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How to Reach a 90+% Clean Claims Rate in Medical Billing

October 18, 2022 by JTS Health Partners
clean-claims-rate

Low clean claims rates may impact a hospital's revenue cycle.

Hospitals and healthcare organizations have struggled over the past few years with staffing shortages, pandemics and constantly changing regulations.  Because of these issues, hospital revenue cycles and profitability have decreased.  According to the Healthcare Financial Management Association (HFMA), one of the main negative impacts on the revenue cycle is a low clean claim rate (CCR). Industry experts recommend a greater than 90% clean claims rate to achieve optimum payments.

Table of Contents

    Industry experts recommend a greater than 90% clean claim rate.

    What is a clean claim in medical billing?

    A clean claim in medical billing is a claim that is submitted without any errors or omissions and can be processed without additional information or verification.  A clean claim is a standard billing key performance indicator (KPI) and should confirm the following information:

    • Insurance coverage is active on date of service and the insurance will cover the services provided
    • Diagnosis code that is currently active supports the procedure codes listed on the claim
    • No questions or issues for medical necessity
    • Required claim information is in the correct field
    • All patient demographic information is correct: name is on claim how it shows in insurance system, date of birth, mailing address
    • The payor is identified on the claim correctly with proper identification number, member identification number, group number and mailing address
    • Most importantly, submit claims within the timely filing window

    How is the clean claim rate calculated?calculate clean claims rate

    The clean claim rate is calculated when an insurance claim has been successfully reimbursed and processed the first time submitted. The clean claim rate calculation is defined by the Healthcare Financial Management Association (HFMA) as dividing the number of claims that pass all edits without manual intervention by the total number of claims accepted into the claim processing system for billing.  The HFMA created MAP Keys to be the industry standard KPIs used to determine revenue cycle performance.  Clean claim rate is just one of the HFMA-defined metrics.

    The clean claim rate is just one MAP key standards created by the HFMA.

    What is a good clean claim rate?

    A clean claim is one that has translated from the electronic health record (EHR) to a clearing house then to the payor without any errors. An acceptable clean claim rate is 80%, however, to ensure high quality and accuracy maintaining a clean claim rate benchmark of 90% or higher is ideal. Ensuring a high clean claim rate is essential to timely reimbursement. Also, a high clean claim rate ensures minimum follow-up is needed on claim errors allowing billing staff to focus on other priorities, such as denials. This can reduce the cost of wasted labor.

    Why should providers submit clean claims to third party payors?

    Why is the clean claim rate important?

    Clean claim rates are essential to ensuring the maximum revenue is obtained in a timely manner as well as preventing wasted labor costs. A high clean claim rate indicates that the data you are collecting is accurate and contains minimal errors. Claim errors affect the timeliness of payment. Aiming for a 90% or higher clean claim rate ensures increased payment rate. Timely payments also decrease the number of claim errors that billing staff members must review and rework.

    How do clean claims impact healthcare organizations?

    Clean claims are key to reduced denials and optimized reimbursement for healthcare organizations.  Having timely and accurate claims leads to speedy payments which improve operational margins. The delivery of high-quality patient care is better provided when the hospital is reimbursed fairly for those services delivered. Claims billed cleanly directly support the quality of care.

    steps to increase clean claims rateHow can I increase my clean claim rate? 

    12 steps for improved clean claims in medical billing

    Many providers and healthcare organizations struggle to have a high clean claim rate. Clean claim rates under 80% result in lost revenue.

    Below are some steps to help increase your clean claim rate:

    1. Keep patient information updated
    2. Verify eligibility and benefits
    3. Check precertification and referral requirements
    4. Know insurance filing limits
    5. Code to highest specificity
    6. Run medical necessity check
    7. Ensure detailed documentation is on file and provide when necessary
    8. Stay up to date with payor bulletins and changes
    9. Claim scrubbing
    10. Track and report denials
    11. Create denial management review process
    12. Educate and train staff

    Step 1.  Keep patient information updated

    What is the first key to successful claims processing?

