There are many valuable metrics that help you monitor a practice’s finances, but when it comes to insurance companies, some say the golden metric — the clean claims ratio — is essential for success. Simply put, a clean claim will be paid the first time, which means the claim:
Consider the following example of clean claims reporting:
This report shows every claim in buckets — clean and not — once there is an activity to make a determination. As shown, 91% of the claims filed in September were paid without any further action, 9% required rework and 1.21% have not had enough activity to make the determination.
For demonstration purposes, let’s assume my practice files 1,000 claims per month and maintains a 90% clean claims ratio. We can now:
Clean claim definition: It has no defect or impropriety, including any lack of required substantiating documentation or particular circumstance requiring special treatment that otherwise prevents timely payment.
- Was never rejected
- Did not have a preventable denial
- Was not filed more than once
- Had no errors
- Every rejection or denial introduces the risk of not getting paid
- Studies show the average cost to rework a claim is $25
- 50% to 65% of denials are never worked, according to industry sources, who attribute that to lack of time or knowledge
Consider the following example of clean claims reporting:
This report shows every claim in buckets — clean and not — once there is an activity to make a determination. As shown, 91% of the claims filed in September were paid without any further action, 9% required rework and 1.21% have not had enough activity to make the determination.
For demonstration purposes, let’s assume my practice files 1,000 claims per month and maintains a 90% clean claims ratio. We can now:
- Determine staffing needs. If you need to re-work 100 claims a month, calculate the average number of claims a full-time employee can work a day (usually 50) to determine the number of employees needed. Factor in the number of touches a claim typically requires during rework. Someone has to enter the rejection or denial, call the payer for details, research coding mistakes, refile the claim, post another denial, etc.
- Measure costs. If the average cost of rework is $25 per claim and 100 claims a month require rework, it costs an average of $2,500 a month to work unclean claims. In addition to an employee’s hourly rate, factor in overhead costs, such as benefits (30% of salary), facilities, hardware and electronic filing fees, directly associated with unclean claims.
- Get a breakdown of claims by rejection code or denial to establish preventive measures. If you are getting a lot of denials for noncovered services, evaluate the codes. Is there another clinically accurate code that can be billed or are you providing services for which you cannot be paid? If you are getting denials related to information the front office is not capturing correctly, you have identified an opportunity for improvement.
- Create a practice-wide awareness campaign to make sure everyone understands the cost of unclean claims, and give each department detailed feedback about what they need to improve. Knowing the financial impact of mistakes might be the best way to reinforce the importance of getting it right the first time.
- Identify practice management system features, such as coding audits, eligibility checking and demographic edits, that help you enter information correctly. Automation can also help ensure efficiency.
- Monitor your clean claims ratios monthly, provide feedback to staff, celebrate improvementsand analyze results. Investigate what reports can be run from your practice management system. If it does not provide clean claims ratio reports, you might consider pulling the information from available reports on number of claims filed, rejected, "errored" and denied to establish your own measurement for this important metric.
Clean claim definition: It has no defect or impropriety, including any lack of required substantiating documentation or particular circumstance requiring special treatment that otherwise prevents timely payment.