6 Common Medical Billing Issues & How to Solve Them (With Automation)

Why effective medical billing is so important 

Whatever good your healthcare facility or practice intends to do is limited by your access to capital. Want to hire staff so that you can spend more time focused on individual care? Want to invest in new treatment or diagnostic equipment? Simply want to keep the doors open and lights on? If so, you need money. And while grants and other funding sources exist, most revenue will flow into your organization via your medical claims billing efforts as you procure funds from both insurance companies and patients for delivered care.

Any disruptions, delays, or errors with your collections efforts can choke your overall cash flow and even have downstream effects on patient care. These problems might also limit your ability to comply with local healthcare and privacy regulations, inviting stiff financial penalties. Finally, smooth, efficient, and error-free billing is critical to building trust with both patients and insurance providers, as few things can sour a relationship more quickly than sending out an inaccurate invoice.

Common medical billing issues and solutions 

The face of healthcare is changing. Telehealth visits have become commonplace. AI is transforming processes both in the exam room and the back office. Subscription billing models are on the rise. And regulations demand lower costs and greater transparency. 

Given this growing administrative and regulatory complexity, many organizations have shifted to automated medical billing solutions to more quickly and easily address recurring problems, like:

Challenge #1: High claim denial rates 

Denials are, unfortunately, all too common among healthcare claims, with the American Academy of Family Physicians (AAFP) noting that a 5-10% rejection rate has been the historic industry standard. However, those figures seem to be trending up, at least for federally facilitated plans offered on HealthCare.gov. — one of the few industry cross-sections that is legally obligated to report on denial rates.

Per a study released earlier this year by the Kaiser Family Foundation (KFF) that reviewed data from 2023, the average denial rate for claims tied to HealthCare.gov plans was 20%. The KFF study also evaluated rates for all insurers operating in both California and Connecticut, states that also mandate denial reporting. In California, in-network claims were denied roughly 21% of the time, while in Connecticut, the total denial average was 23%.

Solution: Pre‑submission claim scrubbing & automated denial routing

To help reduce the likelihood that claims will be denied, many organizations have begun leveraging solutions — like our Accounts Receivable Automation platform — that can perform pre-submission claim scrubbing. These tools scan through the data contained in generated claims, verifying in seconds that this information matches other patient records, aligns with coding guidelines, and fulfills any other payer requirements. So it’s much less likely that a missing detail or a miscoded treatment will derail the payment cycle. 

In addition, most platforms also offer automated workflows that can route disputes or denials to an appropriate reviewer to identify, resolve, and resubmit any problem claims.

Challenge #2: Delayed or missed follow‑up on outstanding claims

Few things will damage your revenue more directly than the accrual of bad debt expenses by failing to ever collect on funds owed to your organization. And unfortunately, since this income originates from two different parties — insurers and patients — in a sequenced billing cycle, it can be incredibly easy for a given claim or invoice to slip through the cracks, particularly if you’re still using outdated, manually-driven dunning processes.

In fact, in a study of more than 1,600 hospitals and 100,000 physicians, Crowe LLC found that nearly 60% of recorded bad debt among these organizations was tied to self-pay-after-insurance patients — those payments that are chased at the end of the process.

Solution: Automated claim status monitoring and follow-up reminders

Commonly, automated A/R healthcare solutions will make it easy to track the status and location of your invoices from creation to closing, either through real-time dashboards or some form of integrated reporting tool. In addition, many platforms will offer a feature similar to our Smart Chasing, which lets you set customized outreach cadences with the tone, messaging, and branding you desire. And since these touches are prescheduled and can operate through multiple channels (e.g., phone, text, email), patients and insurers are much less likely to forget a current obligation.

Challenge #3: Labor-intensive manual billing processes

Manual accounts receivable efforts are directly dependent on the availability, productivity, and headcount of your staff. As claims increase in volume, as compliance demands greater effort, and as coding becomes more complex, you’ll need additional workers to compensate. So your ability to react to market shifts or growth will be dictated by how quickly you can locate, hire, and train new staff.

At the same time, expect regular delays in your invoicing workflows, since work can and will only be accomplished when employees are in the office and at their desks. And errors will be much more likely due to fatigue, distractions, or simple human error.

