Managing Denials Across the Revenue Cycle

Denials erode the provider organization’s bottom line and require an inordinate amount of administrative work for both payers and providers. But they don’t need to. Change Healthcare experts David Dyke, vice president of product management and business development; Kamron Lachney, vice president of acute-care services; and Tammie Phillips, RN, vice president, business consulting; discuss how physician groups and health systems can optimize reimbursement for greater profitability.

Can you put into perspective how the problems of denial management are impacting payers and providers?

DYKE: Both payers and providers want to do the right things the first time. They’re increasingly challenged to figure out how to do that. From an operational perspective, the lion’s share of the work falls on the shoulders of providers, but that doesn’t mean payers are getting off easy. Magnifying levels of complexity mean payers struggle to ensure providers have what they need to get it right from the start.

LACHNEY: From the provider perspective, the biggest impact is on cash flow and margins. One in five claims are delayed or denied, creating 3 percent loss of net revenue. If you don’t address denials – and determine what is triggering them – you’ll get a snowball effect.

PHILLIPS: The problem is worsening as the complexity of claims processing intensifies. Health systems are transitioning more patients across multiple settings and specialists, requiring multiple claims. Our population is aging; therefore, care needs and delivery complexity are increasing. Comorbidities and chronic conditions are more prevalent, requiring a population management approach that extends into the community.

What are the top three reasons for denials?

LACHNEY: The most common reasons are registration/eligibility errors, service not covered and missing data/invalid claims. Frequent errors we see are lack of coverage on service, claims not deemed medically necessary, lack of pre-authorizations and missing information or invalid modifiers.

DYKE: The causes for denials are the very specific things that Kamron mentioned; but, if you look at the why behind those causes, it’s often volume and complexity. It can be hard to find information, or to reach the necessary payers. There are many components, and a lot of manual work, which increases the risk of errors.

How can providers prevent or reduce them?

LACHNEY: Benchmarking is critical for preventing or reducing those denials you know are recoverable. There also comes a point when you have to acknowledge a denial is truly a denial, and more time and resources can’t be spent trying to get it overturned. A robust write-off process on your backend needs to be in place.

DYKE: Improving coordination of information between primary care physicians, specialty physicians and health systems – some on the same platform and some not – is critical. Fewer and fewer patients have one payer. Sending a claim out to all of a patient’s payers is both right and wrong, depending on the service. The better the information is coordinated among all the players, the better your outcomes will be. Using analytics to measure denials, and then pinpoint and address root causes allows you to prevent and manage denials in a more strategic, deliberate manner.

What’s the best strategy to manage front-end patient access tasks like financial clearance?

LACHNEY: Utilizing technology to increase efficiency on the front end is vital – things like automating pre-authorization and screening for verification. When we use the technology available to stop denials, improve the process and make more investments in the front end, overall costs are reduced, a lot of unnecessary backend work is eliminated, and the payoff can be millions of dollars back to your bottom line.

PHILLIPS: The solution to the pre-authorization issue is to shift from a reactive approach to a proactive solution that provides more points of integration and a seamless flow of information from provider to payer and back to provider. Plus, by providing clinical guidance and evidence-based support throughout the process, providers can improve efficiency and reserve expert resources to address those complex cases that require exceptions. And by driving automation into the authorization workflow, you can ensure accuracy at each step including meeting time, place and manner-of-care constraints.

DYKE: There’s a very real opportunity to look at front-end practices and tools to understand where investments could be made. Tasks that can be done in advance – such as checking eligibility and determining out-of-pocket expenses before services are performed – help drive quality and sustain the revenue cycle. Automating pre-authorization screening and verification can both streamline front-end processes and reduce downstream denials related to authorization.

What can organizations do to ensure better accuracy in billing and coding?

LACHNEY: We have to make investments in our staff around training and education specific to coding. It’s important to have dedicated resources for specialties and that coders are up-to-date with any changes. That means maintaining appropriate training and constantly editing rules and adapting workflows.

DYKE: To ensure better accuracy, organizations need a continual improvement process for rules applied to claims before they go out the door. Edits are like underwear – they should be changed daily. It’s important that you are always running your claims against today’s edits because it’s going to be built around yesterday’s denials and yesterday’s publications on the rules. More importantly, it’s built around the discrepancy of what payers say they’re going to do and what they actually do.

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