Denials, Denied: Moving From Denials Management to Denials Prevention

Posted in GeBBS Healthcare Solutions, Inc.

Denials coming from all payers are steadily increasing. Similarly, denied claims based on “medical necessity” related to coding inadequacies are also on the rise. Coding continues to be an increasingly complex process – leaving room for more errors that will lead to more denials. While every healthcare organization dreads the financial impact of denials, few have been successful at truly addressing them and preventing them at a holistic and systemic level.  With hospitals continuing to battle the global pandemic and all the financial hardships that come with it, managing existing denials both timely and effectively and moreover, preventing future denials, is more critical than ever.

From denials prevention, multi-level appeals, root-cause analysis, and performance improvement strategies – a comprehensive approach to mitigating denials is essential for a financially healthy revenue cycle. 

Strategies for Preventing Denials

It’s no secret that denials have cost health systems millions of dollars every year. The great news is that most experts agree that nearly 90% of denials can be prevented. While some denials will likely be overturned with some effort – the numbers for most denials aren’t nearly as impressive and the time and resources needed to correct, rebill, and appeal (rinse and repeat), far outweigh the work it takes to focus on prevention.

When it comes to preventing denials, there are several important strategies that will have a significantly positive impact on revenue cycle performance. Knowing where and why your denials are occurring and developing a comprehensive strategy to address them proactively is key.  Here are some tips for mitigating the 90% of preventable denials.

  • Improve Coding Accuracy. Coding can be a primary contributor, to be sure – so getting it right the first time will help prevent a proportionate amount of denials. Technology solutions such as coding workflow applications can help health systems achieve greater than 95% coding accuracy – which is certain to reduce subsequent denials.
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  • Get to Know Your Denials. Knowing which departments are causing most of your denials – as well as which areas are driving the most significant financial impact based on the value of those denials is a great place to start. According to a 2020 evaluation of more than 100,000 inpatient encounters conducted by the Advisory Board best practices firm, the service lines with the highest volume of denials this year include: general medicine, neonatology, and cardiac services. Specifically, the most common denials within those service lines occur around the treatment of sepsis, the provision of ECMO services, and eligibility denials due to the complexities around newborn coverage. Finally, understanding whether your denials are due to coding problems or issues with clinical validation can be tricky. Engaging clinical and coding experts to evaluate the data will result in greater success and a lower denial rate.

While each system’s data will be somewhat different – digging into your denials will help identify where you have opportunities for improvement and ongoing education and development.

  • Focus on the Fine Print. The increasing complexity of payer contracts has led to an increase in denials. Teams should be intimately familiar with each payer’s contract requirements – minor errors related to medical necessity criteria and other technical specifications can lead to preventable denials. Fully understanding these contract nuances on the front-end can help improve your odds of getting claims submitted accurately the first time – ultimately leading to fewer denials overall.
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  • Make it a Team Effort. No single department can be solely responsible for managing denials – it needs to involve a collaborative team approach. From health information management (HIM), clinical documentation improvement (CDI), and accounts receivable (AR) teams to nursing, physicians, and advanced practice providers all the way to the executive team – representatives across numerous disciplines need to be at the table. Regular and open communication, meetings to review data and set priorities, and ongoing team-based performance improvement efforts are all required to get your denials down and your performance up.

Best Practices for Appealing Denials

Regardless of how effective your denial prevention efforts are, due to the complexity of healthcare coding and related processes, there will be denials. While the appeals process takes significant time and effort, when done correctly, the denial can often be reversed – putting hard-earned dollars back into health systems’ pockets (where they should be). Here are some tips for improving your denial appeals processes.

Let Technology Help. Manual processes are not only time-consuming – they leave more room for human error. Fortunately, automated claims denial management systems can help streamline the process and save valuable time and resources. Staff can sort denials by dollar amount, payer, service type, date, etc. – allowing teams to work the denials with the greatest financial impact first. This can also help identify payer-specific issues that can be worked out between contract management teams and payers.

Engage Physician and Clinician Leaders. Yes, physicians and clinicians are busy – but they often hold the key to the appeals process since they must be engaged for clinical validation, questions, and concerns. Having a team of physician and clinician leaders engaged in the denials prevention and appeals process can help systems quickly recoup lost revenue due to denials. Engaged providers can also help generate awareness among colleagues by providing ongoing education and development of best practices that will reduce future denials.

Do Better Next Time. The average cost of appealing a denied claim is approximately $118. The less denials to work, the better off you’ll be. Take the time to review performance on an ongoing basis to look for opportunities. Engage multidisciplinary teams to focus on performance improvement and dig deeper into potential issues related to common coding errors, payer contract technicalities, and more.  Ongoing communication, education, and development can help reduce the incidence of future denials.

In conclusion, health systems that deploy a comprehensive denials strategy plan can significantly reduce their rate of denials and all the added associated costs too. It will also help improve AR metrics, cashflow, and operational efficiency, which are all key metrics to maintaining sufficient operating margins.

GeBBS Healthcare Solutions offers a wide range of coding solutions that can help prevent denials. To learn more visit www.gebbs.com

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