Denials Management – Post ICD10

A number of years ago, I wrote an article entitled “Denial Ain’t Just a River in Egypt”, and it was picked up by several State HFMA‘s and a national publisher. At the time it appeared to be spot on with advent of the HIPAA transaction file and a good attempt at standardization and how to start a Denial Program. As with every morphing technology, Denial management” became the catch-all phrase for any process that healthcare providers hoped could lead to cleaner claims, standardized denial codes, and fewer denials from third party payers. Then along came ICD10, the Y2K of coding. Well, to the payers surprise it was the Y2K of 2015 all over. The healthcare providers did the hard work of absorbing the extra cost of setting up their systems and processes, testing them, running in parallel and making sure the transition would be as smooth as possible. The sky did not fall thanks to the efforts of the healthcare provider. Today, still, denial management can be part of an entire electronic medical record/billing system, or it can be a “bolt-on” to an existing system, possibly a Web-based system that reviews claims and normalizes data, it can also be a manual, retroactive review of denied claims off an excel spreadsheet. It is most often paid for through the up-front purchase of software within the current system, from the billing software, or by contracting with a vendor for a bolt on product for a percentage of collections or fixed monthly fee. The way you define and handle denials has a major impact on your bottom line. A number of providers have simple work lists or queues developed from the methods outlined in the previous paragraph to work denials. Fewer have comprehensive denial management programs which would include robust reporting, trending analysis, line item review, and/or items such as Alerts. That is the primary definition of the difference in “working” denials and “managing” your denial core issues. The objective is to not only identify and fix individual denials but to find the core issue, the Root Cause, and develop process improvement to prevent future denials. This culture shift requires having a process in place that enables staff to identify trends and take proactive, corrective action. Since the revenue cycle encompasses multiple departments, the process needs to span these departments. In the last article I wrote about senior management buy in and support amnesty for past sins and accountability for future missteps. rewards for .both positive and negative outcomes, and the use of technology. These are still true today. Many providers have some form of denial management, but just which form is a provider by provider case. Now that you have or are in the process of improving this, make sure that you have:

• Not just good reporting but meaningful reporting. You should have the ability to pull both claim level and line item denials, trend your denials over periods of time, and slice-n-dice and dive into the data easily to determine root causes either through cached reports or dashboards. The information should also be easily accessible to all departments within an organization directly. There should be a denial management team or taskforce to analyze the information and decide based on developed criteria, which issues to address.
• Have authority and responsibility roles clearly established: This will facilitate Denials being categorized and assigned to the department that can take corrective action to ensure that it is the most effective, efficient, and cost savings at the appropriate organizational level vs. the department level. For example, patient accounting/ billing may well be the best to correct a denial for a missing modifier by adding a modifier each time, but sharing this information with the task force responsible for the charge description master would provide a more efficient solution to the core reason.
• Put in place Incentive programs: Incentives should be put in place to help motivate staff and promote competition. Staff should be incentivized to not only appeal the denials successfully and in a timely manner but also to identify trends and share their knowledge. As cited above, a common scenario is the modifier correction. In this example, if an incentive program is put into place to reward a staff person for just correcting the modifier to “successfully” appeal a denial, which may result in inefficient behavior of fixing not finding a core solution. However, if the staff person identified the trend and shared the information with the task force, it could lead to a more efficient solution.

So remember, the healthcare environment is constantly changing. Provider organizations are experiencing tighter operating margins and are forced to do more with less. Any little mistake on your claim will impact this margin. Therefore, managing your denials and taking corrective action as soon as possible will not only save you a tremendous amount of time, but may actually improve your business. Set up a good denial management process to improve your revenue cycle and ensure you are getting reimbursed for all services rendered and make sure you have the right tools and organizational structure to support it.