Streamlining claims processing can significantly enhance the financial health of Mental Health Practices. Let's examine how a practice that sees approximately 2,000 patient visits per month can save more than $20,000 monthly by reducing claim denials.
Assumptions:
Average Reimbursement per Visit: Medicare reimbursement rates for common mental health services range from approximately $76.95 for a 30-minute session (CPT code 90832) to $149.64 for a 60-minute session (CPT code 90837). For this Case Study, we will assume that the average reimbursement rate is $100 per visit.
Total Monthly Revenue (with 0% Denials): 2,000 visits × $100/visit = $200,000
Current Denial Rate: 16% (midpoint of the 14-18% range)
Denial Reasons: Split between coding issues and eligibility errors
Financial Impact of Claim Denials:
Total Denied Claims: 16% of 2,000 visits = 320 claims
Revenue Lost Due to Denials: 320 claims × $100/claim = $32,000
Cost of Reworking Denied Claims:
Rework Cost per Denied Claim: Industry estimates suggest that a biller can spend between 2-3 hours reworking a claim. For this analysis, our cost hovered around $50 per claim
Total Rework Costs: 320 claims × $50/claim = $16,000
Total Financial Impact:
Revenue Loss + Rework Costs: $32,000 (lost revenue) + $16,000 (rework costs) = $48,000
Potential Savings from Streamlining Claims:
By implementing effective denial management strategies, practices can reduce denial rates significantly.
The practice in our case study demonstrated a 58% reduction in denial rates. Based on this reduction in denials, they were able to improve their bottom line by over $27,000
Reduced Denial Rate: 16% × (1 - 0.58) = 6.72%
New Denied Claims: 6.72% of 2,000 visits = 134 claims
New Revenue Lost Due to Denials: 134 claims × $100/claim = $13,400
New Total Rework Costs: 134 claims × $127/claim = $17,018
Total Financial Impact After Reduction: $13,400 (lost revenue) + $6,700 (rework costs) = $20,100
Net Revenue Improvement:
Original Financial Impact: $48,000
Financial Impact After Reduction: $20,100
Net Revenue Improvement: $48,000 - $20,100 = $27,900
This analysis indicates that by streamlining claims processing and reducing the denial rate from 16% to approximately 6.72%, a mental health practice can save over $27,000 per month. Even a modest reduction in denial rates can lead to substantial financial benefits, easily achieving savings of $10,000 or more monthly.
Strategies to Achieve These Savings:
Enhance Coding Accuracy: Regular training and updates on coding practices can minimize errors leading to denials. BillCare Systems’ Coding Workflow tool simplifies coding validation and audits, ensuring compliance and reducing coding-related errors.
Verify Patient Eligibility: Implementing real-time eligibility verification tools can prevent denials due to coverage issues. BillCare Systems’ Eligibility Discovery System automates eligibility verification and benefit checks, providing accurate, up-to-date coverage information.
Invest in Denial Management Solutions: Utilizing specialized software can streamline the identification and correction of errors before claim submission. BillCare Systems’ Denial Management tool offers robust tracking and resolution features, enabling practices to correct and resubmit claims quickly.
Monitor Denial Trends: Regular analysis of denial reasons can help in addressing systemic issues and improving processes. BillCare’s Analytics and Reporting Tools provide actionable insights into claim trends, enabling practices to identify patterns and make data-driven decisions.
Streamline Collections: BillCare’s Collection Workflow Automation tool enhances follow-up strategies and automates collection processes to reduce outstanding balances and improve cash flow.
How BillCare Systems Helps Practices Save? By leveraging BillCare Systems’ suite of products, mental health practices can significantly reduce claim denials, improve billing accuracy, and streamline collections — resulting in substantial cost savings and revenue recovery. Medical Billing, Automation, Revenue Cycle Management, RCM, Billing
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