6 Key Challenges of Medical Billing and How to Overcome Them
 Revenue Cycle Management

6 Key Medical Billing Challenges and Solutions

Janet Scott
Janet Scott
June 19, 2023
Last updated on:

June 19, 2023

|

Read time: 5 mins

Medical billing plays a vital role in the financial stability and operations of a hospital. It ensures accurate and timely reimbursement for healthcare services provided, which is essential for the hospital's revenue cycle. Proper medical billing practices contribute to improved cash flow, enabling hospitals to invest in resources, technology, and patient care.

However, medical billing is easier said than done due to its inherent complexity. It involves navigating complex coding systems, insurance policies, reimbursement rules, and compliance regulations. The ever-changing landscape of healthcare regulations further adds to the challenge. The inability to navigate these challenges can lead to claim denials, delayed payments, and financial losses.

Medical Billing Process
Image 1 - Medical Billing Process

This blog will explore seven common medical billing challenges healthcare providers commonly face. It will also focus on effective solutions to overcome them and ensure optimized and consistent revenue streams.

Let’s understand the key challenges that healthcare providers face daily:

6 Medical Billing Challenges and Their Solutions

1. Documentation and Coding Errors

Medical documentation and coding are error-prone due to their complexity and the potential for human error. Inaccurate or incomplete coding can result in claim denials and payment delays. The common challenges in coding and documentation are: 

Challenges:

Insufficient or inaccurate information:

  • Example
    A physician's note that lacks detailed information about a patient's symptoms, examination findings, and treatment plan can lead to coding errors and incorrect billing.
  • Solution
    Engage your physicians, coders, and other staff members in comprehensive training programs to ensure a strong understanding of accurate documentation and coding practices.

Incorrect or inconsistent coding:

  • Example
    Assigning an incorrect diagnosis code or an error in keying in the code that does not match the documented symptoms.
  • Solution
    Take every coded bill through multi-level quality checks before processing the codes to the billing department. 

What are the different types of risk in medical billing?

Here are some of the most common risks in medical billing today:

  • Claim denials due to inaccurate information or failure to meet specific requirements.
  • Compliance violations include improper modifier use, unbundling services, etc.
  • Coding errors include upcoding, undercoding, and incorrect procedure codes.
  • Data security risks that could violate patient privacy, risk of losing sensitive patient data, etc.
  • Frequent changes in healthcare policies pose a great risk in staying updated.

Lack of knowledge about updated coding guidelines: 

  • Example
    Not being aware of the latest changes in the International Classification of Diseases (ICD) coding system. 
  • Solution
    Invest in modern tech solutions such as EHR and coding software to automate processes and stay updated with the latest guidelines. 
Did You Know?
According to an Equifax (a credit agency firm) audit, hospital bills exceeding $10,000 were found to have an average error of $1,300.

2. Insurance Claim Denials and Rejections

Insurance verification in medical billing can be difficult due to factors like complex insurance policies, varying coverage plans, frequent changes in insurance information, and the need to gather accurate and up-to-date patient data. Some common challenges that hospitals face include:

Challenges:

Inaccurate or incomplete patient information:

  • Example
    Incorrect patient demographic data, such as misspelled names or incorrect insurance policy numbers, can result in claim denials.
  • Solution
    Make front office verification fool proof to ensure accurate and complete patient information is captured right at the initial stage of patient registration. 
Did You Know?
Approximately $125 billion is believed to be lost annually by doctors in the United States as a result of poor billing practices. (Source: Equifax)

Lack of pre-authorization or prior approval

  • Example
    Ailments like occupational, speech, and physical therapy require prior authorization. Likewise procedures like penile prosthesis surgery need prior authorization.
  • Solution
    Dial up the insurer to know the latest guideline pertaining to the treatment, even if you are aware of them. Make it a practice to have the prior approval documented.

Non-covered services or experimental treatments:

  • Example
    The administrative team sometimes overlooks the fine details in the insurance policies that may have exclusions for certain services or treatments. The insurance companies term it as a non-covered or experimental treatment. 
  • Solution
    Implementing robust claim review and auditing processes can help identify and address potential issues before submitting claims. 

3. Compliance with Regulatory Requirements

Healthcare providers must adhere to compliance requirements to maintain high patient safety standards. Overlooking the compliance part can put healthcare providers in very difficult legal situations. So, here are the common challenges faced in regulatory compliance along with their solutions: 

Challenges:

Keeping up with changing regulations and policies

  • Example
    ICD 10 coding system was introduced in the US in 2015. Prior to that, all US healthcare providers were using ICD-9 coding systems. The new coding system had a substantial increase in the number of diagnostic codes available, going from 13000 codes in ICD-9 to 68000 codes in ICD-10. This brought in tremendous change in terms of coding structure, specificity, and documentation requirements. 
  • Solution
    To overcome the challenge of keeping up with changing medical billing regulatory compliance, providers can stay informed, establish compliance teams, engage with payers, invest in training, leverage technology, conduct audits, and seek external expertise.

HIPAA compliance and patient data security: 

  • Example
    Any disclosure of patient health information (PHI) in a public medium by human error or unauthorized access to sensitive information can undermine security of patient data.
  • Solution
    Prioritize staff training, implement strict access controls, perform periodic risk assessment, and establish clear policies and procedures to effectively manage patient data securely. 

