Putting claim denials into perspective
Claim denials happen. No big deal, right? Wrong! When you start to add up the real dollars that claim denials cost your practice, you’ll never want to bill without OP’s Integrated Claim Scrubber, our built-in billing technology that provides real-time, on-screen claim scrubbing statuses, giving you the opportunity to fix claim errors before your claims go out the “door”.
According to the Medical Group Management Association (MGMA) averages:
- 5-10% of claims are denied
- 50% of denied claims are denied again after resubmission
- 50% of those twice-denied claims are never paid
- 90% of claim denials are preventable
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Here’s what those averages really amount to…
Let’s say your providers see an average of 20 patients per day— that’s about 440 encounters per provider per month. With a conservative denial rate of 5%, of those 440 claims, 22 of them will come back denied. Staffing costs will vary depending on where you are in the country, but on average it costs around $25 per claim to work and resubmit.
Looking at those same 22 denials, half of them will deny again and will never be recouped. That means that roughly 11 claims per month, which would yield an average of $130 per claim, will never be reimbursed. Your providers delivered services, and your staff completed billing, but you’ve done it for free.
Summing it all up, that’s…
440 claims x .05 denial rate = 22 denied claims
22 denied claims x $25 labor cost to work and resubmit = $550
22 denied claims x .50 repeated denial rate = 11 claims never paid
11 claims never paid x $130 = $1,430 in lost revenue
In total, you’re looking at $1,980 per month (labor at $550 and reimbursement at $1,430) or $23,760 per provider (labor at $6,600 + reimbursement at $17,160), per year in labor cost and lost reimbursements.
How much revenue is your practice losing due to the cost of claim denials?
Use the Denial Impact Calculator, powered by Alpha II to find out!