| 09.23.2020

Hospital leadership continues to face complexities in hospital denials management.

When you have challenges with complex issues like hospital denials management, it can be tough to pinpoint the right solution strategy. The problem is big enough, extending beyond facility walls, that it requires some nimble thinking and the right mix of tactics to get it under control. In this article, we review some recent insights that jump into the challenge from different angles.

From an article on four healthcare complexities driving up claim denials, at the Olive blog:

“Given the ever-changing complexities around claims management and processing, it comes as no surprise that approximately 9% of insurance claims submitted are denied, costing health systems as much as 3.3% of net patient revenue.² And that’s not considering the expense of rework –  this added effort also drives up hospitals’ total cost to collect.”

The article quoted above goes on to list the four complexities behind increasing claim denials:

  1. Resources are stretched thin, and so processes are riddled with errors
  2. Denials management and financial clearance processes are too decentralized
  3. EDI transactions are complex and imperfect
  4. Payer complexity continues to increase

This longer article goes into detail on the above four “complexities” while giving related stats and observations from the Olive company perspective as a healthcare AI developer. This results in insights like:

“Why are 23.9% of claims still denied due to eligibility and registration issues? That’s partly because of a broken billing process across the revenue cycle and disadvantages that come with the current electronic data interchange options.”

Then there’s a finding “that insurance companies are increasingly leaning on utilization management techniques like prior authorization to avoid payment, and even after patients receive authorization, their insurers may still refuse to cover treatment costs right away. All of these additional touches to patient accounts are increasing the overall cost to collect for hospitals across the country.”  

Silos, Payer Focus and Clinical Validation for Hospital Denials Management

The HFMA cuts into the challenges from related but different perspectives. In an article  “emerging trends call for a proactive denial and appeal strategy,” HFMA (Healthcare Financial Management Association) editors identified three more challenge areas for hospitals to focus upon.

  1. Clinical validation. We’re seeing an increase in clinical validation denials that are based on a combination of clinical indicators and coding references by the payer. Placing clinical validation under the coding umbrella further complicates the appeal process.
  2. Payer targets. Payers tend to focus on 10 to 12 diagnoses. Knowing those focus areas is critical to flagging records for a more in-depth review. Use of data analytics to identify the diagnoses that show the highest denial rates and revenue risks is the foundation for building a proactive denial prevention and appeal strategy.
  3. Managed care contracts. Breaking down silos extends beyond coders and physicians to include managed care. Organizations are increasingly focused on how diagnoses are defined in managed care contracts and the impact on payer denials. 

Looking forward and backwards with audits

The way industry experts look at the hospital denials management problem is interrelated but differs on strategic approaches. 

Revcycle Intelligence has an article reviewing “the right blend of retrospective and pre-bill reviews.” In this article we learn that, “The retrospective audit enables providers to explore their internal coding processes to identify underlying issues or high-risk areas based on the organization’s history. The audit is also a key way facilities can track coding accuracy and quality performance.” In contrast, the article explains that “pre-billing validation is focused on the here and now. Compliance staff engages with pre-billing audits once coders have completed their initial coding and before the claim goes out the door for reimbursement.”  

The article quotes Julie Tyson, CCS, RHIA, coding services consultant at 3M, observing that, “Aggressive CFOs are looking to drop a hospital bill two and three days post-discharge; it’s hard to turn a bill around that fast if you’re adding pre-bill auditing. It’s going to take you longer.” For this reason, “organizations should be marrying retrospective and pre-bill auditing to develop a comprehensive compliance program.”

Balance your approach to auditing, get a handle on your electronic data exchange, and understand payer focuses and complexities which include how “hospitals are constantly battling denials as payers require authorization for more types of procedures, or adjust policies without any notification to providers. That’s not including the large volume of claims that end up not requiring authorization at alltoday, 30% of services don’t require prior authorization, yet organizations still waste time by checking their necessity,” explains Rachel Mooney writing at the Olive blog. We see the same situations for Revint’s hospital clients and that’s why we bring a skilled team of clinicians, attorneys, and reimbursement specialists to work for you in our Denials Recovery solution