Webinar Recap: The Path to Success in Proactive Denial Management & Prevention: 8 Tips to Set You Free from Claims Denials

By nThrive | Posted: 02/26/2018

Free up the revenue frozen by denials

Out of a total $3 trillion in total claims submitted by health organizations, $262 billion have been denied, averaging nearly $5 million in denials per hospital. 65% of denied claims are never resubmitted and 58% of all denials were from commercial payors, up from 54% in 2016, according to nThrive Principal Director of Revenue/Charge Audit Glen Reiner. In 2017, we found that many health organizations are overwhelmed by the time, resources and money it takes to appeal denials, and are not sure how to develop a prevention program that won’t overburden their teams.

Valuable guidance was offered at the recent nThrive webinar through HFMA, “The Path to Success in Proactive Denials Management & Prevention,” led by Director of Patient Financial Services at Maricopa Integrated Health System (Maricopa) Kathie Kirkland, and Glen Reiner. The two experts shared how to track down problems in the revenue cycle that could be causing high rates of denials, and how to prevent denials in the first place – the most effective way to produce clean claims. They pointed out how upstream issues – in areas like scheduling, patient access, or care delivery – can camouflage problems downstream, which is why root cause analysis is so important. They also noted how market trends such as increasing patient liability, frequent system mergers, and electronic medical record (EMR) upgrades frequently cause an uptick in denials, which can become unmanageable.

Maricopa and Denials

Five years ago, Maricopa transitioned to a new patient accounting system, which resulted in a backlog of denials. The health system didn’t have enough staff to work the denials and outsourced some of the backlog to focus on identifying root cause issues. Their analysis identified record requests and precertification (system logic issues) as two key areas for improvement. A subsequent strategy session led the team to focus their efforts on enhancing the health system’s EMR in order to eliminate issues that led to denials in the first place.

This is just one of many cream-of-the-crop best practices shared during the webinar. We’ve assembled a list of denials life hacks based upon Maricopa’s journey to a cleaner claims system to set you on a similar path to timelier reimbursements.

Here are eight life hacks to set you free from claim denials:

1. Know your numbers

Before you tackle high denials, identify your initial denial rate, claims rate and dollars rate. Armed with this additional level of specificity, you’ll be equipped to dig into root cause issues, discover opportunities for improvement and define the size of each opportunity. In other words, you’ll see where you can recoup the most money or where you can eliminate problem trends.

How to calculate denials rate: According to HFMA, the initial denial rate is calculated by the number of zero paid claims denied by total claims remitted.

How to calculate claims and dollars rate: The total dollars remitted minus total dollars paid, divided by total dollars remitted.

With these figures, you are learning where and how big the corrective opportunities are and can laser-focus your efforts on the most critical. The key is to make sure you identify all denials and that none are hiding.

Rate of appeals – how many claims should you appeal? There are two philosophies when it comes to balancing your rate of appeals: 1. You miss 100% of those you don’t appeal; and 2. If you fight too many bad appeals, you run the risk of wasting money that could be spent on prevention efforts.

In hospitals across the U.S., the best practice percentage of denials to appeal is 85 to 88%. Too high above or below this range indicates upstream problems. Appealing above 92% indicates you’re probably fighting too many losers and you may be camouflaging an upstream opportunity to prevent denials. Too low an appeal rate indicates to the payor that you’re not looking at the denials. The best practice is to appeal enough claims from each payor so that you’re trading ample information back and forth with each payor. Payors need to know where their opportunities are, as well, and must be confident that there’s a mechanism in your appeals process to communicate retrospectively with them.

If you appeal nearly every claim from a particular payor and you consistently win the appeals that indicates a strong opportunity to coordinate with the payor for process improvement. Likewise, if your appeals are losing, there’s likely a process error way upstream where you could make permanent process improvements to remove the problem.

Another tip: Don’t just hunt down the big dollar denials. Look at the smaller issues that occur frequently; repetitious errors may indicate a trend – another opportunity. Even if you choose not to appeal, there’s still something you could do to prevent that denial in the future.

2. Fish upstream

The important thing to ask when hunting for the root causes – how early in the revenue cycle process can the issue be addressed and corrected? The earlier in the process that you implement a preventive measure the more efficient your revenue cycle and denials prevention program will become. Analyze at the start of the revenue cycle process; many times, an upstream issue can camouflage a downstream activity. In other words, you may see problems downstream that are actually symptoms of root cause problems occurring in the beginning of the cycle. It creates confusion around accountability – who takes ownership? For example, within scheduling, authorizations are a major denials culprit in many organizations. An MRI out of the ED requires initial authorization, then there are additional authorizations for requirements. The question is, who owns what? If the claim is denied, it looks like an authorization denial no matter what. You’ve got to drill down into the data and push that denial prevention effort as early in the process as you can and be sure you apply the 835 data in your root cause analysis to the right area and the right portion of your process flow.

