According to the denial rates report published in February 2021, out of total claims submitted worth $3 trillion, claims worth $262 billion were denied. You will be surprised to know that more than 90% of these denials are preventable. And the worst part is, more than half of these denials were never appealed or resubmitted by providers and healthcare organizations. Healthcare organizations should adopt a preventive denial management approach rather than a corrective one. Managing denials requires an alarming amount of time, money, and resources; adopting a preventive denial management approach could protect revenue.
Identify Denial Reason
Process last 12-15 months’ claims submission and denial data to identify denial reason. After identifying the denial reason, categorize the root cause for each denied claim. Some of the common reasons for denials are prior authorization, incorrect coding, timely claim filing, and out-of-network billing. For reference, we shared top coding denials in 2018.
- Radiology: MD may have ordered a test and failed to document the reason why the test was ordered many occurrences in the emergency department (ED) and same-day surgery (SDS).
- Same-Day Surgery (SDS): Electrode removals for leads not working and the complication code not passing medical necessity.
- CCI conflicts with HCPCS codes of 58661 billed with 44970. CPT 59 would need to be added on 44970. The coder is not prompted by 3M to add 59 at the time of coding.
- 25: Rejections on evaluation and management (E/M) levels. Most often, the E/M level is done in the ED or by another vendor, not by health information management professionals.
- 91: Rejections of duplicate lab modifiers on a daily basis. If caught on the front end, could eliminate many edits.
- 59: Rejections on a daily basis. Same thing with modifier 59. If caught on the front end, could eliminate many edits.
Build Denial Prevention Team
The next step would be forming a denials prevention team. This would be a multidisciplinary team that includes experts from medical coding, billing, accounts receivables, and providers. Everyone in this denial prevention team should take 100 percent ownership of correcting each denial. This level of responsibility requires a high level of commitment and expertise. So, selecting the right team members with the right expertise is essential.
Find areas of improvement in your revenue cycle management and provide training. Some of the areas would include technological deficiency, lack of knowledge, process gaps, and documentation. For example, if you find out medical coding is a major reason for denials then provide training for medical coding. Make sure that your coders would have access to numerous resources including software applications and online references. Your coders should understand the payer mix and payer-specific coding guidelines.
Consistently measure the performance of all activities included in the revenue cycle management process. Monitoring performance will ensure an overall reduction in the denial rates and success of the appeals submitted. Some of the data you should look into include: denial rate, rate of appeals, and appeal success ratio.
- Denial rate: This will include a number of claims denied: procedure codes wise, payer wise, modifier wise, patient wise, location wise, and rendering provider wise. This level of specificity will help to identify the impact of denial prevention activities over a period of time.
- Rate of appeals: Keep a track of the number of appeals done. Without proper understanding, too many appeals may result in wasting time and money. Understanding root cause, resolution of denial, and appealing with corrected/additional information is the right way to handle denials.
- Appeal success ratio: The appeal success ratio cannot be too small as it may not justify the time invested by team members of the denial prevention team. Just appealing denials won’t help.
Most of the practices are aware of the impact that denials can have on their revenue, however, they lack the technology and staff expertise to implement an effective preventive denial management process. Outsourcing to a billing company like MedicalBillersandCoders (MBC), which has the technology and medical specialty expertise available to optimize your revenue cycle and boost collections by preventing denials. To know more about our preventive denial management process, contact us at firstname.lastname@example.org/ 888-357-3226