Utilizing MAC Denial Trends to Facilitate Process Improvement
By: Vicente Farina, MBA, Senior Manager

The Revenue Cycle is presented with daily challenges ranging from the daily pressure on cash, to managing operational improvements, to information technology initiatives. The staff is prepared and trained to handle these challenges while also completing the assigned tasks within the process to ensure that cash flow is not impacted. One of the key areas that staff continuously monitors and manages is denials. Given the potential negative impact that denials may cause in cash flow, denials remain on the top of management’s priority list.   Medicare Administrative Contractors (MAC) share denial and rejection information regularly with the provider community through outreach sessions. A recent review of the most common Medicare denials from different MACs reveals that providers face similar issues and challenges since denial and rejection reasons reported are consistent across all regions. The key to managing denials has always been to identify and understand the root cause that led to the denial. There are countless reasons why claims and charges are denied. For purpose of this article, the rejection reasons were grouped into three key denial reasons:

• Eligibility

• Coding/Coverage

• Billing

Eligibility- The origin of most denials can be traced back to inaccurate and incomplete information obtained at the time of insurance verification. For example:

• The Centers for Medicare & Medicaid Services (CMS) Common Working File (CWF) indicates the beneficiary's name and health insurance card number do not match.
• CMS records indicate the beneficiary is not in file.
• Claim date(s) of service are overlapping a Medicare Advantage Organization (MAO) plan enrollment period.
• Claim submitted as Medicare primary and a Workers’ Compensation insurance 15/E record exists at CWF. The claim should be billed to the primary insurer.
• The service date(s) on this claim overlap a hospice election period and Condition Code 07 is not present.
• CMS records indicate that the beneficiary is not entitled to Medicare coverage for the type of services billed on the claim. Therefore, no Medicare payment can be made.
• Claim submitted as Medicare primary and a positive working elderly record exists at the CWF.
• The beneficiary’s entitlement for Medicare coverage was terminated prior to the first date for services provided on the claim.

As trends emerge among providers and within the facilities, providers should focus on identifying the root causes of the issues. We recommend the following course of action to enhance internal controls and mitigate future denials:

• Verify eligibility data is available to staff upon registration and that all insurance information is confirmed through the registration process.
• Review and refine as needed processes related to insurance verification for scheduled patients. Better performers conduct insurance verification for all scheduled patients prior to service.
• Internally monitor and track eligibility denials to identify the point of registration.
• Share historical and concurrent denial data with all registration points specifically decentralized registration.
• Refine insurance eligibility processes based on denial trends for all account types.

Coding/Coverage- Coding and Coverage denials stems from rejections resulting from inaccurate diagnostic and procedural coding including:

• Invalid Healthcare Common Procedure Coding System (HCPCS) code for a revenue code reported or HCPCS is not valid for the date on which the services were provided.
• The principal diagnosis on this claim is V048 or V0382 and there is no condition code A6 present. Effective with dates of service 10/01/2003, diagnosis code V0481 is present and there is no condition code A6 present.
• Inappropriate specification of bilateral procedure.
• Multiple visits on the same day without an appropriate condition code.
• A source of admission code is required on this claim.
• Claims billed on or after 07/03/2006 bill type 12X, 13X, 22X, 23X, 34X, 74X, or 75X with revenue code 042X must have an Occurrence Code 29 present. If Occurrence Code 29 is present, then revenue code 042X must be present.
• Inpatient acute care hospital claim with a discharge date on and after 04/01/2008 must contain a valid present on admission (POA) indicator.
• Medicare payment cannot be made for these services because the claim does not indicate that the beneficiary had a three-day qualifying hospital stay (Occurrence Span Code 70) prior to admission to the SNF; or the hospital stay is prior to the beneficiary’s Part A effective date.

As facilities continually analyze the reasons for denials, inevitably the facility will reach a point of diminishing returns and rather search for a solution to be proactive in preventing denials instead of retroactively correcting them. Subject to the staffing resources and expertise, we recommend the following best practices:

• Review the Local Medical Revise Policies and National Coverage Determinations for Medicare with regard to the diagnoses that support medical necessity for these services. 
• Review services rejected as non-covered to verify that the denial is consistent with payer contracts and/or patient insurance coverage and is not due to inaccurate coding.
• Audit CPT, modifier and diagnosis code rejections for specific sample data for the facility.

Billing- Rejections resulting from inconsistent/inaccurate data on the claim not captured through billing edits or not responding timely to a request for additional information. These denials include:

• The operating physician is required or, if an operating Unique Physician Identification Number (UPIN) or National Provider Identifier (NPI) is present, the physician's last name and first name must be present. If any name is present, the UPIN or NPI must be present or NPP is an invalid UPIN.
• Timely Filing
• This claim is denied for payment because the provider failed to submit documentation requested by the intermediary within 45 days.
• The requested non-medical information was not received timely.
• This claim is an exact duplicate of a previously submitted claim where the following fields on the history and processing claim are the same
• Beneficiary was an inpatient in a SNF at the time these services were rendered. Therapy services rendered to beneficiaries in a SNF must be billed by the SNF.

Providers can take additional steps through process improvement or staff education to prevent denials. Revenue Cycle staffers can implement these process improvements without putting additional pressure on timely processing:

• Review bill edits and identification of what is not passing.
• Implement 72 hour edit check with claim submissions and ADR processing.
• Manage claim status/resolution lists to ensure clams are billed timely.
• Track and trend timely filing denials to identify the reason why claims have not been billed timely. Track account service types and coordinate internally to identify process improvement opportunities.
• Review and refine as needed internal processes related to SNF outpatients
• Track UPIN and NPI denials and work internally to make updates to the physician master

An effective denial management strategy encompasses processes and action items that allow facilities to track denials, rejections and appeals internally. Coordination the functional areas within the Revenue Cycle is essential to identifying and assessing ongoing denials as an aggregate and percentage of denials category. Given the abundant information available through the MAC, keeping current with the most common denials impacting the industry provides the Revenue Cycle areas information that can be used to assess its internal operations. In addition, it allows providers to informally results their practices against their neighbors. Unfortunately, only with a detailed review will providers be able to stack up their internal policies and procedures against industry best practices.

The rejection reason codes outlined in the article are not uncommon and if one looks back in previous MAC-provided summaries, the same codes appear consistently over time. Based on these repetitive results, it is clear providers are still in need of effective management of their denials process. This can be accomplished through a precise focus on the process with technology enhancements. However, the optimal solution cannot be a one-size-fits-all approach. Facility management has to first assess where they compare, identify trends in their data and attack root causes vigorously.  The facilities who strive to reduce the overall impact that these denials have, will be most effective in collecting every dollar that it is owed and on a more timely basis.

Vicente Farina has worked with BESLER Consulting’s Revenue Cycle service line since joining the firm in 2001. Prior to joining BESLER, he worked for an accounts receivable outsourcing company and a regional Health Maintenance Organization. He earned his undergraduate and graduate degrees from Rutgers University. Vinny can be reached at (732) 392-8215 or vfarina@besler.com.



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