In this episode, we are joined by Olga Barone-Allan, Senior Manager of Onboarding & Delivery at BESLER, to discuss the top revenue cycle challenge facing hospital finance leaders today: Denials.
Highlights of this episode include:
- Background on why denials was identified by revenue cycle leaders across the country as a top challenge to their revenue cycle.
- Who at a hospital should be involved in creating a denial management strategy?
- What are the common denials that hospitals face and what can they do to avoid them.
- Strategies that hospitals can follow to accelerate the time-to-pay gap and improve their cash flow.
- And more…
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Patient Financial Services (PFS) has the responsibility to manage and reduce the payment delays due to claim denials. To progress toward the goal of no or limited denials, PFS must have a method for identifying and monitoring the denials, and an effective process for reversing and eliminating the denials. For this to happen, they must understand the reason for the denials.
Denial Management refers to the formal process of tracking denials, rejections, and/or appeals. It involves the coordinated approach to identify, assess and track ongoing denials as an aggregate (i.e., overall receivable) and percentage of denials by payer and/or denial category. Ideally, as part of the process, the denial rates and dollars will be matched to the actual denials overturned or days and dollars recaptured due to successful appeals and real time attention. If managed appropriately, a good denial team/process can significantly reduce unnecessary account aging and write offs.
It is critical to involve physicians, utilization review, registration, HIM, Clinical Departments, and all other applicable departments. Collaboration between the above parties in addition to Case management documentation and monitoring levels of care are so critical to an effective denial management strategy. In fact, traditional reporting structures of utilization management are being changed to report to or working very closely with PFS.
Some common denial categories:
- Not Medically Necessary
- No Authorization or Pre-certification
- Not eligible
- Lack of documentation
- Lower level of care
- Timely filing
- Diagnosis not in line with age and/or sex
- Diagnosis/procedure due not match
- Duplicate billing
- Billing error
In analyzing denials, you should evaluate them by inpatient versus outpatient, hospital service, patient type, CPT/HCPCS, and clinical departments.
Proactive approach in preventing denials can be achieved by constantly working and assessing your Unbilled/Discharge Not Final Billed (DNFB), Billing scrubber edits, Retuned to Provider (RTP) Medicare suspense daily. The information obtained by reviewing these reports daily can provide system, departmental, charge issues that could be resolved on the front end to achieve a higher clean claim rate.
Some terms you will encounter in Denial Management are specific to certain payers, for example:
- ADR (“Additional Development Request”) – Medicare suspends a claim when it asks for more information, a provider should send as much information as possible because inadequate documentation may result in another denial.
- CERT (“Comprehensive Error rate Testing”) – This post payment review occurs when Medicare pays a claim but then requests medical records and compares them to the claim to determine if the payment was correct. It is important to work with Medical Records Department (HIM) immediately as to expedite the appeal can be completed within the timely limits outlined on the CERT request.
- LCD (“Local Coverage Determination”) – This prepayment edits alerts if an item or service is covered within their geographic area for services not governed by national policy. A provider can appeal and have CMS revise the determination which the services and tests are medically necessary and therefore covered. Ensure true non-covered services are communicated to the client and for Medicare patient a signed ABN (“Advanced Beneficiary Notice”) is on file.
- NDC (“National Coverage Determinations”) – This prepayment edit ensures that covered services are medically necessary and reasonable.
Denials and write offs should be reviewed, analyzed, and managed to protect a provider from financial losses. It is critical to monitor administrative and clinical denials, under payments, partial payments, and inaccurate payments both by the payer and the provider.
Denials or rejections can be found in various points in the billing cycle, at any point, it is a payment delay or avoidance. These points include: the unbilled/DNFB, billing scrubber edits post bill drop, RTP post bill and denials. Correcting the claims prior to bill drop is the best way to minimize payment delays, but does not minimize the importance of all points of denials.
Ongoing contract review and staff updates on applicable contractual elements, changes, and covered versus non-covered services, authorization and referral requirements is also critical component of controlling future write offs. Inter departmental collaboration as well as aligning Case Management processes with Revenue Cycle is becoming more the trend because of Case Management’s role as patient advocacy and resource liaison between patient, payor and provider team. Bridging the gap between clinical and finance department is key for a successful and healthy revenue cycle.
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast®.
In a recent study BESLER conducted around revenue cycle vulnerabilities and opportunities, revenue cycle leaders across the country noted that denials are their top revenue cycle challenge.
We’ve covered that a bit in the past here on the podcast. But to dive into specific denial management strategies, I’m joined by Olga Barone-Allan who is the Senior Manager of Onboarding & Delivery here at BESLER.
Olga, welcome to the program.
Olga Barone-Allan: Mike, thank you for inviting me.
Mike: So Olga, denials is something that stretches across a hospital finance organization. Why don’t you start out by telling us who has specific responsibility for denials. Who actually owns it?
