By: Ehson Afshar, Director of Revenue Cycle
The importance of a strong denials prevention program cannot be overstated – not only does it maximize the revenue coming into the organization, but it minimizes the cost associated with working the claim subsequent times for payment. Many organizations require a culture shift from billing claims and dealing with issues on the back-end versus installing process fixes upstream so that the claim only needs to be worked once.
Installing a comprehensive program requires people, processes, and technology/reporting across the entire Revenue Cycle. It is a multi-disciplinary initiative built on strong reporting, analytics, and root cause account reviews. It also requires close tracking and oversight to ensure process fixes result in reduced denials. Let’s explore the three crucial dimensions of such a program – technology/reporting, process, and people – and the key drivers of success for each.
The first step in creating a program requires knowledge of what is causing denials and the magnitude of each trend. First, reporting must be created from the 835 remit files returned by the payers. Most organizations will deploy a tool to translate the 835 files into readable data files which can then be analyzed. It is also helpful to combine key 835 fields with other account information from the health information system. Recommended key fields would be the following:
- CARC code (Claim Adjustment Reason Code)
- RARC codes (Remark Adjustment Reason Code)
- Service Begin Date, Service End Date, Denial Date
- Denied Amount
- Patient Type
- Hospital department or area
- Other fields if available: Physician information, DRG, CPT code
Additionally, CARC codes should be mapped to a denial type. As not all CARC codes should be considered denials, a deep dive into the codes should be performed to designate denial vs. non-denial. If a code does not withhold payment for a claim, it should not be considered a denial. Codes should then be assigned a category roll-up such as eligibility, authorization, coding, medical necessity, non-covered, additional documentation needed, billing error, timely filing, or credentialing. Each code should also be assigned a “Denial Prevention Owner.” For example, registration denials would be assigned to Patient Access while coding denials would be assigned to HIM/Coding. Once the reporting is built out, program leaders will be able to easily identify the biggest opportunity areas by reviewing the highest denied amounts and volumes.
After reporting has been built, program leaders need to perform a deep dive into the different CARC codes used by the payers. Leaders should perform root cause analysis on a historical set of data (such as the last 3 months of denials) to understand which payers use which codes and in what manner they use them. Payer usage of CARC codes is not uniform and can vary heavily across geographic regions. Leaders should also strive to understand which CARC codes are controllable or not controllable:
- Controllable: Failure to follow payer guidelines by front, middle, or back-end revenue cycle operations
- Example: Authorization was not obtained or was not obtained for the correct length of stay or service performed
- Uncontrollable: Payer requires certain protocols to be followed, including submitting medical records, itemized statements, or bundled procedure
- Example: Implant invoice required for all services billed or medical records required for an extended length of stay
After designating controllable vs. non-controllable, leaders who are installing internal process fixes will focus on the controllable denials. Uncontrollable denials will be escalated to respective payer contacts through the contracting department or business office. However, the organization may choose to track progress solely on controllable denials as uncontrollable may involve longer-term contractual changes.
After the initial root-cause account reviews are conducted and top trends are understood, leaders should begin to implement initiatives to reduce denials. For example, account reviews might show that authorizations in the hospital’s cancer department are not being obtained for certain chemotherapy drugs. In this case, educational material should be built to share with the department. Additionally, edits can be placed in the billing scrubber to detect if a certain drug code does not have an associated authorization number.
Account reviews should be conducted on a weekly or biweekly basis. These reviews should be focused on the “root cause” of the denial. In other words, what was the furthest upstream process that resulted in the denial? By focusing on the root cause, we can then begin to formulate the process fix to eliminate the denial trend.
An account log can be hosted on a shared drive with accounts assigned to the respective denials prevention owner/team. For example, Patient Access would review high dollar denials that fall under their bucket while Case Management would review their own slice of the data. Since there can be hundreds or thousands of denials each week based on the size of the organization, a dollar threshold can be placed to limit reviews over a certain denial amount. Trends across payer or hospital departments should also be investigated and researched.
Program leaders should utilize reporting after installing process fixes to monitor if denial volumes are reducing. If not, action plans should be reviewed again for process gaps.
A prevention program requires leadership across the entire Revenue Cycle. First, a program champion should be identified, most likely the CFO as they would understand the crucial benefits of the program and have the organizational sway to remove barriers while pushing priorities forward. Additionally, a Denials Prevention leader should be chosen to provide oversight for the entire program on a day-to-day basis. This could also be the same leader who manages the denials work down team (if a separate team exists).
Leadership teams from Patient Access, Case Management, HIM/Coding, Revenue Management, and the Business Office must be involved in the root cause analysis process and installation of process fixes. While the Business Office or a separate Denials Team may work and manage the denials, the prevention of denials is reliant upon the area of the Revenue Cycle where the root cause originated. Also, the organization’s training team may be involved on an ad hoc basis when new training needs to be rolled out to different departments. For instance, if a major payer changes authorization or medical necessity requirements for certain procedures, then the training department should update existing documents and educate the front-end teams to check these requirements.
Denials Action Committee meetings should be held weekly or biweekly to report on trends and action plans. These can either be facility-specific if the system has multiple facilities, area-specific (e.g. Case Management only meeting), or a combination of both.
Additionally, the contracting department should be involved to inform and consult on payer strategy. For denials that are payer-related, an escalation structure should be developed to push denial trends through contracting and to the respective payer contacts.
Building a strong denials prevention program takes all 3 components to work. Having effective and actionable reporting being analyzed constantly by the right people will ensure that major denial trends are stopped quickly. By developing a culture of denials prevention, the organization will reap both the financial rewards as well as improve the overall health of the Revenue Cycle.