Denial management has always been a speed bump in hospital revenue cycle management — and it’s just gotten more challenging.
In the past, shifting insurance guidelines, coding changes, and a shortage of qualified knowledgeable billers and coders has kept hospitals chasing denials, with rates increasing in recent years. While many organizations have made efforts to address the root causes of these trends, recent changes have made hospital denial management even more difficult.
To help you and your organization improve your billing practices, decrease denial rates, and build an overall healthier revenue cycle we’ve put together the tips and best practices below as a resource.
Hospital Denial Trends
First, let’s discuss the current state of denials in hospital revenue cycle management.
Hospital denial rates soared a full 23% between 2016 and 2020. While this has been the trend for years, the COVID-19 pandemic accelerated the increase, with a 20% jump in the denial rate in Q2 of 2020 — claims denied at initial submission jumped from 9% in 2016 to 10% at the beginning of 2020. By the third quarter, the rate was up to 11%, according to an analysis of around 102 million hospital remits [1].
But there is a bright side — the same analysis found that 86% of denials are avoidable. For example, more than one in four denials goes back to registration and eligibility [1]. This means that organizations like yours have potential to turn results around with a fresh perspective on your denials and by implementing solid best practices.
Hospital Revenue Cycle Denials Management Tips
If your organization is interested in improving your denial rates, it will be useful to review the tips from AHIMA below, looking for areas in your own current practices where they can be implemented [2].
Appeal Every Case Possible
If you aren’t dedicating resources to appeal every denial where documentation supports the original coding, you’re missing out on low-hanging fruit.
Make sure every denial is being reviewed for validity and that your staff is checking that documentation supports the way the claim was coded. The benefit to this is that, along the way, even if you are finding claims that shouldn’t be appealed for denials, you’ll have launched a process that helps you identify weak spots in your coding practices.
Work With Your Clinicians
ICD-10 drastically increased the complexity of your coding challenges and with ICD-11 coming in just a few years, now is a great time to start looping clinicians for support. Clinical validation can be invaluable when appealing denials, meaning beefing up your clinical documentation integrity (CDI) today can pay off in the long run.
Keep Letters Simple and Straightforward
When writing appeal letters, don’t give payers any excuse to push them off to the side. Make sure that the letter states the reason for denial and includes information for proper review of the appeal, including why you feel the claim should be reconsidered.
But keep things brief, concise, and factual. Don’t include documentation that won’t be needed or that will force payer representatives to work through more than they need to. If you have staff who seem particularly good at this, consider having them train others or take on this role themselves.
Cite Official Guidance
If there is any official guidance that supports your claim, make sure it’s included. For example, ICD-10-CM Official Guidelines for Coding and Reporting and The American Hospital Association’s Coding Clinic publications. Additionally, don’t forget individual payer guidelines to help make your case and prove that your claim is supported by their own standards.
Denial Management Best Practices
For many denial management leaders, navigating a shifting future influenced by increasingly complex coding and the long-term effects of COVID-19 will mean implementing best practices to support your hospital revenue cycle management goals. Here are a few to get you started [3].
Get Clinical Staff Involved
We mentioned this before as a tip for individual denials, but this should be a long-term goal for your organization. With the level of specificity that code sets now allow, integrating clinical knowledge into your denial management process isn’t an option.
Some hospitals, like Baptist Health South Florida, got ahead of the challenge, showing clinicians ICD-10 code books — something many of their clinicians had never seen before. Taking this step helps them understand their place in the hospital revenue cycle management ecosystem but also lets them know that the information is available if they’re ever interested.
Keep in mind that this is a journey. Some clinicians might not initially see the value in making improvements to clinical documentation practices and individual conversations and even training might be required. In general, make sure that your revenue cycle isn’t siloed off from clinical staff and you’ll be well on your way to the multidisciplinary team needed to navigate the modern world of denial management.
Leverage Data Analytics
If you’re using the same analytics processes and KPIs that you have been for the last decade, it might be time for a change. For example, many organizations calculate general denial rates across payers for a specific time period. HFMA recommends you calculate your denials rate by dividing the total number of claims denied by the aggregate number of claims remitted for a specific time frame. Your hospital should aim to keep this KPI as low as possible (the industry benchmark is 4% but lower is better).
Go beyond the general denial rate with advanced KPIs that provide insight by denial type and payer. This level of specificity will help you develop custom KPIs that track your most challenging denials and help you identify root causes for eventual resolution.
Be Smart About Your Technology
With the complexities of today’s coding and denials environment, technology is no longer a question of “do we need it”, but “how can we best incorporate it”. Unfortunately, a 2016 HIMSS Analytics survey revealed that 31% of providers were still using a manual claim denials management system.
But today, smart hospital revenue cycle management takes more than just stepping away from manual processes. Denial management requires optimization of tech choices around billing and EHR systems as well as patient scheduling and registration to really dig into the high percentage of claims denials that are preventable. Your tech choices should provide your staff with the information they need while enabling the denial processes and hospital revenue cycle management analytics your leadership determines will be best for your organization.
All of this though, isn’t a road you have to take on your own. From technology, to KPIs, and processes, partnering with an experienced outsourcer can be a smart first step in getting your hospital revenue cycle management up to speed for the future. If you want to start your new perspective on denial management with a partner who stays on top of hospital revenue cycle trends, contact us today.
References
[1] J. LaPointe, “Hospital Claim Denials Steadily Rising, Increasing 23% in 2020,” RevCycleIntelligence, 4 February 2021. Available: https://revcycleintelligence.com/news/hospital-claim-denials-steadily-rising-increasing-23-in-2020.
[2] K. DeVault, “Top Ten Tips for Denials Management,” AHIMA, 1 April 2020. Available: https://journal.ahima.org/top-ten-tips-for-denials-management/.
[3] J. LaPointe, “3 Best Practices for Hospital Claim Denials Management,” RevCycleIntelligence, 11 May 2017. Available: https://revcycleintelligence.com/news/3-best-practices-for-hospital-claim-denials-management.
