The best denial recovery strategy: Prevention


Ask just about anyone whether they would rather be cured of a disease or not contract it at all and the answer will be obvious. It is one of the core principles behind value-based care and population health management.

Yet when it comes to dealing with claims denials, the opposite thinking occurs. Today one in five claims is denied or delayed. Most healthcare organizations still place the bulk of their efforts into appealing denials, despite the fact that 90 percent of denials are preventable. That makes little sense, especially at a time when financial resources and human resources are often scarce. Hence 65% of denials are never reworked, creating lost revenue.

To maximize revenue and minimize administrative costs, especially in an era of shrinking margins, healthcare organizations need to adopt strategies that will help them discover the root causes of denials so they can avoid them rather than simply manage them more efficiently. Most of the time denial issues result from information that is either missing or erroneous due to inefficient, manual processes or simple human error.

Here are some of the most common sources of denials – and how to solve them:

Verifying eligibility: The vast majority of denials – as much as 75 percent – are the result of problems with patients either being ruled ineligible or not covered for certain services. It only takes a small error, or one missing piece of information, to turn a legitimate claim into a denial. Manual approaches to verify eligibility and coverage of services during scheduling and registration processes are time-consuming and laborious, often requiring multiple phone calls or logging in to a payor’s website. Even if all the information is obtained, if it is entered incorrectly into the system it can still result in a denial.

Eligibility verification technology can solve these issues, ensuring a patient is eligible for all the intended services before they are provided – right up to the time of check-in. Automating the information-gathering process ensures that the patient and service data is entered accurately, without the risk of introducing human error. By sending quality information to the back office staff, the organization can ensure claims are as clean as possible, reducing denials and the administrative burden of attempting to fight them later. Thus, helping the organization secure more revenue with minimal effort.

Resolving bundled payments: Bundled payment programs are growing in popularity as a means to elevate the quality and consistency of care while incenting providers to drive down costs, but they can also be a new source of denials. One of the most common scenarios is a provider who submits an invoice for an episode of care that she doesn’t realize is covered under a bundled payment arrangement, as in the case of a specialist who receives a referral from a primary care physician (PCP).

Under the bundled payment contract the PCP is supposed to reimburse the specialist, but the specialist doesn’t know that and submits a separate invoice. If the hospital attempts to bill the payor separately for the specialist’s services, the claim will be denied. Revenue cycle management technology that is designed specifically to manage the intricacies of bundled payments will catch this error and flag it for correction, preventing the denial and the expense required to discover, correct, and adjudicate it.

Demonstrating medical necessity: While it seems like they should be fairly simple, the rules around what qualifies as a medical necessity are actually quite complex and arcane. Some health plans will cover certain services only if the documentation clearly and concisely proves there is a demonstrated medical necessity based on a clinically relevant, specific diagnosis. Making the determination whether the conditions present a case that meets the criteria for a medical necessity can be tricky, however.

Technology that identifies cases where medical necessity requirements must be present in order for the service to be covered, and provides details about what qualifies, are extremely helpful in reducing this source of denials. It gives staff and clinicians an opportunity to evaluate other alternatives, rather than risk performing a procedure that will not be paid by the insurance company. A signed advanced beneficiary notice, also gives the provider the ability to be reimbursed by the patient, if they choose to move forward with a procedure that insurance does not deem medically necessary.

Managing dual eligibles: The last few years have seen an increase in denials resulting from submitting claims for services that are already covered by another payer. One major source is so-called “dual eligibles” who are covered by both Medicare and Medicaid. There are also those who have supplemental insurance, with or without Medicare and/Medicaid. Claims that are submitted across these different payors will receive responses in different timeframes. That can be problematic due to deadlines for filing requirements and other factors.
Technology that identifies patients who have more than one form of coverage, and then organizes the proper order in which to submit the claims, not only reduces denials due to conflicts but also expedite payment.

Removing human error: Any time you have manual processes you introduce the possibility of errors. Something as simple as an incorrect age, or transposing two numbers in an address, or forgetting to fill out a basic field can result in a denial that must then be managed. Technology that auto-populates basic, repetitive information eliminates this source of denials by starting them as clean claims. Once the demographic information is locked down, more sophisticated systems can also provide a double-check to ensure that no information is missing and that the claim is clean and accurate. They may even have the ability to compare the current claim to past claims, enabling them to flag those have the potential for a denial based on past experience. If the system detects the possibility of an incorrect code, or a problem such as a charge for inserting a device but no charge for the device itself, it will suggest potential solutions so the claim can be corrected before it is submitted.

Being preventive: Just as it’s always easier and less expensive to prevent a disease or condition rather than treat it, the same is true of denials. It can take up to 75 minutes to work a single denial and appeal it manually. It may take an additional 15 to 45 days to receive payment for the appealed claim. The more often a healthcare organization can submit a clean claim, the fewer denials it will need to manage, the less it will cost to manage those few that remain, and faster the organization can realize the revenue it has rightfully earned.

By Ryan Feldt, Product Manager, Enterprise Solutions at ZirMed

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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