Jane Turner,BSN,RN,M.S., CCMVice President of OperationsPremier Medical Appeals

*Book by CK Prahalad

INTRODUCTION

DENIAL TYPES

COMMERCIAL VERSUS GOVERNMENT

DENIAL MANAGEMENT PROCESS

Decreasing profit marginsVolume leakage

Point-of-Service collection

Clinical documentation quality

Competing reimbursement models

Governmental regulations

Denials

Patient Safety and Quality

Technology

Managing risk-based health care delivery

Mergers/acquisitions/affiliations

http://www.beckershospitalreview.com/finance/cfos-name-top-6-challenges-in-2017.html

Medicare Access and CHIP Reauthorization Act

Transformative law Transition from: fee-for-service payment model

Transition to: risk-bearing, coordinated model

Bundled paymentsCMS joint replacement (April 2016)

CABG / AMI bundled payments selected markets, July 2017

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/three-reimbursement-changes-watch-2017?page=0%2C1

49.05%

29.27%

16.08%

2.80%

2.70%

0.10%

Private third-party payors

Medicare

Medicaid

Other government payors

Private self-payors

Other

Medicare Access and CHIP Reauthorization Act

Transformative law Transition from: fee-for-service payment model

Transition to: risk-bearing, coordinated model

Bundled paymentsCMS joint replacement (April 2016)

CABG / AMI bundled payments selected markets, July 2017

https://www.healthcatalyst.com/top-healthcare-trends-challenges

CMS - increased scrutiny to decrease costs

Hospital Provider - increased need for analytics Appropriate utilization of hospital resources

Minimize readmissions

Properly allocate costs

Physician Provider – incurring penalties (1%) for failure to implement Electronic Health Records

http://www.beckershospitalreview.com/finance/cms-releases-macra-final-rule-10-things-to-know.html

Any situation where a payment is less than the amount that was contractually agreed for the services rendered

The refusal of a payer to honor a request by an individual or the representing provider to pay for a health care service obtained from a health care professional

http://hcmarketplace.com/media/supplemental/3659_browse.pdf

EideBailly.com

Soft denial- A temporary or interim denial that has the potential to be paid if the provider takes corrective action. No appeal required

Hard Denial –A denial that results in lost or write –off revenue

Preventable or Avoidable –A hard denial resulting from action or inaction of the part of provider of services

Clinical Denial – denial of payment due to medical necessity

Technical or Administrative – A denial in which the payor has notified the provider by way of remittance advice with specific information describing why the claim or specific item was denied

www.eidebailly.com Implementing an Effective Denials Management Program

Denials can result in a loss of net revenue, often as much as 3%

Approximately 67% of all denials are appealable

90% are preventable

http://www.ucop.edu/ethics-compliance-audit-services/_files/webinars/4-9-15-denial-management/denial-management.pdfhttp://www.healthcarefinancenews.com/sponsored-insights/getting-front-problem-how-can...

Rejected Claims Claims that do not meet the specific data requirements or the basic format necessary will be rejected

Rejected claims will not be processed because they are not considered to have been “received” by the payor, thus do not make it into the adjudication system.

Corrected claim needs to be resubmitted

Denied ClaimsClaims that have been received by the payor’s adjudication system, reviewed and denied for cause

Denied claims cannot be resubmitted, but CAN be appealed

http://electronichealthreporter.com/differences-between-a-rejection-and-denial-in-medical-billing/

Denial Reviewed and Action TakenAppeal, Resubmit with additional information, Transfer, Write-off

Provider Notified with Reason for DenialAuthorization, Coding, Documentation Eligibility, Late Filing, Routing

Claim Reviewed and Denied Technical Medical Necessity

Registration/ Checking for eligibility and verification of insurance

Duplicate Claims

Experimental, Investigational, Non-covered benefit

Incorrect Claim Data

Lack of Medical Records

Lack of authorization

Medical Necessity

Medical Coding

Late filing

COB

Bundled services

• Gross charges denied by payors amounts to 15% - 20% of the nominal value of all claims submitted

• According to CMS estimates, claim denial rates could skyrocket by 100% to 200% in the early stages of ICD-10 implementation

7%

52%28%

13%

Payor Denials by Type

MedicalNecessity

Technical

Authorization

Documentation

Hospital Type

BedsAnnual Billings

from Patient

Treatment

Estimated Annual Denials Cost @

15%

Community 185 $63 M $9.5 M

Teaching 480 $660 M $99 M

Health System 1,100 $2,610 M $391.5 M

https://www.humanarc.com/wp-content/uploads/2013/06/HOSPITAL-DENIALS-WHITE-PAPER-by-Holly-Pelaia-2013-05.pdf

Understand the basis of the denials

Calculate your institution’s denial rate

Assess your team’s remit and outcomesAppeals only, or tasked with case management?

