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Tracking rejections in times of transition

With 5010 and ICD-10 looming on the horizon, now is the time for practices to begin safeguarding against spikes in rejections and denials. Rejections and denials are, obviously, important barometers of financial health that must be tracked at all times. But accurate tracking becomes even more important during times of change.

In my opinion, practices should begin considering periods of transition as “the new normal.” After all, fresh legislative mandates seem to be hitting the healthcare industry with increasing regularity. It might be wise to invest a little time in developing policies and processes to monitor key practice indicators during times of upheaval.

Rejections and denials offer the perfect place to start. Right now is a good time to begin establishing benchmarks for these numbers in your practice. Don’t wait until December 31 to determine your average rejection and denial levels—do this in the months prior to the 5010 conversion on January 1, 2012. That way, you have an accurate yardstick against which to measure your post-conversion rejections and denials.

First create a consistent way to evaluate your numbers. Do you want to track denials by payer? By provider? The decision largely will depend on your practice’s goals, but formulate a consistent policy and stick to it.

Deciding which numbers to track is also important. Typically—although by no means always—rejections are used to measure front-end processes at the clearinghouse and payer levels, while denials and non-payment are used as a back-end gauge.

Your payer rejection rate, for example, may be a good measure of your clearinghouse’s effectiveness. If the rate is high, you might want to question how well your clearinghouse is proactively preventing bad claims from getting through to the payer. By contrast, your rejection rate from the clearinghouse may reveal internal billing errors. Although high payer rejection rates may indicate the clearinghouse isn’t catching errors, it may also reveal other issues such as an internal billing problem, a conversion problem on the payer’s end or the need to implement eligibility to verify insurance benefits prior to patient visits.

During the 5010 conversion, practices may experience a propensity toward front-end rejections. That’s because 5010 changes aren’t likely to result in many alterations to medical or payment policies that would cause back-end problems. The ICD-10 transition, on the other hand, will definitely change the diagnosis codes used in claims adjudication. Back-end denial rates are more likely to suffer.

Keep in mind that the numbers you track should reflect the business needs and goals of your practice. Decide what they are, and then be consistent about gathering them regularly. During non-transitional periods, you may want to track rejections and denials once a week, if your practice doesn’t have the resources to track them daily. Once a transition occurs, however, track your numbers daily until you are comfortable that any problems have been resolved.

Revenue cycle management technology—clearinghouses, practice management systems, and the like—can help make the process more efficient. Take advantage of the many reporting and alerting tools they offer. The better your practice becomes at managing change, the easier it will be to do so whenever the need arises.