For most health systems, insurance claim denials are a significant financial liability. CMS denies nearly 26 percent of all claims, and 40 percent of those are never resubmitted even though two-thirds are recoverable and 90 percent are preventable.1 Usually health systems lose tens of millions of dollars struggling to reduce denials and the inability to identify and correct the root causes.
Any large healthcare organization’s revenue cycle has a lot of variation and complexity. Policies and procedures differ from payer to payer, technology and communication systems vary from patient to patient, and the complexities of separate hospital and professional revenue cycles in the same system can lead to defects and waste.
Most health systems have a vision of leading the county, metropolis, state or nation in healing, caring and discovering. Unfortunately, the level of denied claims amounting to wastage of millions of dollars, makes the organization unsustainable and cripples this vision. By avoiding initial denials, healthcare organizations would reduce re-work and improve cash flow. Research reveals that efforts by organizations are usually too broad and require excessive effort from stakeholders. Following are some of the key areas which negatively impact denial management:
- Inefficient Processes and Workflows
- Uneven, burdensome workloads
- Uneven workloads and burdensome work
- Lack of a sense of urgency at the front end to obtain complete and accurate demographic information
- Lack of Analytical and Process Improvement Tools
- Underutilizing available tools or IT systems
- Working in silos make it difficult to pinpoint problems
- Denials data do not provide the required insights needed
- Providers or healthcare operational stakeholders do not effectively communicate or collaborate with the finance team
Essentially, a healthcare organization needs to get upstream of its challenges with claims denial management, and needs a comprehensive improvement plan. Moreover, this improvement plan needs to be supported by substantial data and engage principal clinical, operational, and financial employees in tackling the problem. EqualizeRCM with its extensive experience in providing platform-agnostic revenue cycle management (RCM) services to healthcare providers in the United States, recommends a multi-pronged approach to reduce denials.
Multi-Pronged Approach to Reduce Denials
Select a Champion to Communicate the Vision, “Reduce Denials”
To set the stage for organization commitment to make the Vision, “Reduce Denials” a success, a champion should endorse and promote the denials reduction initiative. The leadership should designate an executive champion to convey the vision and the “why” for the work. The champion should articulate the vision and issues in a way that resonates with physicians, providers, and operational staff. This should illustrate how revenue cycle impacts organizational performance. Operational staff should understand that avoiding claims denials and getting billing right the first time would have a positive impact.
Resuscitate Focus on Quality Improvement in the Revenue Cycle
To drive sustainable change, the revenue cycle improvement plan is built with an eye on sustainability, and flexibility. The focus should be on specific problem areas rather than the ocean. The progress of the set of implemented series of initiatives should be closely monitored. One-time tasks should be buried and a culture of continuous improvement by conducting ongoing assessment, research, and continuous cycles of Plan, Do, Check, Act (PDCA) should be developed. In addition, aligning lean improvement principles to address specific areas of denials should be implemented. This robust approach will help identify root causes and develop effective interventions to address inefficient processes, workflows, and manual work.
Dedicated Claims Denial Management Team
Healthcare providers and organizations should realize that to maintain momentum and to sustainably reduce denials and write-offs, a dedicated denials analysis team is needed. The team would be responsible for reporting, quantifying opportunities over time, identifying trends, assessing improvement opportunities, and communication with operational staff. In addition to its revenue cycle expertise, the team can also provide consulting solutions to facilitate and develop partnerships with stakeholders.
Use RCM Robots or AI to Make Data Visible and Actionable
To supplement a dedicated denials team, a healthcare organization needs meaningful data to move ahead and upward. Effective business offices use small scale automation tools to replace inadequate stock reports from the EHR, creating visualizations and dashboards which give new insights into the data. Utilizing a suite of robotic process automation (RPA) bots can achieve the following wonders:
- Analyzes State of the Claim
- Comes up with the Set of Actionable Insights
- Performs certain Follow Up Tasks
- Improves the Quality of Work by Achieving Consistent Accuracy
- Drives up the Clean Claim Rate
- Reduces Denials
- Significantly Improves Resolution Time
Let Effective Analytics Drive Improvement and Engagement
Revenue cycle analytics tools expose denials data in meaningful ways, allowing the team to drill into and explore specific issues with ease. Blending AI capabilities with this powerful analytics application, can slice and dice data and obtain detailed information for denial trends over time. With this actionable data in hand, your organization can standardize a core set of metrics that will drive engagement and lead to the successful adoption of improvement initiatives.
- Haines, M. (2014, December 11). An ounce of prevention pays off: 90% of denials are preventable. Retrieved from Advisory Board: https://www.advisory.com/research/financial-leadership-council/at-the-margins/2014/12/denials-management
- Health Catalyst. (2017). Clinical and Financial Partnership Reduces Denials and Write-Offs by More than $3 Million. Retrieved from Health Catalyst: https://www.healthcatalyst.com/success_stories/4-key-strategies-to-effective-claims-denial-management