Denials Management for Hospitals – Headaches and Solutions

July 24, 2019

medical assistant filling the form

Hospitals continue to lose revenue due to denied claims. $262 billion in claims are initially denied with an estimated 63% recoverable making denials management for hospitals a key revenue recovery focus. What is happening and how can hospitals solve these issues?

Malissa Powers and Sabrena Gregrich writing for AHIMA (American Health Information Management Association) note: “Distinguishing coding denials from clinical validation denials presents an ongoing challenge. HIM professionals are seeing more clinical validation denials where payers use a combination of clinical and coding references which makes it hard to determine the type of denial. In some cases, payers inappropriately use a coding reference to support a clinical validation. This growing issue demands a dual approach to writing appeals. Coding experts—who specialize in coding rules and regulations—and clinicians—nurses, physicians, nurse practitioners, physician assistants—must work together to appropriately respond to denials. Collaboration between coding and clinical documentation improvement (CDI) professionals is essential.”

When you dig further into the denials management for hospitals problem, you learn how “payers are requesting larger volumes of records for Healthcare Effectiveness Data and Information Set (HEDIS) and risk adjustment purposes, placing unprecedented demands on HIM staff. There seems to be a fallacy that producing health records within an electronic environment involves minimal effort. Moreover, many payers now request direct access to the electronic health record (EHR), a controversial issue from both a data management and privacy/security perspective.” This insight, also from the AHIMA article, leads to some solution examples:

“Data collection and reporting are critical to an effective denial management program. At Yale New Haven Health, a large hospital and physician network based in Connecticut, the team has implemented denial management and appeal technology and combined it with a team of experts to manage the volume of denials and pursue the appeal process across the system. This dual approach aims to help the organization eventually shift from payer denial management to proactive denial prevention.”

Revenue integrity solution:

Working with our clients, your R1 underpayment recovery & professional services solutions team uses a variety of efficient tools and methods to tackle denials management. This includes clinical appeals, contract management, charge capture and proprietary pricing technology. We work with limited or no support from your staff to recover underpayments. We provide root cause analysis on all denials identified and recommendations to decrease future denial rates.

Insurance companies and government continue to frustrate denials management for hospitals

Are emergencies actually emergencies? Anthem says no and denies some claims. Moves by Anthem could reshape how payers increase denials. “Nearly one in six emergency department visits by commercially insured adults could face coverage denial if all commercial insurers adopted Anthem’s policy to potentially deny coverage for unnecessary ED visits,” reports Health Leaders Media editors. This from a study published in JAMA Network Open by researchers at Brigham and Women’s Hospital. The article continues, noting that “the researchers studied ED visits of more than 28,000 commercially insured patients and found that Anthem’s list of non-emergent diagnoses would classify coverage denial for 15.7%, or 4.6 million ED visits annually.”

And government-related denials resulting from new policies and decisions don’t seem to be slowing. In an article on “Hospital Outpatient Denials Looming,” at JDSupra, the authors report that “Starting in July 2019, the Centers for Medicare & Medicaid Services (CMS) will instruct Medicare Part A/B Macs to perform claim validation edits and return all claims to hospital providers if the address on their claim forms does not exactly match the information in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS). Any discrepancy, such as the difference between ‘Road’ vs ‘Rd’ or ‘Suite’ vs ‘Ste’ on a claim, could mean claims for services provided in hospital outpatient sites return to the provider, potentially resulting in millions of dollars in claims being returned and an obvious delay in payment.”

What can hospitals do? R1 has a complete suite of solutions that often involve an experienced interim Director of Revenue Management to get denials under control. When it comes to denials management for hospitals, R1 has developed a large practice to support our Hospital and Physician Practice clients. This includes account follow-up to resolve and appeal denials and support to verify insurance and mitigate insurance coverage related denials.

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