Get a handle on denials, increase reimbursements
Central clearinghouse for all rejections is a must
In these times of dwindling health care reimbursement, there’s no phrase more significant to managers — and their bosses — than "denial management." There are several key components that must be in place if a hospital is to achieve best practice in denial management, says Joe Denney, CHAM, director of revenue management at The Ohio State University (OSU) Medical Center in Columbus. "The goal, of course, is not to receive any [denials] if possible," he notes.
At his organization, Denney notes, a distinction is made between "rejections" and "denials," which is key to understanding the process. "In our lingo, whenever a claim goes out the door and something comes back from the payer saying it is seeking more information or saying, for example, I will deny the last day of this inpatient stay,’ we call that a rejection."
Hospital staff work all rejections with the aim of turning them around if there is a reason to do so, he explains. "A lot of times a rejection has to do with documentation, as when it says that [access personnel] didn’t precert or preauthorize."
That particular type of rejection is sent to the registration quality assurance manager, who looks in the system and may say, We did do the authorization and here’s the authorization number.’" In that case, he adds, "we would write a quick appeal letter and get the money."
What his hospital considers "denials," Denney explains, is when a rejection has already been appealed and the payer has come back and said, "There is no way we’re going to pay." At that point, he says, "we write it off to bad debt. So there’s a real distinction between rejection and denial."
That distinction made, he says, the central component of successful denial management is establishing one area in the hospital where all rejections and denials will be received. "Until we established that here, [rejections and denials from payers] went everywhere — to the director of utilization review [UR], the business office, even hospital administration or the chief operating officer. We found it extremely important to have one designated area and say, This is the address.’"
To clarify that requirement, Denney suggests making sure the necessary language is in managed care contracts. With Medicare, it’s not an issue, because those communications are sent electronically.
Don’t let one department sit on rejections
"We also did some internal communication, saying, If you get these [rejections or denials], forward to this person in the central business office, and that person will get in touch with the insurer.’"
This piece of the process is crucial, Denney points out. "Every [payer] has a deadline. Some say, If you don’t appeal within 30 days, we’re not going to pay no matter what.’ If a rejection went to the director of UR, for example, and that department sat on it for a while, you could be past that line."
The next step, he says, is to have a very good grasp of what a rejection is about so it can be placed on a work list and sent to the appropriate area to be investigated and appealed.
At the focal point of the rejection/denial activity at OSU Medical Center, Denney notes, is the organization’s central business office, where Mark Tennant, the rejection/denial manager, oversees the process. In November 2001, Tennant explains, he was given the mission of developing a rejection process using the health system’s existing staff and computer technology. "The flow was to have the business office receive all rejections, whether correspondence, follow-up, or explanation of benefits," he says. These rejections, Tennant adds, would go to employees known as "rejection reps," who would review the information and put them in various categories, or electronic buckets, depending on the reason for the rejection. A service code assigned to each rejection sends it to one of the following buckets, he says:
- precert/authorization;
- medical necessity;
- medical documentation;
- peer review organization denials;
- Medicaid sterilization.
The latter, Tennant says, has to do with a consent form that Medicaid requires in order to process claims for a service requiring a "sterilization procedure," such as an abortion or a hysterectomy.
Gatekeepers resolve rejections
There are more than 50 open service codes — defined by the payer’s reason for the rejection — within the five categories, he adds. So, for example, there are several reasons why a rejection might go into the precert/authorization bucket. "If authorization date was the problem, the [rep] would apply that [specific] service code."
One person is assigned the role of gatekeeper for each bucket, Tennant says. The gatekeeper for each bucket receives a daily revenue management work list listing all the rejections in the bucket. While the gatekeepers may delegate tasks to other employees, they are ultimately responsible for resolving those rejections. "Their names are assigned to that work list, which is important for accountability," he notes. "The gatekeeper has 10 days to resolve the account. At that time, they put a close code’ on it, which shows what the resolution was."
The resolution might be "authorization obtained," "no authorization obtained," "additional information sent," and so forth, Tennant says. "Once [the rejection] is closed, that account goes back into our regular business operation, and the code triggers the next action."
What’s unique about the process, he notes, is that everything that happens within the service code — a function of the hospital’s patient accounting system — is a permanent stamp. "The open’ and close’ codes are tracked to the ultimate payment or adjustment to the account, why we opened it, and why we closed it."
As part of the denial management process, the hospital’s information services department has developed an information warehouse for the rejection data, Tennant says. In place since September 2002, this data warehouse "is like a sub of the process," he explains. "The information is identified and dropped into the warehouse, which produces reports that show a breakout of the buckets."
Those reports show which payers the rejections are coming from and what the problems are, Tennant says. "We can look at the whole process to see if it’s the payer having the issue or a practice we need to change."
Almost all departments participate
Administrators, directors, and managers throughout the hospital system receive biweekly summary reports on the five buckets, including the number of rejections and the related dollar amount for each one, he notes. It has been extremely important to the success of the denial management initiative that almost all the departments in the hospital are involved, Tennant says. When he made the initial presentation on the process, he adds, "the right people were in the room to say, I can do this, I can help.’ That’s the plus of doing that."
In addition to putting language into the contract regarding where rejection correspondence should be sent, the managed care department comes into play in communicating with payers at the other end of the process, Tennant points out. When managed care personnel meet periodically with payers — for some it’s quarterly, for others every two months or once a month — they discuss and review denial management reports, he says. "[The hospital representative] says something like, We’ve boiled it down to what we think the real issue is,’" Tennant says. "If it’s a payer problem, [the hospital’s position is] This is what we’re seeing. Tell us why you’re rejecting these claims."’
The managed care department, as well as everybody in the revenue cycle, has direct access to the denial information, he notes. The next step is to designate one individual on the payer’s side and one individual from the hospital who correspond directly regarding rejections, Tennant adds. The hospital already has this relationship with two of its biggest payers, he says, and the goal is to increase that to five.
In these times of dwindling health care reimbursement, theres no phrase more significant to managers and their bosses than denial management. Several key components must be in place if a hospital is to achieve best practice in denial management, says Joe Denney, CHAM, director of revenue management at The Ohio State University Medical Center in Columbus.
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