For health system executives and revenue cycle staff, there is perhaps no challenge more vexing than claim denials. Denials can eat into an organization’s bottom line and the time-consuming process of appealing denied claims by itself can be costly, even when successful.
An estimated $262 billion of the $3 trillion in claims submitted by hospitals in 2016 were initially denied, representing an average of $4.9 million in potential losses per hospital, according to a 2017 study of more than 3 billion hospital transactions. The same study found that while more than 60 percent of the denied claims were ultimately recoverable, providers spent an average of $118 on each claim appeal, which amounted to $8.6 billion in administrative costs nationwide.
While preventing all denials is unrealistic, evidence suggests a vast majority of denials can be avoided. A study conducted by the Advisory Board in 2014 found 90 percent of claim denials to be preventable. The same study determined two-thirds of denials can be reworked. While providers need effective processes in place to efficiently and effectively rework denied claims, a proactive approach to denials through prevention should be the priority. When claims are processed without issue, both the patient and provider benefit. Denials prevention can help providers deliver timely and more transparent bills to patients, which can help boost patient satisfaction and potentially increase patient payments.
“Denials are essentially a delay in finalizing patient liability and the patient understanding what their responsibility is,” said Michelle Castillon, vice president of product line management for Conifer Health Solutions, a provider of technology-forward revenue cycle solutions, during an interview with Becker’s. “As the industry places more focus on consumerism and the patient experience, it’s really important that we streamline this process.”
However, for most, this process is not streamlined. Providers are largely locked into a reactive approach when it comes to claims management. At many health systems, winning strategies to prevent denials are often overlooked. And, even if leaders make denials prevention a priority, the very execution of such an effort presents its own set of challenges.
The data challenge
Healthcare’s data revolution is helping providers deliver more personalized care and achieve better outcomes. However, extracting actionable insights from the reams of data collected can be a challenge. Effective denied claims prevention requires providers to get their “arms around the data,” said Ms. Castillon.
More sophisticated data capture and analysis can empower providers with metrics that deliver actionable insights. Ms. Castillon told Becker’s that Conifer uses a technology-forward approach leveraging artificial intelligence and predictive analytics to evaluate a provider’s entire denials and prevention process. “We’ve started to measure the quality of each process and sub-process that can influence a claim throughout a patient encounter,” Ms. Castillon said. “We’ve established an arsenal of metrics that creates a report card for the whole process.”
To streamline the patient billing experience and optimize revenue cycle management, hospital and health system leaders need to empower staff with metrics that matter. However, Ms. Castillon pointed out that metrics and technology alone cannot reduce the rate of denied claims. Ultimately, technology and processes are only as good as the teams that support them.
“You can have great data and great programs, but if the people that need to participate don’t feel accountable and take ownership of these programs, then the initiative will flounder,” Ms. Castillon said.
Foster accountability with a collaborative, top-down approach for denials prevention
A proactive approach to denials prevention requires collaboration between clinicians, executives, administrators and others. Educating team members about their role in the process and how it connects to the organization’s broader goals can be a challenge, but it’s essential. Leaders should establish educational programs so new documentation processes are well understood and used correctly in a manner that doesn’t increase clerical burden. Additionally, organizational goals need to be communicated in a way that resonates across disciplines and roles.
Generating buy-in among clinicians can be particularly difficult because they want to focus on patient interactions, not administrative tasks. It should be made clear to frontline providers and clinical leaders that if financial goals are not met, it will hinder the organization’s ability to invest in technologies, staff and programs that can directly influence outcomes. Clinicians should also receive the message that when patients have a transparent financial experience, they are more likely to be satisfied with their clinical care. These communications need to be delivered from the top down.
Dawn Castro, vice president of accounts receivable management with Conifer Health Solutions, told Becker’s she worked with a provider that had trouble achieving success with a denials prevention program. Ms. Castro said when she assessed the program, she realized the organization hadn’t been able to align incentives and promote ownership of the program among staff. To solve the program, the provider created a multidisciplinary leadership team that included executives, clinicians and case managers.
“We made the CFO a leader of this effort and made sure financial incentives were communicated to team members,” Ms. Castro said, adding that the organization’s CMO also got involved and was able to facilitate better physician education to support the program. This top-down communication allowed for better collaboration and helped promote a sense of accountability for the program’s success among staff.
“We communicated in a much more collaborative fashion in a way that made the program more personalized for the individuals involved,” Ms. Castro said. “We focused on aligning incentives across collaborators and this really promoted ownership of the program.”
Cracking the code on denials
Inefficient claims management can put the fiscal health of hospitals and health systems at risk. Leaders can help protect their organization’s financial viability by implementing processes and technology that support a more streamlined approached to claims management. When assessing potential solutions, providers should look for technology partners that not only offer sophisticated tools but have the leadership experience to support the implementation of a top-down, collaborative approach to denials prevention.
“Claim denials cause a lot of downstream burdens,” Ms. Castro said. “And we know denied claims are complex, but we believe we’ve cracked the code through collaboration with our clients.”