Why Revenue Leakage Happens In Healthcare

When a healthcare professional provides services to a patient but does not receive reimbursement, this situation is referred to as “revenue leakage.” Typically, it occurs when accounts receivable go too long without being paid or are unintentionally forgotten.

The likelihood that healthcare providers will recover payment, even in part, decreases the longer an account receivable is unpaid. Providers should typically expect to receive little more than a penny on the dollar in reimbursement and a denial management solution if the AR cycle lasts more than 120 days.

There isn’t a single solution that addresses the causes of leakage because the credentialing services for providers’ methods, its clients, or its payers could all be at fault. Nevertheless, a broader strategy or outsourcing to a revenue cycle management firm may aid in minimizing revenue loss and the ensuing financial harm.

RCM and AR Cycles

Accounts receivable and revenue are viewed by a medical billing company near me as part of a cycle that starts with the patient’s initial appointment booking and lasts until that care provider receives payment.

The goal of revenue cycle management is to lessen inefficiencies that result in ARs being ignored by patients, rejected by payers, and ageing without notice or follow-up. From the moment the front desk begins gathering the patient’s information, a more comprehensive RCM improves the provider’s process flow.

Top Reasons for Healthcare Revenue Leakage

Many factors may contribute to revenue leakage, but healthcare practitioners can find remedies by understanding the main causes. Revenue leakage can be ascribed to various major causes, according a site that offers management services to healthcare organizations:

  • Not getting permission from the payer before providing care
  • Inaccuracies in confirming insurance upon patient check-in
  • Incorrect registration data entered
  • Incorrect or insufficient billing documentation of medical procedures
  • Undergoing a surgery without having insurance
  • Refusals of payer reimbursement
  • Delays or mistakes when codifying claims submission procedures

Healthcare revenue leakage refers to the loss of revenue in the healthcare industry that can occur due to various factors. Here are some common reasons for healthcare revenue leakage:

Coding errors:

Incorrect coding of medical procedures and services can lead to revenue leakage. If a service or procedure is not properly coded, it may not be reimbursed by insurance companies or may be reimbursed at a lower rate than it should be.

Billing errors:

Billing errors such as incorrect patient information, incorrect dates of service, or incorrect billing codes can lead to revenue leakage. These errors can cause delays in payment, denials, or underpayments.

Denials and underpayments:

Insurance companies may deny claims or underpay claims for a variety of reasons, such as incomplete documentation, medical necessity issues, or incorrect coding. This can result in revenue leakage for healthcare providers.

Inefficient revenue cycle management:

Inefficient revenue cycle management practices can result in revenue leakage. This includes issues such as delays in claim submission, lack of follow-up on denied claims, and inadequate documentation.

Contractual issues:

Contractual issues with insurance companies or other payers can lead to revenue leakage. For example, if a healthcare provider is not aware of all the terms of a contract with an insurance company, they may not bill correctly and miss out on revenue.

Unbilled services:

Unbilled services are services that have been provided but have not been billed. This can happen for various reasons, such as incomplete documentation, lack of communication between departments, or inefficient billing processes.

Inaccurate charge capture:

Inaccurate charge capture refers to services or supplies that have been provided but not properly charged for. This can happen if charges are not captured in real-time or if there are errors in charge entry.

Lack of training and education:

Lack of training and education for healthcare providers and staff can lead to revenue leakage. If they are not properly trained on coding, billing, and revenue cycle management, they may make errors that result in lost revenue.

The good news is that by simply evaluating their processes, identifying inefficiencies, and setting improvement goals, providers may address many of these causes of revenue leakage.

The primary source of claim denials continues to be unverified insurance coverage. Medicare and Medicaid claim denials are typically caused by coding errors.

Claims that are denied due to erroneous insurance and billing information will be less likely to be denied if simple administrative errors are corrected.

Methods To Minimize Revenue Leakage

The following are some of the main methods healthcare providers can use to reduce or stop revenue leakage:

Process Improvement

The moment the revenue cycle with a patient starts, incidents that cause revenue leakage can happen. When staff enters patient and insurance information improperly, providers face the risk of payers rejecting claims at the very start of the cycle. Making errors while adding line items for services provided and the equipment utilized for claims further increases the likelihood that a claim will be denied. Process improvement entails:

  • Prior to the patient’s first appointment, obtain accurate information from the patient regarding their identity and insurance coverage.
  • Use appointment reminders to let people know what their expected fees will be in advance.
  • Emphasize to the front desk the importance of collecting patient copays very away after care.
  • Eliminate the AR ageing brackets from the bottom of statements, which give patients the impression that they can delay payments.
  • Prior to switching to phone calls, send no more than two notices via mail..

More Options for Payment

By not accepting a variety of payment options, many practitioners unintentionally restrict the amount of money they may collect from patients. This frequently occurs when businesses don’t provide payment plans or accept certain credit card kinds. Patients who leave without making a payment are 50% more likely to avoid paying their medical expenses later on. Finding measures to increase patient liability collection will assist stop significant revenue leakage.

Do not disregard patient balances.

Patient balances are frequently written off by healthcare providers. But in addition to being ineffective, it might also violate the conditions of an insurance agreement. Medicare and commercial carriers both anticipate that healthcare providers will collect patient co-insurance in the form of copays and deductibles. Healthcare providers run the risk of breaking their contracts and having the insurance provider reduce the permitted amounts to match the amount they took as full payment when they wrote off the patient balance.

Look for Uncovered Insurance Coverage

Patients frequently change or add new insurance without telling your intake personnel. Make it a practice to at the very least question each patient about any changes to their insurance at each visit. Another suggestion is to check for Medicaid coverage for Medicare patients without supplemental insurance and for self-pay patients at every appointment. Don’t forget to verify your system for qualifying charges because Medicaid pays for medical treatments up to three months before the patient’s coverage date.


Knowing the actual pricing of your services is one of the best ways to generate income. Planning and swiftly changing your charge schedule in accordance with the various insurance carriers will help you avoid underpayments. Seek professional advice while creating your fee schedules.

Also Read: Medical Insurance and Payment Methods

Jesse handerson

I am a professional blogger at a renowned medical billing company. I used to write quality blogs and articles related to medical billing company and practice management etc.

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