4 keys to driving down denials

More than 3 out of 4 (76%) healthcare leaders say denials are their greatest challenge, according to a recent Healthcare Information and Management Systems Society (HIMSS) survey.1 At the same time, 82% of medical groups and 92% of hospitals planned to do away with manual patient bill processing efforts on the back end by the end of 2018. The reason: Manual work on accounts is prone to error and drives denial rates.

Traditional processes for revenue cycle management (RCM), especially in physician practices, may not be enough to support the collection of monies owed. In an era of high deductibles, 83% of practices with five or fewer physicians say slow payment from high-deductible patients has affected revenue.2 At the same time, commercial payers are scrutinizing more claims than ever.

Four key areas can help physician practices more effectively reduce denials and improve collection rates:

1. Identify denials with revenue cycle analytics

An estimated 9% of hospital charges are initially denied, one study found.3 For the average hospital, this equates to $4.9 million in net patient revenue put at risk each year. While 63% of denials are recoverable on appeal, it costs an average of $118 per denied claim to appeal.

Physician practices can more effectively reduce denials by using revenue cycle analytics to pinpoint the leading causes of denials. For example, the study found denials are most often associated with breakdowns in front-end processes, such as patient registration/eligibility (23.9%), missing or invalid claim data (14.6%) and authorization/precertification (12.4%).

Revenue cycle analytics give practice administrators the ability to discover the root causes of denials and determine ways to address gaps in performance, such as by providing access to real-time patient eligibility and demographic data at the point of care to verify coverage and correct errors in capturing patient information. A data-driven approach to improving revenue cycle workflows reduces denial rates and improves cash flow for physician practices.

Revenue cycle analytics also can provide key insight into the effectiveness and efficiency of RCM processes, such as:

• Claims monitoring activities from submission to post-adjudication, including how long it takes to get paid
• Progress toward key performance indicators (KPIs)
• How the practice’s RCM performance compares with other physician practices

An RCM analytics platform should feature robust reporting capabilities that help administrators uncover the main causes of denials. The platform also should include easy-to-view dashboards for sharing KPIs with physicians and staff.

2. Strengthen coding capabilities

Accurate coding is critical to achieving revenue integrity. Physician practices frequently face coding challenges, including:

• Undercoding claims, which occurs when physicians select codes that do not fully reflect the intensity of the work performed (typically out of fear that the claim will be denied)
• Neglecting to update old codes or include codes for specific services in the EHR
• Lack of familiarity with coding nuances, such as those related to Medicare or specialty-specific coding
• Failing to demonstrate medical necessity

Hiring a certified professional coder (CPC) is key to making sure claims are clean before they go out the door. A CPC can help educate physicians on the correct codes to support clean claims. This is especially critical for specialties such as orthopedics, neurosurgery and family practice, which typically have to keep up with an array of coding updates. Support from a CPC helps ensure revenue integrity and speeds payment times.

3. Post your charges daily

Insurance companies place time limits on claims submission (e.g., 90 days from the date of service). These deadlines vary by payer. When physician practices miss the filing deadline, the claim is denied, and practices lose their right to appeal. For example, a charge was inputted three months after the date of service. The practice lost revenue because it did not file on time. Posting charges daily helps ensure the physician practice meets all deadlines for claims submission.

4. Reexamine workflows to determine inefficiencies

Even high performers have opportunities to improve workflow, accuracy and efficiency. In reviewing your practice’s revenue cycle workflows, you should focus on the following:

• Determine whether your practice’s fee schedules are up to date. Keeping your fee schedules up to date will help identify whether payers are paying the negotiated rates for services. It will also provide a basis for comparison in negotiating in-network rates with commercial payers. Physician practices also can use their fee schedules to assess aspects of revenue cycle performance, such as charges per encounter.
• Ensure payer contracts are updated at least once every two years. Doing so is critical for keeping reimbursement rates in line with market rates. Regular reviews also ensure contracts are up to date, which ensures practices can collect the appropriate market revenue.
• Evaluate the efficiency of your prior authorization processes. Investing in tools that prompt physicians and staff for documentation that supports prior authorization requests often increases efficiency and speeds approvals.

Conclusion

Reducing the risk for denials isn’t easy in today’s reimbursement environment, so being proactive to limit risk is critical to the financial health of your organization. Continually look for ways to reduce days in accounts receivable in your organization and post charges daily. Doing so will better position your organization to capture revenue earned for care and services delivered. 

Notes:

1. “Dimensional Insight and HIMSS Analytics Survey shows healthcare organizations with multiple revenue cycle management systems have higher rate of denials.” Dimensional Insight. May 10, 2018. Available from: bit.ly/2xyH6KH.
2. “Providers driven to implement patient-centric financial solutions as consumer payment responsibility skyrockets 29%, Black Book Survey.” Black Book Research. Oct. 24, 2017. Available from: prn.to/2pwkOmg.
3. “Change Healthcare healthy hospital revenue cycle index.” Change Healthcare. June 26, 2017. Available from: bit.ly/2jro5mL.