Able to respond to all denials ?

Increasing numbers of write offs?

Trend in the turnover rate

Understand the process

Know your data and review it quarterly

Cardinal rule of denial management is to address every denial as soon as you get it.

Track and define denials and keep record of the tracking

Catalogue denial by type, payor, billed charges and expected reimbursement

Denial Task Force

Interdepartmental meetings -

Improved timeliness and effectiveness of response

Integrate technology between clinical and revenue cycle process areas for enhanced communication

Monitor write-offs

Monthly meetings with payers http://www.ucop.edu/ethics-compliance-audit-services/_files/webinars/4-9-15-denial-management/denial-management.pdf

Accelerate the denials management process

Many facilities lump all rejected and denied claims into one basket

A detailed denial report is essential in determining causation and process problems

Facilitate improvements being implemented in the Revenue Cycle Management process

Rejected EDI Claim

+ Payor Denied Claim

+ Underpayments

Total Claims

Minimizing denials through an effective concurrent review and notification process

Recovering as many denied dollars as possible through an aggressive appeals process

Effectively closing the loop between approval and payment

Using data to identify key drivers of denials, and developing processes to mitigate these drivers, thereby further reducing denials

GovernmentMedicare (RAC, CERT, QIO)

Five levels of appealRedetermination

Reconsideration

Administrative Law Judge

Medicare Appeals Council Review

Judicial Review by District Court

Medicaid – usually one appeal level per audit

Commercial - different appeal levels available

www.beckerhospitalreview.com/.../has-it-can-t-eliminate-medicare-appeals-backlog

In-house modelFixed headcount

Competing responsibilities

Variable number of denials that may impact the ability to appeal 100% of the claims

Outsourced modelAvoids fixed headcount costs

Flexibility to appeal 100% of denialsPay for services needed

Quick response time reduces write offs

Provides a level of expertise that may not be available internally – potentially higher overturn rate

Allows the management team to focus on other areas in the revenue cycle

Becker Hospital Review.com/finance/outsourcing

Overturn rate and how the rate is calculated

Type of software / IT platform utilized and the extent of security measures in place

Evidence of adherence to best practices

Reporting capabilities, including root cause analysis

Accessibility and flexibility

Contractedrates

Actual payments

Net revenue after cost of collection

http://www.ucop.edu/ethics-compliance-audit-services/_files/webinars/4-9-15-denial-management/denial-management.pdf

124

609

1500

0

200

400

600

800

1000

1200

1400

1600

1800

AutomatedDenials

ComplexDenials

MedicalRecordsRequests

Activity through3Q15

Activity through4Q15

Activity through1Q16

Source: AHA (April 2016). RAC Trac Survey

Region Percent of Hospitals

Nationwide

A 15%

B 19%

C 40%

D 26%

www.cms.gov

$867

$5,451

0

1000

2000

3000

4000

5000

6000

AutomatedDenials

ComplexDenials

Average Dollar value

Source: AHA (April 2016). RAC Trac Survey

Average Dollar Value of Automated and Complex Denials per Participating Hospital by Region

RAC Region

Automated Denial

Complex Denial

National $867 $5,451

Region A $604 $5,322

Region B $1,756 $4,562

Region C $818 $5,759

Region D $605 $5,645

Source: AHA (April 2016). RAC Trac Survey

79%

33%

5% 5% 8%12%

7%

0

10

20

30

40

50

60

70

80

90

All Activity Q3 2015

All Activity Q4 2015

All Activity Q1 2016

Source: AHA (April 2016). RAC Trac Survey

42%

72%

51%

0

10

20

30

40

50

60

70

80

Denial Rate Appeal Rate Appeal OverturnRate

Source: AHA (April 2016). RAC Trac Survey

51

27

2018

9

0

10

20

30

40

50

60

providedaddl. Inf.

Care foundto be Med.Necessary

Underreview

RAC error Other

Implement a Denials Management process

Review the results of this process quarterly

Appeal immediately!

Educate your team

Denials Management may not be glamorous, but the process supports a “Fortune at the Bottom of the Pyramid!”