Staying updated with insurance coverage policies: 

  • Example
    Insurance companies may reduce reimbursement rates or place additional restrictions on a procedure for a reason you may not be aware of. Healthcare providers who are unaware of this change will continue to bill the procedure the old way. This will lead to a claim's denial. 
  • Solution
    Maintain effective communication with insurance companies to stay informed of these changes by designating specific staff members. These are one of the many effective tips for claim denial management. They will serve as the point of contact for insurance-related matters. Dial up the insurance providers to double-check fine details. 

4. Slow Reimbursement Processes 

Accuracy matters in reimbursement. And rushing through the process manually will lead to errors. On top of that the billing team must cross-check with their existing policies to ensure compliance for complex reimbursement requests. All this and other factors slow down the entire reimbursement process. So, here are some of the most common challenges faced by the reimbursement team on a daily basis:

Challenges:

Delays in insurance claim processing: 

  • Example
    A patient undergoes a surgical procedure, and the healthcare provider submits the claim to the insurance company for reimbursement. However, the reimbursement team encounters a delay because the healthcare provider did not include all the necessary documents, such as the itemized bill, surgical reports, or supporting medical records.
  • Solution 
    Clear and effective communication between the healthcare provider and the insurance company can minimize such instances drastically. Be proactive in clarifying the documents required for specific procedures and diseases upfront with the insurance companies. This will significantly shorten the reimbursement timeline. 

Complex reimbursement procedures:

  • Example
    A healthcare provider submits a claim for a patient who requires a sophisticated medical device, such as a prosthetic limb or a durable medical equipment (DME). The reimbursement team must navigate the intricate reimbursement procedures set by different insurance companies, each with their own specific requirements and documentation guidelines. 
  • Solution
    Designate medical staffs to closely study and understand each insurance company's reimbursement policies and procedures. Maintaining a steady flow of communication is equally important with the healthcare provider. As it helps in gathering all the necessary information and removes any uncertainties in a complex reimbursement procedure.
Factors Behind Slow Reimbursement Process
Image 2 - Factors Behind Slow Reimbursement Process
Did You Know?

A study conducted by InstaMed revealed that 87% of consumers express a desire to consolidate all their healthcare payments into a single platform.

5. Managing Accounts Receivable (AR) 

When it comes to healthcare operations, nothing impacts like delayed payments. It could severely hamper the financial performance of healthcare organizations. Healthcare providers often deal with multiple insurance payers, each with its own set of rules, policies, and reimbursement procedures. The whole process further puts pressure on patient care quality.

So, here are a few common challenges and solutions faced by healthcare providers in managing AR along with solutions to overcome them: 

Challenges:

High AR days and cash flow issues: 

  • Example
    After submitting claims, a clinic often has to wait for an extended period of time before receiving payment. A number of reasons could be behind it, like high processing time, a huge volume of claims being submitted at the same time, administrative inefficiencies in their reimbursement process, etc. All this affects the cash flow of the clinic.
  • Solution
    Implement EHR systems, and other RCM tools to streamline billing processes. Reducing coding errors, and improving documentation further reduces AR days. Also make sure to regularly follow-up on unpaid claims and denials and resolve disputes with insurance companies to accelerate the entire process.  
Did You Know?

According to Health leaders Media, most health providers, specifically 77%, report that it takes longer than a month to collect payment.

6. Keeping Up with Technology Advancements 

Staying updated with the latest technological innovations is essential for healthcare organizations for a sustained competitive edge over their competitors. However, it is easier said than done to keep up with technological developments.

Below are several challenges faced by healthcare providers in this aspect: 

Challenges:

Rapidly evolving technology landscape: 

  • Example
    The COVID-19 pandemic accelerated the adoption of telehealth services, which allow healthcare providers to offer remote consultations and virtual care. This involved data migration, staff training, system testing, and ensuring compatibility with other existing systems and interfaces.
  • Solution
    Collaborate with technology vendors, consultants, and experts for guidance and support in adopting and integrating new technologies. Continuously educating and training your staffs about the emerging technologies within the domain will help you stay updated and improve patient engagement.

Limited resources and budget constraints: 

  • Example
    Adopting new technologies to optimize healthcare operations is a capital and resource-intensive effort.
  • Solution
    Consult with industry and domain experts and consultants for their insights and guidance on implementing new technologies and better understand your core technology requirements.
Did You Know? 
The majority of healthcare providers, approximately 75%, still rely primarily on paper-based and manual processes for their collection efforts. (Source: InstaMed)

Conclusion

While medical billing is crucial for healthcare organizations' financial stability and success it is important to note that the medical billing landscape constantly evolves, and new challenges keep emerging. Staying updated with industry trends, regulatory changes, and technological advancements is the key to overcoming these emerging challenges. Healthcare providers must embrace a culture of continuous learning and innovation to adapt to the ever-changing healthcare landscape.

If you are looking to improve your revenue cycle management (RCM) process, Invensis is here to assist. With over 20 years of experience in serving healthcare providers, Invensis offers comprehensive solutions to optimize your medical billing processes. Their team of experts understands the unique challenges healthcare organizations face and provides tailored strategies to enhance your RCM efficiency. Partnering with Invensis can help you streamline billing operations, reduce costs, and maximize revenue. Contact us now.

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