EXECUTIVE SUMMARY
Patient access leaders are seeing a surge in claims denials due to increasing payer requirements and in some cases, successfully appealing these denials. Departments are doing the following:
- reviewing contract terms and payment obligations in payer contracts;
- bringing examples of denied claims to joint operating committee meetings;
- Building Relationships With Payer Reps.
Many patient access leaders are seeing a sharp increase in claims denials, primarily due to more numerous and stringent payer requirements.
“Claims denials are increasing at an alarming rate,” reports Brinn Leach-Wilson, a Merritt Island, FL-based consultant with BHM Healthcare Solutions and former director of operations for Rockledge, FL-based Health First.
However, says Leach-Wilson, “it is estimated that around 90% of all denials are preventable and roughly 67% of all denials are appealable.”
Leach-Wilson is seeing many more denials due to the Affordable Care Act (ACA) and implementation of ICD-10. “According to an estimate by the Centers for Medicare and Medicaid Services, claims denial rates could skyrocket by 100% to 200% in the early stages of coding with ICD-10,” says Leach-Wilson.
Kristin Greenstreet, national business unit leader for healthcare revenue cycle at Navigant, based in Lawrence Township, NJ, says the specific amount of revenue at risk for denials varies, “but industry estimates are that 0.5% to 2% of net revenue is at risk.”
In Greenstreet’s experience, about 60% of denials are related to front-end processes. Most involve missing authorizations, medical necessity, and timely filing. “There are often situations where an authorization was obtained, but it may have been inappropriately linked to the final bill,” says Greenstreet. She says that better clinical documentation by clinicians can prove medical necessity. “Timely filing becomes a ‘catchall’ for miscellaneous reasons why the payer is not paying,” says Greenstreet. “These range from not receiving medical records timely to not receiving appeals.”
Greenstreet says patient access needs “an understanding of every dollar due for service. A strong relationship between utilization review, revenue cycle, and managed care also helps.”
EXAMINE PAYER CONTRACTS
Recently, a payer refused to give an authorization until the third day of a patient’s hospitalization at The Medical Center of Plano (TX). Patient access leaders pointed out that the hospital’s contractual agreement stated that the authorization needed to be given within 72 hours.
“Luckily, we were able to stop the denial,” says the hospital’s chief financial officer Melissa McLeroy, MBA. “Our in-house payer rep created a process to address this.”
The language used in payer contracts sometimes conflicts with changes in payer requirements. For this reason, says McLeroy, “anytime payers make a change, we refer back to our contract. There can be significant revenue at risk.”
Lulett Baldwin, revenue analyst for revenue recognition and billing compliance at Mayo Clinic in Phoenix, carefully reviews contracts to be sure payers are meeting their obligations. “Read over the most updated version of the provider manual,” she urges. “This is where the payer outlines rules, regulations, and expectations of claim process handling.”
To identify underpaid claims, patient access needs to fully understand contract terms and payment obligations. “Research the services billed, contract terms, and provider manuals, to have a clear perspective on the next steps to getting that additional owed reimbursement,” says Baldwin.
Some payer contracts state that the timeframe to pay a claim is 30 days, but the payer typically takes 60 to 90 days. Payer reps may indicate the claim still is processing or under review. “But this is unacceptable when the contract has been breached,” says Baldwin. “Examples of these claims should be taken to joint operating committee meetings for exposure and resolution.”
Recently, Baldwin noticed a surge in denials of Veteran’s Affairs (VA) claims sent electronically. “Through reading their provider manual, I learned that these claims must have medical records attached in order to be considered for payment,” she says.
Baldwin stopped the denials by working closely with billing to stop the electronic process. “The billers send me a daily email of VA patients,” she says. “I print the claim and send it with the medical records. This issue was resolved.”
The Medical Center of Plano’s denial team looks at all high-dollar denials and also small-dollar denials that are occurring often. “With our denial committee, we have been able to reduce total dollars written off for denials,” reports McLeroy.
Writing an effective appeal for a denied claim is essential to receiving a thorough claims review, advises Leach-Wilson. “It takes specific expertise to respond appropriately to each denial,” she says. Patient access departments sometimes fail to aggressively manage denials due to lack of resources or conflicting priorities.
“But if denials are not handled correctly or in a timely manner, they can be extremely costly,” says Leach-Wilson.
SOME DENIALS INEVITABLE
Even the best prevention strategies can’t prevent denials from occurring.
Baldwin says, “Payers may delay a claim, deny a claim in error, or completely reject it, as many of us have seen over the years.”
While denials are received on the back end at the last stage of claims processing, “the compilation of data submitted on a claim begins with the front end: patient access,” she emphasizes. Baldwin recommends these approaches to increase the chances of overturning denials:
• Keep in close contact with payer reps.
“These are the individuals that will give one-on-one attention to your denials issues and work to resolve them,” says Baldwin. “Establishing a professional friendly rapport is the best approach.”
One way she builds this rapport is by being a familiar face at Joint Operating Committee meetings. “Acquire business cards to start building this network of connections,” says Baldwin.
She also schedules one-on-one meetings with payer reps and signs up for email alerts on changes in requirements. “Learn about all the tools and resources they have available,” she advises.
• Ensure that patient access employees meet quality expectations when entering patient demographics and insurance information.
“Lack of accurate data retrieved on the front end can result in a denied claim, but can be avoided,” says Baldwin.
• Do further research if you see a trend of three or more claims denied for the same or related reason.
Mayo Clinic’s Revenue Recognition Department is rolling out a denial report tracking system. “This will assist us in identifying trends to resolve,” says Baldwin.
• Provide requested information to the payer in a timely manner.
“In circumstances in which the patient is uncooperative, have a procedure in place to follow that will move this account balance to patient liability,” suggests Baldwin.
Unresolved claims issues “causes a domino effect, triggering A/R days to increase,” warns Baldwin. “Organizations may not reach monthly or yearly revenue goals because of this.” (See related stories in this issue on preventing denials and appealing medical necessity denials.)
SOURCES
- Lulett Baldwin, Revenue Analyst, Revenue Recognition & Billing Compliance, Mayo Clinic, Phoenix. Phone: (480) 342-4574. Fax: (480) 342-1949. Email: [email protected].
- Brinn Leach-Wilson, BHM Healthcare Solutions, Merritt Island, FL. Phone: (888) 831-1171. Fax: (888) 818-2425. Email: [email protected].
- Melissa McLeroy, MBA, Chief Financial Officer, The Medical Center of Plano. Email: [email protected].
5 reasons for claim denials
Here are the top five reasons for claims denials, according to 2015 data from Alpharetta, GA-based RelayHealth Financial:
- registration/eligibility: 24%;
- duplicate claim/service: 18.7%;
- missing/invalid claim data: 13.8%;
- service not covered: 9.9%;
- authorization/pre-certification: 7.9%.
These data highlight areas where patient access can strategically pursue denial prevention, says John Holyoak, RelayHealth Financial’s director of product management. “Identifying processes and errors that cause denials can have a far-reaching, positive impact on the efficiency of the entire revenue cycle,” he adds.
Many patient access leaders are seeing a sharp increase in claims denials, primarily due to more numerous and stringent payer requirements.
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