Overaged Claims are one of the major reasons behind revenue leakage in the healthcare industry. Overaged claims can be defined as claims in the healthcare industry that remain unpaid for a significant period. These claims go beyond the statute of limitation and cause major damage to the revenues of a healthcare organization.
Overaged claims make a huge impact not only on the healthcare organization but also on all parties involved in the revenue cycle of the healthcare industry, including patients, providers, and insurance companies. The parties that get affected by overaged claims often face long-term financial and legal consequences. It is thus important for the healthcare organization to understand the impacts of overaged claims and how these can be handled.
Factors Contributing to Overages Claims
Before moving on to find a solution to the problem of overaged claims in the healthcare industry, it is important to assess the causes of the same. One of the most common factors of rising overaged claims is the complexity of medical billings and coding. Apart from the other processes in the healthcare organization, billing and coding remain the most complex process as it is not the primary service for the organization.
Medical billing and coding require the processing of large amounts of data including medical procedures and services offered by the organization to develop or create standardized codes that can be utilized to process insurance claims. The process of billing and coding can be time-consuming and needs a lot of resources to handle. Being from a medical profession, the billing and coding part of the organization surely becomes complex for healthcare organizations. Any error or issue in the process can further lead to delays in payments adding to the overaged claims. Further, the longer time an amount remains unpaid for the organization becomes more challenging to collect. Based on a report published by the Medical Group Management Association (MGMA), it is estimated that on average it takes around 70 days to collect payments for medical services. In half of the cases, the claims can remain unpaid for more than 70 days.
The higher cost of medical services has also been a reason for the increase in overaged claims. Healthcare services in the USA can be categorized as one of the most expensive in the whole world. Being expensive, the healthcare services are out of reach for many patients, or in some cases, they struggle to pay for the same once the service is provided resulting in overaged claims.
To add to the woes of rising overaged claims in the healthcare industry, in many cases the insurance companies deny the claims or delay them based on any cited reasons. The burden of this action by the insurance companies falls on the healthcare organization. The longer these claims are delayed there is more the chance of them becoming overaged claims. A survey report by the Medical Group Management Association (MGMA) shows that missing or incorrect information about demography and insurance also contributes to overaged claims.
Overaged Claims – Impact on Healthcare Organization