    Patient registration is the start of the entire billing and revenue cycle process.  Having an effective patient registration process is the first key to reduce errors that would cause a "dirty" claim. To learn more about the importance of a streamlined patient registration, refer to Patient Registration to Improve the Revenue Cycle.

    Step 2.  Verify eligibility prior to visitclaim eligibility

    Verifying patients’ insurance eligibility prior to the hospital visit is an important step in the process of clean claims.  This ensures that the insurance coverage and demographic information is correct in the EHR to help decrease denials and increase upfront collections to improve overall hospital revenue.  Read more about increasing hospital revenue.

    Step 3.  Check precertification & referral requirements

    Knowing the difference between a referral and precertification is very important for the revenue cycle process. Precertification is a decision made by the health plan/payor that a service, treatment plan, prescription drug or durable medical equipment is medically necessary. A referral is when a primary care physician (PCP) recommends the patient to see a specialist. Checking precertification and referral requirements at time of registration or prior to claim submission is essential for the success of the clean claim.

    Hospital admission, non-emergent surgeries, radiology and mental health services normally require a referral or precertification prior to service. If a precertification or referral number is absent from the claim when submitted to the payor, the claim can be rejected by the payor, dropping the clean claim rate.

    A payor rejection is considered a “dirty claim” as it was returned by the payor prior to processing. However, sometimes claims can go all the way through the adjudication process without the required numbers only to end up in a denied state. Not having a precertification when one is required by a health plan can result in lower reimbursement or no reimbursement at all.

    Step 4.  File within the insurance deadline & limitstimely filing of claims

    Timely and accurate filing is the best way for a healthcare organization to receive reimbursement.  Each payor and contractual agreement defines specific directions and timelines for submitting claims.  One of the most common, yet preventable, reasons for claim denials is due to timeliness. It is possible that claims are not properly handled in the workflow and are “lost in the system”. Analytics which give key reporting criteria such as “Claims not touched in 10, 15, 30-day increments” can be invaluable to managing volumes of claims.

    Step 5.  Double check modifiers

    Know the payors and their policies.

    Medical coders should be familiar with modifiers and apply them appropriately, as well as following advice on any edits found in the encoder at the time of the first coding of the record.  In addition, being well educated and familiar with national coverage determination (NCD)/local coverage determination (LCD) policies to establish if a particular service is covered by Medicare in that area is key.  They should also be aware of where they can locate up-to-date information regarding these policies as a reference and utilize that knowledge as they carefully review the record to look for any diagnosis to meet medical necessity requirements.

    By adding any necessary modifiers and/or diagnoses to meet medical necessity at the time of coding, the need for claims to be returned to health information management (HIM) for rework can be eliminated.

    Pro Tip: Be aware that every October 1, Medicare and other contractors update coverage guidelines and requirements.

    Step 6.  Run medical necessity check

    Medical necessity is determined by the payors to decide if a service or treatment is necessary. By running a medical necessity check, you will find out if the service or treatment is covered and if not, you can determine alternative treatments that can achieve the same results or obtain a Financial Liability Waiver or Advanced Beneficiary Notice. For example, if a patient presents to a Lab to have blood drawn for tests, a provider will send a form with what labs are to be drawn and the diagnosis that make these tests necessary for the patient’s wellbeing or to attempt to diagnosis a new condition.Medical Necessity for Claims

    However, sometimes tests can be ordered without a “covering” diagnosis. A covering diagnosis shows the insurance that the test was needed. If this is not present, the claim will likely hit in the clearing house for a “medical necessity edit” which stops the claim from proceeding to the payor. The edit flags the claim for review for additional diagnosis codes for coverage. If the medical necessity check is performed at registration or prior to claim submission, the need for the medical necessity edit will be eliminated.  If no covering diagnosis is on file, a Financial Liability Waiver or Advanced Beneficiary Notice can be obtained. This will eliminate the error, but informs the patient that they will be responsible for the balance if the test is not covered. This will in turn be a “clean claim” as it will not be stopped by the medical necessity edit.

