By Jonathan Cook, MBA, PMP
Senior Solutions Manager, Streamline Health, Inc.
Denials management is an aspect of the revenue cycle that impacts net revenue and overall provider profitability in many different ways. In addition to hurting net revenue, denials also negatively impact cash flow and cost to collect as cash is held up in the appeals process and organizations must dedicate staff to resolve these claims in lieu of focusing their efforts elsewhere. Providers looking to truly move the needle in financial performance should target improving their overall denials management, including the processes, personnel and technology involved.
The elements of comprehensive denials management
Reporting & Analytics: Accurate, and timely reporting serves as the foundation of an effective denials management program. It’s critical to be able to unlock the data in hospital 835/837 files to gain a clearer picture of revenue cycle performance and support ongoing performance monitoring and improvement initiatives such as denials management and prevention. Unfortunately, as 835/837 files were designed to simply facilitate transactions and transmissions between healthcare organizations, they’re not structured in a way that makes reporting and analysis easy for the end-user. Once 835/837 reporting is available, the ability to link it with data from other sources (i.e., patient accounting system, contract management system) unlocks the ability to derive additional insights and root-cause relationships related to denials. A few of the key metrics and reports available are:
- Initial denied claims as a % of total claims submitted
- Initial denial rate as a % of gross revenue
- Denial write-offs as a % of gross revenue
- Appeal success rate (%, $)
- Ability to differentiate denials by clinical and technical reasons
All denial-related metrics should be available at an aggregate level, as well trended over time, broken out by payer, service lines, reason codes, physician, etc.
Workflows: A configurable workflow solution that intelligently routes claims based on various account and payer characteristics (e.g., CAS code, denial amount, cash opportunity, appeal window, etc.) to the appropriate area/department for resolution is critical to managing denials and improving appeal and success rates. The findings from the denial reporting should serve as a guide as providers assess and structure their denial and appeals workflow. The solution can also provide additional data around the denials management program by looking at current caseload, staff activity, number of accounts pending appeal, number of accounts with a delayed appeal response from payer, etc.
Moving from denials management to denials prevention
Robust monitoring ability, root-cause reporting/analytics, and clearly defined workflows designed to mitigate risk/maximize impact are all crucial elements of denials management. However, technology isn’t the silver bullet to optimizing denials management. Organizational resources and process changes are also critical to successful denials management. For instance, you should consider an Insurance Verification unit, clinical coverage for pre-authorizations and concurrent reviews, and an overall governance and committee structure whose responsibility is to monitor the volume of denials and define their root causes. This governance structure should be empowered to make process and policy changes further “upstream” in the process that attack the issue at the source, rather than having to continually manage denials once they occur on the back-end.
As we transition to ICD-10, denials will have an even greater impact on revenue cycles. By taking a holistic approach to denials management and implementing the correct tools and processes, your organization can mitigate the impact of denials and truly refine your cash flow and overall financial performance.