Effective denials management strategies to drive growth

Over the last three years, most health systems have seen increases in denials. At the same time, it's becoming harder to get denials overturned and the time frames to appeal are getting shorter.

This is challenging since as many as one-third of healthcare providers use manual processes for denials management. 

During an October webinar hosted by Becker's Hospital Review, sponsored by Xtend Healthcare, two revenue cycle experts discussed different strategies healthcare organizations can use to drive growth:

  • Doug Polasky, executive vice president, Xtend Healthcare
  • Colleen Goethals, vice president, mid-revenue cycle, Xtend Healthcare

Five key takeaways were: 

  1. Organizations must track their appeals rates. The industry best practice is to fight between 85 and 88 percent of appeals. The good news is that most can be successfully overturned. Denials fall into two categories: technical and clinical. "For technical denials, group and track them by payer," Mr. Polasky said. "Different payers deny for different reasons. Clinical denials are usually related to medical necessity. These typically require more time and resources to appeal, such as a peer-to-peer review or a nurse auditor who can help with the appeal letter."
  1. To prevent denials, it's essential to proactively identify root causes. Assembling a multidisciplinary team with a physician liaison is an effective way to identify why payers are denying claims. "In a recent study by the National Association of Healthcare Revenue Integrity, 63 percent of respondents felt that interdepartmental committee meetings were a best practice for identifying and addressing denial issues," Ms. Goethals said. An outsourced partner with coding and clinical resources like Xtend Healthcare can reduce the burden on revenue cycle teams and enable employees to focus on preventing denials.
  1. Carefully written appeal letters will reduce denial rates. Organizations should appeal every case where documentation exists to support the original coding. The most effective appeal letters are concise. They leverage clinical and coding expertise and include pertinent record excerpts, copies of the medical record when helpful, official coding guidelines and credentials of those who have reviewed the appeal.
  1. Analyze the claim workflow to determine problem areas. Two top causes of denials are registration and eligibility. "Those areas are connected, with almost 27 percent of denials," Mr. Polasky said. "It's not surprising that many errors come from the front end, since scheduling and registration are areas in the hospital with the highest turnover."

Educating front-end employees about the importance of their work to the process of claims approvals can be helpful. Organizations should also evaluate how long it takes to work denials. "A recent survey revealed that for each claim that is denied and overturned, it takes an additional 21 to 45 days for reimbursement," Ms. Goethals said. "The best practice is to work denials within 48 hours of receipt. It's important to add that into your workflow, if possible." 

  1. Tracking and reporting denials data increases visibility into this important area. Reports should include information like denial trends, cases that were overturned and failed appeals. "With data, you can educate physicians and also explain to administration the financial impact of denials that were successfully appealed. That will speak volumes to your CFO about the value of your work," Ms. Goethals said. 


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