Ten Best Practices for Coding and Billing Clean Claims

Health systems are struggling to manage a growing caseload of denials and underpaid claims as evidenced by denials rates increasing 20% over the past five years. With 33% of hospitals now reporting average claim denial rates of 10% or more, providers are spending nearly $8.6 billion a year trying to appeal and overturn denied claims. This trend is having a serious negative impact on reimbursement. But as high-performing revenue cycle teams have learned, an ounce of denial prevention is worth a pound of cure, and that starts with coding clean claims.

Going on offense with the revenue cycle

While there can be many causes for an insurance claim denial, most denials are preventable. It’s fundamental to proactively put fixes in place by identifying the denial root cause – most often related to eligibility and authorization issues, incomplete clinical documentation, and missing or invalid claim data – but also be empowered to hold payers accountable.

Providers need to switch from defense to offense to protect their margins and navigate constantly changing payer reimbursement requirements. One recent trend that providers are seeing is increased payer scrutiny of medical necessity to deny claims. That’s why Cloudmed uses advanced analytics and algorithms to help clients identify diagnostic codes that are most likely to be denied by payers.

Clean claims and denied diagnostic codes

The importance of first pass clean claims

A generally accepted definition of a clean claim is one that can be processed and paid the first time it is submitted to the payer. While back-end denials management is an important component of revenue capture, the first pass resolution rate (FPRR) is a strong indicator of how effective revenue cycle processes are from front to back. Here are ten best practices for submitting clean claims the first time.

Ten clean claims best practices

While incorrect coding in a claim will almost certainly lead to denial, coding itself is only one piece of the clean claims puzzle. Administrative deficiencies can also lead to denied claims. It’s important strategically to take a holistic approach to claims management that prioritizes clean claim submission. Here are ten things you can be doing to help code and bill clean claims.

  1. Keep patient information updated – Patient data is subject to constant change and outdated information can trigger denials. Confirm or update basic information like addresses, phone numbers, employer, and insurance plan at every patient encounter.
  2. Verify eligibility and authorization before the date of service – These steps are critical for submitting clean claims yet account for about a quarter of all denials. They are also labor-intensive processes that can reduce staff capacity. With labor shortages as the new normal, leveraging a technology partner with healthcare revenue cycle management (RCM) expertise that supports the financial clearance process is prudent to avoiding front-end denials.  
  3. Provide detailed clinical documentation – Few things are more critical for clean claims than documenting the actual services provided so they can be properly coded and billed. But with more payers challenging claims on medical necessity grounds, clinical documentation takes on even greater importance.
  4. Keep an eye on the calendar ­­– Failure to file claims according to the specified payer terms and timelines makes even an otherwise clean claim an easy target for denial. Regular reviews of timely filing and pending claims should include a check of submission deadlines to help prioritize work queues.
  5. Double check modifiers to ensure correct usage – Coding modifiers need to be applied correctly and to the correct procedure. The National Correct Coding Initiative has useful tools for providers to help ensure medical coders are using modifiers correctly and efficiently.
  6. Follow payer-specific coding guidelines – Different payers can have different coding guidelines that are specified and required. Creating payer-specific Local Coverage Determination (LCD) guidelines will help coders verify compatibility.
  7. Implement quality control checks – Claim scrubbing should be a required step in any submission process. Technology tools can make these quality control reviews more efficient and effective. Providers can go a step further by employing analytics across RCM departments to identify denial trends and determine root causes. Prescriptive analytics can go further still by providing guidance on how to resolve identified issues.
  8. Maintain the chargemaster – As the final authority on service fees, the Charge Description Master (CDM) needs to be maintained to reflect Centers for Medicare and Medicaid Services (CMS) updates, pricing changes, and new procedures and drugs. Quarterly updating is recommended.
  9. Find opportunities to automate – Claims management involves a considerable amount of manual, repetitive processes that can easily be automated. This can not only increase staff capacity and shorten cycles, but it can also reduce transcription and other data errors.
  10. Know and track your KPIsProviders have a variety of metrics available to help them understand the current state of their claims management processes. Clean claims rate and first pass rate are two of the more useful for measuring performance in this area, but denials rate and other indicators are also helpful.

Health systems find themselves besieged by the financial woes of escalating costs and a reimbursement environment that seems ever more challenging. Preventing denials and prioritizing clean claims to payers is an important strategy for accelerating and optimizing revenue.

The CloudmedAI™ Platform powers every Revenue Intelligence® Solution, including Charge Capture, DRG Validation, and Denials Recovery.

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Discover top trends affecting the revenue cycle – and how to address them –  with the 2023 Revenue Intelligence™ Data and Insights Report.