Clinical denials are a fact of life for hospitals. Providers must contend with a number of government audits conducted by several different organizations. On the private payer side, hospitals must comply with complex approval processes related to prior authorizations, admission status and medical necessity.
At Becker's Hospital Review's 10th Annual Meeting in Chicago, R1 RCM hosted a workshop focused on clinical denial prevention. Ronald Hirsch, MD, FACP, CHCQM, vice president of the Regulations and Education Group at R1 RCM, discussed how collaboration between physicians and utilization and revenue cycle leaders can minimize clinical denials and maximize payment for hospital services.
Start with the registration process
Accurate patient registration is the first step to preventing clinical denials. Two best practices are:
Medical necessity for services
Medicare and most private payers have published coverage guidelines for medical necessity. This doesn't mean, however, that obtaining pre-authorization for services is easy. Hospitals must pay attention to several areas:
Medical necessity for the patient status
If Medicare patients are hospitalized for two or more midnights, their status should be changed from observation to inpatient. Hospitals sacrifice millions of dollars by keeping patients in observation status after the second midnight.
Aiming for a "benchmark" observation rate is fraught with peril. Observation rates vary from hospital to hospital, based on the payer mix, the number of surgical patients, the formula for calculating the observation rate and more. Dr. Hirsch warned, "Don't compare your observation rate to that of another hospital."
For all patients, post-acute planning should start at admission. Commercial payers often withhold approvals for skilled nursing facilities, long-term acute care hospitals and inpatient rehabilitation facilities until the patient is ready to leave the hospital.
Eliminating silos and enhancing communication among clinicians and staff is essential for data transparency and for preventing clinical denials. "Staff, physician advisors and doctors can't prevent denials if they don't know what's being denied. To find trends, they must have access to denial and appeals data," Dr. Hirsch said.
There are always areas for improvement when it comes to looking at the revenue cycle, and many can benefit from utilizing technology, expert review and recommendations. The role of active and ongoing medical record review by physician advisors is crucial and developing a robust clinical denial prevention program with a revenue cycle partner can help practices focus on front-end processes, medical necessity and contract variations to appeal and prevent clinical denials.