Understanding the Key Challenges in Medical Billing

Amy Pattinson
July 26, 2022
 Mins Read

The healthcare industry is quite different from other businesses as clinical treatment is not a succinct or lone transaction, but subjects to complex procedures starting from a patient’s appointment and ending with his/her account closure. It involves a planning of inventory and requisites that need experienced hands and minds. However, managing a healthcare facility drains a lot of resources and often leads to lapses in insurance verification, medical billing, follow-up, collections, and payments.

Here are a few statistical analysis of Medical Billing that a healthcare facility can refer to for evaluating the challenges in the current Medical Billing Process and look for alternatives to improve their financial health:-

22% Claims are Rejected:

Researchers from California Nurse Association found that 22% of the claims submitted were rejected. And almost 40% of the rejected claim is never resubmitted. Various reasons are claims being lost or missed or not meeting the time deadline, callous attitude, etc.

Two primary reasons a claim doesn’t result in a payment are

  • Claim is not received by the payer
  • Payer denies payment due to a defect in the claim, whether incomplete or incorrect demographic data or lack of proof supporting the services billed.

65% Denials Never Re-Appealed:

The necessary work to submit the claim is done, but an administrative error dooms the healthcare provider to non-payment. When a claim is denied, it is often far too costly and time-consuming for a practice to do the necessary follow up and appeals to ultimately secure payment.

$400 Billion Spent On Non-Core Medical Activities

Of the $2.7 trillion the USA spends annually on healthcare, $400 billion (~14%) goes to Claims processing, Payments, Medical Billing, Revenue Cycle Management (RCM), and bad debt—in part because half of all payer-provider transactions involve outdated manual methods, such as phone calls and mailings.

10% Claims Incorrect:

According to the American Medical Association, up to 10% of claims are not paid correctly and commercial payers on average underpay on 7% of their claim adjudication. This can add up to significant revenue loss for your practice.

11% Revenue Loss:

It is estimated that the average medical practice loses as much as 11% of its revenue due to underpayments each year. Also, According to the American Medical Association (AMA), 20% error rate among health insurers represents an intolerable level of inefficiency that causes a loss of around US$ 17 billion each year.

The above financial losses can be countered by taking the professional help of a Medical Billing Service Provider; an effective Revenue Cycle streamlines the claim processing and minimizes the claim rejection/denial.

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