Kirkland and Reiner cited five main areas of the revenue cycle, and 36 functions within the areas (see end of blog for function list), where root cause issues of denials can occur:

  1. Scheduling
  2. Patient access
  3. Patient care
  4. HIM/charge capture
  5. Billing/collections

3. Leverage data and analytics

Data is key. Look at the data, look for trends. Kirkland mentioned that she considers data and analytics a resource she depends on daily. She models the data in different ways to uncover trends. Reiner observed that he sees organizations relying on their central analytics team for the central reporting they need, which can take weeks to obtain, creating bottlenecks.

Take advantage of analytics to uncover trends in data. If you don’t have real-time analytics capabilities, reporting delays can occur. Kirkland mentioned that she considers data and analytics a resource she depends on daily. She pivots the data in different ways to uncover trends. Reiner observed that he sees organizations relying on their central analytics team for the central reporting they need, which can take weeks to obtain, creating bottlenecks.

4. Team up

Develop a team to implement continuous improvements. Involve all departments

and meet regularly to discuss identified root cause issues and how to permanently correct them. Be prepared to encounter resistance from departments initially. They may be suspicious of another program and hesitate airing problems in front of others.

Each month Maricopa communicates denials by reason code and financial impact to different departments. Buy-in has increased, and departments are taking on more ownership. For example, departments such as Radiology now understands how they can help reduce denials.

5. Communicate carefully and don’t place blame

When it comes to sharing insights, a collaborative approach is key. Include enough information surrounding the results to put the numbers in perspective. To successfully prevent denials, colleagues must be able to trust that they won’t be blamed and there won’t be any consequences if a root cause problem lies within their area. If colleagues fear repercussion from discovered problems, you won’t get the cooperation you need to fix the problems causing the denials.

6. Include your payors in the conversation

Payors can also benefit from resolution of denials issues. Collaboration between the health organization and the payor to address denials can be a more effective way to achieve system efficiency. Kirkland shared that Maricopa addresses denials during payor JOC meetings. Maricopa identified denials issues that payors were able to address, and other health organizations benefitted from the correction, as well.

7. Productivity over quantity

All stakeholders want to work down a denials backlog as quickly as possible. What’s the best way to manage that process with limited time or resources? Tracking only the claims you’ve addressed can mask true productivity as measured by denied dollars recovered. Factor in the denial, appeal and win rates to achieve a more holistic view of productivity.

Kirkland shared that her team looks at the smaller denials that indicate trends, which could be corrected. Effectiveness can be measured by the number of denials the issue is causing or by the value of the corrective action.

Once you begin implementing corrections, you’ll see a combination of quick hit fixes, and other issues that require upfront investments and take longer to correct. You and your team must decide how you want to focus your attention and set the expectation. At Maricopa, they split their denials corrections between in-house resources and outsourcing the rest. For all the denials addressed, they maintain data and reporting.

8. Scope your hunting grounds

Here’s a list of areas within the revenue cycle where you may likely discover denials root causes:

Scheduling:

  • Benefit plan coverage
  • Benefit maximums exceeded
  • Eligibility
  • Experimental procedure
  • Authorization
  • Pre-existing condition
  • Medical necessity
  • Credentialing

Access:

  • Benefit plan coverage
  • Benefit maximums exceeded
  • Coordination of benefits
  • Eligibility
  • Experimental procedure
  • Authorization
  • Pre-existing condition
  • Medical necessity
  • Documentation

Patient Care

  • Medical Necessity
  • Authorization
  • Experimental procedure
  • Documentation

HIM, Charge capture

  • Documentation
  • Medical necessity
  • Experimental procedure
  • Authorization
  • Benefit plan coverage
  • Coding

Billing/Collection

  • Bundling
  • Coding
  • Demographic mismatch
  • Documentation
  • Eligibility
  • Authorization
  • Pre-existing conditions
  • Timely filing
  • Coordination of benefits

Summary

For denials prevention look upstream – drill into data for root cause issues and don’t blame; form cooperative payor relationships.  Case in point, Maricopa has active JOCs – change the way we think about denials and cooperate rather than contest, be persistent – make sure you communicate with them the same way. Internally, empower each functional area to say, “I didn’t know that was an issue, what can we do to fix?” More and more we’re seeing departments are seeking to understand how denials are impacting their areas, so they can help identify solutions.