Software can improve denial management
Case managers integral part of revenue recovery
In an effort to reduce denials and improve their financial performance, an increasing number of hospitals are establishing revenue recovery units to overturn unpaid claims, while others are employing new software to reduce the number of unpaid claims proactively. Some of these units include case managers and utilization review nurses, while others address denials at the reimbursement specialist level.
Traditionally, most hospitals focused on high-dollar, high-volume procedures. But at least 400 hospitals now are using a software application to help avoid denials and speed claims processing, says Patrick Harkins, vice president of compliance and regulatory affairs at Healthworks Alliance, in King of Prussia, PA, which developed the software.
According to Harkins, the software allows hospitals to manage and evaluate medical necessity as soon as the order is submitted. If the orders do not meet medical necessity by the carrier or fiscal intermediary standards, they collect the advanced beneficiary notice (ABN) and notify the patient.
The claim then is submitted to Medicare for initial determination. Either the claim is paid and the patient does not get a bill, or the claim is denied and the hospital recovers the revenue from the patient because it already has generated the ABN.
Jaye Shaughnessy, corporate compliance manager at University of Miami Hospital and Clinics, says she uses the Healthworks software to screen for medical necessity on the front end as well as the back end before claims are submitted. "I would not let a bill go out of here without that software," says Shaughnessy, who has been using it for almost four years.
"If the system is used properly, you can have 100% Medicare compliance when it comes to billing," she asserts. "It is a wonderful system that is constantly updated by the service."
Claims may be denied for any number of reasons, including a request for additional information, Harkins says. The billing department may respond to those requests, while other more complex decisions based on medical necessity may require additional diagnostic information or medical record information and usually are referred to case management.
According to Harkins, some hospitals deal with outpatient denials strictly in the billing department, and the only denials handled by case management and utilization review are those that involve inpatient services.
To facilitate that process, Healthworks Compliance Checker software takes the Medicare Part A and Part B rules and inputs them into its software along with the order and the diagnosis. The software then evaluates the combinations and generates an ABN if necessary.
All of that information is recorded in the database so that case managers can look at those reports and evaluate how well physicians are doing providing diagnostic information to outpatients they refer, Harkins says. If physicians are noncompliant, the case manager can use those reports to educate them and help them become compliant.
Dealing with APCs
Harkins says that medical necessity must be checked on everything because if the order fails medical necessity validation, it may not be subject to the ambulatory payment classification (APC). If a procedure is paid under an APC and fails medical necessity validation, the failed procedure cannot be grouped into the APC. The Healthworks software has the ability to generate not only the ABN but also the APC copay statement.
If the claim gets paid under an APC, the patient must pay a percentage as a copayment and the APC pays the balance, he explains. The software allows hospitals to collect that money upfront. In addition, the software prints out a requisition for the service.
According to Harkins, hospitals also can use the software with physicians who send a high volume of referrals. "That way, they no longer have to provide a requisition to the hospital," he says. Instead, they can input all of the information into the computer and the requisition is printed out with the patient’s insurance information, the physician’s information, the diagnosis, the test, and the ABN if required.
"That pushes the ABN process back out to the point of care where it should always have stayed," he says. "But we all know that physicians do not always comply." The application is very robust in terms of its ability to provide edits. "There are many different edits that can either be turned on or turned off depending on how detailed you want to get," Harkins says.
For example, Medicare’s correct coding initiative (CCI) indicates certain procedures that cannot be ordered together on the same date of service. Other services can be performed only on an inpatient basis.
"Those edits reside in our software as well, and when procedures are ordered together that should not be, warnings are sent up on the system that say you have a CCI edit conflict that can be corrected with an appropriate modifier or cannot be corrected with modification," he says.
A similar edit looks at the age and sex of patients because some tests can be ordered only on either males or females or on patients of a certain age. "All of those things are edited on the back end of the claim by the FI [fiscal intermediary] or carrier, and if any one of those edits fail, the claim is returned," Harkins says. "The more that you put in upfront before the claim is sent out, the better off you are. It is just proactive management of your denial upfront."
Healthworks now is in the process of releasing a new software program called Denial Tracker that Harkins says will be beneficial to the revenue recovery units, especially case managers who may be tracking denials on the inpatient side. "There may be an issue where somebody was not pre-certified or it was an extended DRG or too many days or too many services," he says. "Case managers typically will deal with those type of inpatient denials because they are big bucks."
Denial Tracker is PC-based software that tracks claims by downloading the electronic remittance advice and recording all of the denials that have occurred. It attaches patient information and the reason for denial as well as the dollar amount.
Essentially, what the Denial Tracker does is allow the utilization review team or case managers and billing personnel to have their own automated tool to facilitate timely compliance with the guidelines for resubmitting denied or rejected claims, Harkins says. That allows the person tracking the claim to print a report that shows the denials categorized by dollar volume or other criteria, he says.
If a claim has been returned for additional information, the software puts it into a working queue and then generates a report indicating when the claim must be returned and the additional information requested about the patient.
It also has built-in forms so that the appropriate forms or letters can be generated and forwarded as a cover letter for easy submission back to the payer. "It pulls all the patient information and your demographics and also has the address of the payer so that everything is sent out automatically," Harkins says. It also includes an automatic due-date calculation so that hospitals do not miss deadlines for different levels of appeal.
According to Harkins, many facilities are not yet using automation to track this process. Instead, they still may be using a Microsoft Excel spreadsheet or an Access database.
"This is true automation to help you through every process with overdue reports and different management reports that show you what has to be sent and what the status of any rejection may be," he says.
To date, Harkins says, Medicare is the only government insurance program that has issued local medical review policies while private insurance carriers and HMOs simply list in their beneficiary manuals what they won’t pay for.
However, private payers now are moving more toward establishing local medical review policies as well, he says. "Most HMOs and private payers are now looking at the success that government has had with these programs."
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