The Hidden Costs of Reworking Claims: A Wake-Up Call for Home Health Agencies

In my previous Invisible Truth blogs, I’ve established that in home health, every dollar counts. Yet, many agencies are unknowingly bleeding money through a seemingly mundane process: reworking denied claims . Today, let's dive into the true cost of claim rework and why it's a critical issue that demands your attention.

The Staggering Numbers

First, let's talk numbers, and brace yourself – they're not pretty:

- On average, it costs between $25 to $117 to rework a single denied claim.

- Approximately 20% of all claims are initially denied or delayed.

- Shockingly, up to 65% of denied claims are never resubmitted, translating to pure revenue loss.

For a medium-sized home health agency processing 5,000 claims per month, this could mean:

- 1,000 denied claims (20% of 5,000)

- A rework cost ranging from $25,000 to $117,000 per month

- Potential annual rework costs of $300,000 to $1,404,000

And remember, this doesn't even account for the lost revenue from claims that are never resubmitted!

Beyond the Direct Costs

The financial impact goes beyond just the cost of rework:

1. Delayed Cash Flow: Denied claims mean delayed payments, affecting your agency's financial stability.

2. Administrative Burden: Staff spend countless hours on rework instead of focusing on patient care or growth initiatives.

3. Compliance Risks: Rushed rework can lead to errors, potentially triggering audits or compliance issues.

4. Reputation Damage: Consistent billing issues can strain relationships with patients and referral sources.

The Ripple Effect on Your Agency

Consider how these costs cascade through your organization:

- Staffing Challenges: You might need to hire additional billing staff or pay overtime for rework.

- Technology Investments: You may be forced to invest in better systems to manage the workload. I highly recommend you do invest in technology, but proactively.?

- Opportunity Costs: Resources tied up in rework can't be used for marketing, training, or expanding services.

Breaking the Cycle

The good news? Much of this cost is preventable. By investing in:

- Robust claims management software- like Velocity

- Comprehensive staff training

- Proactive denial management strategies

- Regular audits and process improvements

...you can significantly reduce your denial rate and the need for rework.

The Million-Dollar Question

Now, here's the question that should be keeping every home health agency leader up at night:

"How much could you save by reducing rework?"

Consider this:

- If you're processing 5,000 claims a month

- And you reduce your denial rate by just 5% (from 20% to 15%)

- You could save between $75,000 and $351,000 annually on rework costs alone

And that's not counting the improved cash flow, reduced administrative burden, and potential to recapture revenue from claims that would have otherwise been abandoned.

Time for Action

It's clear that the cost of reworking claims is more than just a pain in the a$$ – it's a significant drain on your agency's resources and potential. Isn't it time to take a hard look at your claims process and ask yourself: How much are denied claims really costing you, and what can you do to stem the tide?

Remember, every dollar saved on claim rework is a dollar that can be reinvested in patient care, staff development, or agency growth. The question isn't whether you can afford to address this issue – it's whether you can afford not to.

So, I'll ask again: How much could you save by reducing rework? The answer might just transform your agency's financial future.

Are you looking for a team of experts like the ones at HealthRev Partners to help you with claims on your AR that need reworked? Contact us NOW!