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Denials management is a complex process that all hospitals and providers must go through. The national average for denied claims sits around 6% , and this directly hits your bottom line.

One of the first issues a hospital must tackle is how they are measuring denials; many simply don’t. Being focused on Days in A/R and daily operations often doesn’t leave the time. We completely understand, that’s why we provide an easy-to-use report that pull all denials by CAS/CARC (Claim Adjustment Summary/Claim Adjustment Reason Code) code. This is easily put into a pivot table. From here, there are three ways we tackle the specific denials that a hospital may be experiencing.

Most common types of denials:

  1. Eligibility Denials
  2. Medical Necessity Denials (Clinical Reasoning Denials)
  3. Authorization Denials
  4. Billing Denials
  5. Coding Denials

#1. Eligibility Denials
The most insidious type of denial, and thankfully, often the easiest to get out in front of, and reduce. These are denials where the patient didn’t have coverage, a provider had a certification lapse, or a facility certification lapsed.

How should your RCM help?
Your RCM should make it easy to get out in front of these with integrated eligibility checking, and a reportable doctor master where credentialing can be tracked.

#2. Medical Necessity Denials
These are some of the hardest to get a meaningful return from, as they require a fully enabled Utilization Management team to go after. These are denials where the payer feels that the charges are unreasonable, or the length of stay went beyond reasonable and customary. These usually require a clinical appeal, and this is not an insignificant labor cost.

How should your RCM help?
It should provide tools to help track UM efforts and build rules around problem claims.

#3. Authorization Denials
The third common type of denials are also easy to get in front of with proper business rules and reporting rigor. These are denials due to lack of a pre-authorization. This is a recent, but relatively common requirement from many payers. Services that are higher cost, like imaging, implants, certain advanced radio-surgical techniques, and others require a provider to get permission from a payer before performing the procedure in order to get paid.  The good news is that these are almost always spelled out in the payer rules manuals.

How should your RCM help?
Your RCM should provide a rules engine that can help you trigger an alert when attempting to schedule these procedures, so that you can enable a business process to stop these denials in their tracks.

#4. Billing Denials
The fourth type of denials are “technical denials”.  These are errors are generally human generated. These include missing guarantor numbers, misspelled names, missing occurrence fields, and more. These are rarely technology errors. No hospital can eliminate these completely because we’re all human, but they are important to minimize.

How should your RCM help?
Rules and processes can help reduce billing denials. Also, a sophisticated platform can help, but these are generally caught and corrected in a ‘claims scrubber’. When there is mention of “clean claim” rates and denials, your RCM is trying to correct issues like this.

#5. Coding Denials
The fifth major type of denials are coding errors. These are errors that come from a claim that was coded incorrectly. The issue must be corrected in charging, documentation, or clinical practice. Coding errors can arise in different areas, but the result is an inefficient use of resources and potential for loss of revenue.

How should your RCM help?
Your RCM helps with these using good workflow management tools such as queues, UM worksheets, and more. Helping staff understand the technology and ensuring it does not inhibit their preferred workflow is important here and with all denials prevention and management.

The three main ways to tackle the above types of denials are focused on the drivers of any business:

  • People
  • Process
  • Technology

As mentioned above, people directly impact technical denials. Training and reporting can help drive people to improve accuracy and clean claims. The best performing Patient Financial Service teams or business offices tie incentives to accuracy and offer continued training. Processes, such as a review of claim files by payer before final submission, and a quarterly review of payer rules can help catch other issues with technical denials. Technology has historically been a stop gap, but with increases in machine learning, it is becoming easier for your RCM to identify trends and weak links in a department.

Correction of clinical denials is primarily a process driven improvement. This involves getting physicians and caregivers used to consistency. Documentation needs to be complete, and information governance tight. It is less a people issue, and definitely less a technology issue. Coding ER claims properly, for example, is largely a matter of boxes checked (Severity level, Triage, Treatment). Same goes for surgical intervention. There are standard tools to ensure consistency (3M/Trucode) that are in wide use.  Technology that can help revolves around machine learning to identify blips, odd claims, or code patterns that will trigger an upcode/downcode that consistency might cause a team to ignore.

Eligibility denials are most easily corrected with technology and minor process improvement. There are a plethora of commodity clearinghouse technologies to help check and recheck eligibility throughout a patient’s care journey. Minor process changes, such as always checking on registration/check in, can make a huge difference, as it allows corrections to be made real time, while the patient is present.  People are important, but talent is inherent to these improvements.

Authorization denials are 100% technology and process. The process involved is checking and rechecking payer rules on a consistent and repeated basis. Technology assists by making the eligibility check automated.  Even if physical calls are required to obtain an authorization, doing so before the patient arrives can generate thousands of dollars in on time A/R, rather than months of fighting for payment.

Denials can be tricky, but by putting focus on people, processes, and technology, you can really keep these in check – saving your organization money and your team headaches that come along with denials. To learn others ways your healthcare organization can save money, better serve you patients, and keep your staff happy, check out our white paper; The Future of LTC: Predictions.