    Step 7.  Detailed documentation

    It is important to have detailed o protect both the patient and provider. If detailed documentation is not on file, the claim can be held up for many reasons until the solution is found. Ensuring that all documentation is proper and thoroughly detailed allows all information to be easily accessed and presented if needed to attach to a claim prior to submission. This is particularly important for workers compensation, auto accidents, third party liability carriers and Veteran Affairs claims. Most of these insurers require medical records to be submitted to them with the claim for processing. Also, detailed documentation is effective for medical necessity edits that arise to prove the services were needed.

    Step 8.  Know payor changes & updatesOct 1

    Every October 1, Medicare and other contractors update coverage guidelines and requirements. Changes can cover anything from authorizations, coverage, coding requirements and more. These changes are required beginning January 1, but many times the guidelines are already active beginning October 1. Keeping current on all payor updates and changes are essential when submitting claims. If coverage changes and new guidelines or coding changes occur, this could cause edits to appear on the claim causing it to not go out clean the first time. Healthcare coverage and requirements for certain procedures can change at the drop of a hat. Staying up to date on payor changes ensures consistent cash and will prevent mass rejections and denials in the long run.

    Step 9.  Claim scrubbing?

    What is claim scrubbing?

    Claim Scrubbing is defined as the process of scanning medical claims for errors prior to translation to the clearing house. Claim scrubbing ensures there are no mistakes on a claim that would make a payorClean claims reject or deny the claim. This process involves scanning the claim through chronic condition indicator (CCI), LCD/NCD and other guidelines to find possible errors. These errors can then be corrected before the claim is released to the payor. This process can be done manually or automated using software to review claims prior to submission. Daily claim scrubbing increases the clean claim rate and maximizes reimbursement.

    Step 10.  Track & report denials (to learn from it)

    The best way to make improvements and learn from the causes of denials is to track and report the root causes.  JTS utilizes a powerful analytics as a service (AaaS) platform that provides analysis of denial rates based on services by location and payor data with predictive analytics representing total expected reimbursement outcomes.

    JTS’ nCREAS™ categorizes denials by department to determine volume, dollars and rate. It examines the historical recovery rate by denial code and department as well as potential recovery opportunities. nCREAS™ also enables pinpointing of denials remaining untouched.track claims denials

    All data inside nCREAS™ reports can drill down through our hierarchy levels to a single account number which provides education to prevent future denials.

    Step 11.  Create an effective denial management review process

    Having a solid denial management process is a vital part of clean claims, and ultimately a successful revenue cycle.  Read more about denial management in the blog Denial Management in Medical Billing:  The Ultimate Guide.

    Step 12.  Education & training of staff

    As with most of the healthcare system, medical codes change on a regular basis.  Ensuring a well-educated and updated coding and billing staff is vital to clean claims.  Coding and billing staff should receive training on an ongoing basis to maintain the most current education.

    For inpatient claims powerful training and education through the automated auditing engine. Consistently taking claims through the engine for review, and possible rebill, the HIM team can grow and learn without punitive measures on yearly required audits.

    How does JTS Health Partners help you identify & improve your clean claims rate?

    JTS’ services and solutions combine analytics, consulting and professional services with a creative, highly experienced team who works side by side with our clients for individualized strategies that result in operational health, efficiency and profitability.  nCREAS™ provide best practices, standard work instructions, second level analytical tools, outcome measures and productivity methodologies to help organizations identify and improve their clean claims rate. In addition, the EBO team assists with the overall departmental operating expense reduction and increased revenue cycle outcomes.

    Ready to improve your clean claims rate?

    Clean claims in medical billing reduce denials and increase revenue.  Are you ready to improve your clean claim rate?

    Find out more
    Category: Analytics, Articles, RCM

    JTS Health Partners

    Serving as trusted advisors and industry leaders, JTS is a healthcare management consulting firm dedicated to meeting the needs of the nation’s many top healthcare organizations in both the private and public sectors.

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