Olga: So, it’s always been Patient Financial Services. PFS always had to handle the denials. But historically, it was really siloed into patient accounting. And it was very frustrating for the staff because there was—
Denials are stemmed by the repercussion of a claim. So, it starts from the beginning. And as time has gone on, there has been somewhat of an evolution of who owns it and who oversees it and who needs to get involved.
So, it’s been interesting over the years to see it evolve into what it’s gearing towards for the future.
Mike: So, who ideally should be involved in a denial management strategy at the hospital?
Olga: So, what we’ve seen more and more—which is the ideal situation—is that Patient Financial Services definitely has to be the spearhead of managing and tracking denial management, but also the various departments—specifically, physicians, the clinical areas, case management, utilization management, patient access, contract management. All need to work hand-in-hand with Patient Financial Services to make the denial management process work successfully at any provider facility.
Mike: So Olga, talk to us about some of the common denials that providers might face and perhaps any strategies that you would like to talk about to help avoid some of those specific denials.
Olga: That’s perfect, Mike, to go into some of the categories because, over the years, you can speak to any director or anyone in patient accounting or patient financial services, the themes are the same.
The names of the denial categories are the same: “not medically necessary,” “no authorization,” “not eligible,” “lack of documentation,” “timely filing,” “lower level of care,” “diagnosis doesn’t match the age or the sex of the patient,” “duplicate billing,” you know, “billing error.” So the themes are the same.
And it’s across payer, so it’s the same common bucket of denials that each facility is dealing with and struggles with throughout the years.
Mike: Yeah, it seems like denials are just sort of there. Now, they just happen almost routinely, particularly with certain payers that hospitals have to deal with. And it’s something that they have to kind of continuously go back and revisit, spend resources on.
Is there a strategy or a way that they can kind of circle the wagons and spend less resources on denials that are more common or specific to a certain payer?
Olga: And that is the key. When you’re tracking and monitoring the denials and collaborating with the various departments, the key focus should be in improving the process, trying to get the bill before it leaves the facility, before it’s billed, to make sure that all these edits or coding or additional documentation—if you know that a document, the standard denial is going to take place when the claim is processed for additional information, have it billed initially with the documentations attached to the claim.
Or if its lower level of care, make sure those types of claims are reviewed. There’s a scrubber in your mainframe or in your billing system to flag them and to prevent bills from going out before they go to the payer.
So, being proactive and meeting with the departments, making sure that eligibilities are being verified, medical necessity—you know if there’s an ABN, advance beneficiary notice, on file signed by the patient, making sure that the service is covered—that will help decrease the denial days and that duplication of productivity or time where the employee has to now double work or appeal the claim and rework that claim. It takes time.
And a lot of times providers, because they don’t have the resource and the budget, tend to write off these denials. And there could be good money sitting there that can be reimbursed and collected.
Mike: And we talked about this a little bit before the podcast, Olga, the idea that a denial might happen—sometimes they sit until you can get back to them because there’s just things involved that require staff time and staff are busy.
In your experience, are there any strategies or other things that hospitals could be doing to accelerate that time-to-pay gap and try to improve their cash flow by bringing in the money sooner from denials that they might get overturned?
Olga: Great question, Mike. Denials really do increase your AR days and your age trial balance. Unfortunately, the time, even though you have different workflows, bolt-on systems, or even internal mainframe workflows, to get to a denial, the amount of effort, most facilities do outsource their denial process or denial management accounts, because they just don’t have the time.
I would say the proactive approach in reviewing your unbilled, your DNFB, creating scrubbers within your mainframe in addition to your billing scrubber, are definitely key. Working your return-to-provider (RTP) and Medicare suspense is so crucial—working that regularly. And also, working your provider edits on a regular basis to see what is getting stuck in those categories. And then going back to the table to your various departments—your physicians, your case management, patient access, sitting with them and saying, showing them the value of the dollars that are hitting these categories, and then together with them, trying to strategize how to prevent them going forward.
Mike: Olga, when you think about a denial management strategy, are there certain terms that providers should be looking for when they’re considering their denial management strategies?
Olga: Absolutely! And I’ll mention them briefly, but there’s more on the blog that you can see more of the definition of what they overall mean and what can be done to help prevent them.
But additional development requests, the ADR, Comprehensive error rate testing is another form of denial; LCD, which is a local coverage, determination; NBC, national coverage determination. These are terms in the denial management world that most payers, Medicare specifically, have built modules that you can go into the Medicare or CMS to take a look at whether those charges are covered or if that service is covered and to prevent a denial from being posted and not collecting right up front.
These are things that can be incorporated when the patient comes in at the time of verifying services and scheduling. And it helps reimbursement collection occur faster.
Mike: That’s great information, Olga. And certainly, we’ve only just scratched the surface here of denial management strategies because they are many and complex. And this is certainly a tough issue for hospitals to deal with.
As Olga mentioned, there is some more information available up on the blog associated with this podcast. If you’d like to take a look, you can go to besler.com/insights, just look for the Revenue Cycle button. You can click on that and you’ll find this and a lot more.
Olga, thanks so much for joining us today on the podcast.
Olga: Thank you, Mike, for inviting me.