Solution: Automate your accounts receivable workflows 

With automated workflows, however, you can offload the mundane, repetitive aspects of your A/R onto the technology, freeing up your workforce to focus on more strategic and profitable endeavors. You can also cut out the unnecessary delays common to manual processes, as the automated solution can complete core tasks in constant succession, each step taking only a matter of seconds to complete. Commonly, you’ll only need to wait for staff to sign off on final approvals.

In addition, these streamlined systems can be easily scaled, only requiring additional processing power to handle larger workloads. And by eliminating the manual element, you can avoid typos, duplicate entries, and other common, human-caused errors.

Challenge #4: Inefficient patient billing and collections 

In another KFF study — this time conducted in cooperation with the Peterson Center on Healthcare and focused on analyzing government census data — we learn that roughly 20 million patients in the US owe an aggregate $220 billion in medical debt. That represents a sizable portion of tied-up capital for healthcare providers.

Of course, there are a host of reasons why a healthy portion of this debt can’t or won’t ever be paid, but the focus of your A/R efforts should be to keep that loss to a minimum.

Solution: Automated patient communications and flexible payment options

Patients are much more likely to pay you promptly when they receive notice of their debts shortly after receiving care. At the same time, they’re also much more likely to pay you if you can create a frictionless billing experience that doesn’t require them to figure out complicated processes or chase down additional payment details.

As such, you’d be wise to leverage automation to generate and send out invoices quickly, minimizing process delays. At the same time, offer convenient payment options, like a self-serve portal that can support a broad range of payment types. Or let your patients set up customized payment schedules that allow them to break up larger debts into a series of automated, recurring charges.

Challenge #5: Fragmented systems and data silos

Medical billing, when done correctly, relies on a lot of information. You’ll need access to treatment records, patient and insurer contact information, inventory lists, appointment schedules, and various other enterprise resource planning (ERP) systems. But many healthcare offices lack mature integration, meaning that considerable effort is typically needed to transfer information between these systems or into consolidated records like claims, superbills, and reports.

Solution: Integrate and centralize A/R data and processes

Fortunately, most automated A/R healthcare platforms come with broad integration support, letting you seamlessly push and pull data across common ERP, accounting, and other back office systems. In addition, more robust tools — like ours — will offer application programming interface (API) access, allowing you to surface billing functions within your existing dashboards and control panels if you’ve already invested in a modernized, tightly-integrated framework.

Challenge #6 Increasingly complex medical codes and regulations

While emerging technologies can help unlock more efficient and effective care practices, they also tend to create a host of medical billing problems. For example, telehealth visits are making it easier for patients to get faster access to treatment for simple medical issues while keeping associated costs low. However, this evolution of services has also further complicated the claims process as the American Medical Association (AMA) released a new set of more nuanced CPT codes earlier this year to categorize these developing processes properly. 

Similarly, new regulations continue to spring up dictating how telehealth data — or artificial intelligence (AI)-driven diagnostic information, or any innovation really, should be considered, handled, and stored. And these rules and associated compliance efforts only grow more involved as innovations transform existing care standards and policies.

Solution: Automated validation, coding, and reporting tools

Admittedly, you likely won’t be able to automate these efforts fully, but you can simplify them. Look for a platform that comes with invoice coding capabilities to help streamline the identification and application of medical codes to your payment requests. Some of this matching can be optimized more effectively with AI-powered tools and other validation measures integrated directly into your automated invoicing workflows.

You should also stick to offerings that include real-time reporting capabilities to document your ongoing compliance proactively. And with these records in hand, you’ll be in a much better position to address the questions and concerns of auditors, both internal and external.

How Invoiced supports easier healthcare billing processes

Whatever billing challenges your practice may be facing, you likely can overcome them — or at least mitigate their impact — by embracing automation. 

With Invoiced’s Accounts Receivable Automation platform, we offer an Automation Builder that lets you customize your A/R workflows to meet your billing needs for both today and tomorrow precisely. Take advantage of our Cash Collection Forecasting tool to develop high-accuracy predictions on when and how you’ll get paid. Additionally, you can leverage our CashMatch AI feature to ensure that when those payments arrive, they’ll be appropriately applied to the right patient, invoice, and account — no matter how complex the treatment or billing situation.

We’ve even augmented our platform with the global payment capabilities of Flywire software, so you can more easily deliver care across borders and receive payments in 140 different currencies.

Discover how much easier your medical billing can be and schedule a demo today!