looming and all stakeholders are focused on “bending the curve” on healthcare expenditures, these two trends will become increasingly visible in the next few years. Payors will continue to look for creative strategies to avoid paying claims that are improperly coded.

Denied claims are particularly problematic for physician practices. The average denial costs a practice up to $25 to correct, and MGMA estimates only 35% of providers appeal denied claims. There is a significant revenue opportunity to prevent denied claims on the front end; however, it is time consuming and difficult for billing staff to do so without any assistance.

Individual billing employees can process between 280-525 encounters per day, depending upon other responsibilities. Even if a practice only contracted with the three insurance carriers mentioned above, each encounter represents a new opportunity to forget one of the 186,678 rules that are unique to the carrier and the particular patient’s visit. Even if only 1/10thof 1% of the rules apply to your specialty, that is still 186 rules to keep up with; multiplied by 280 encounters, that is more than 50,000 potential decisions every day!

The volume is staggering, and all indications point to an increase in the number of payor-specific rules in the years ahead. In order to minimize denied claims and preserve the sanity of your staff, consider implementing a closed loop denial prevention process.