November 5, 2014

RACmonitor Survey Reveals Various Strengths, Weaknesses in Area of Denial Management

By Christopher M. Vairo

Concerns among healthcare providers in the area of denial management constitute a hodgepodge of various issues, with some clearly holding priority over others, according to the results of a recent RACmonitor industry survey covering the matter.

According to the survey, nearly 72 percent of respondents indicated that the most pressing medical billing challenge for the industry is the upcoming conversion to ICD-10. This is not surprising, as industry experts warn that the ICD-10 rollout likely will cause a sharp increase in denials during the first few months following implementation. Most agree that preparedness is a critical factor in mitigating the projected coding productivity decline and avoiding long delays in reimbursement.

The RACmonitor survey also found that the majority of the denials seen today are centered on justification of the submitted claim. This covers explanations such as medical necessity, level of care, and observation stays. Insiders have seen many clear instances in which further justification is not needed, based on the diagnosis and procedure billed; however, pushback from the payer commonly requires intervention to get the claim paid. 

Ongoing industry changes will continue being an obstacle for facilities, especially in cases in which strong payer relationships may be lacking.

It pays to do the math at your facility. Over half of the respondents surveyed reported paying more than $30 per account to resolve denials, with 38 percent paying more than $40. This points to an industry-wide opportunity to seek out and implement systems that will reduce this cost.

While reducing cost is important, however, it is imperative to balance reducing expenses and improving performance.

The survey showed that the majority of respondents are achieving between 60-90 percent appeal success rates (a successful appeal is considered a reversed decision with payment). This positive finding should encourage facilities to continue learning ways to improve their processes and systems to collect more of what they are owed, faster.

While the statistics show positive momentum, they also reveal some unfinished business. The survey indicated that almost 11 percent of respondents are still in the development stages of their denial appeal processes, while another 16 percent don’t have any appeal process in place. With over 25 percent of respondents reportedly in the beginning phases of the appeals process, there is ample opportunity for industry-wide improvement.

One option is to utilize denial management tracking software. This technology represents a key method for hospitals to improve tracking and reporting of denial trends, but 37 percent of the surveyed facilities are not currently using this software. When a facility does not track and trend denials, it opens the door to lost revenue and reduces the opportunity to identify and resolve root causes to prevent future denials.

Another proactive solution to minimize denials is cross-training coders and billers. A total of 39 percent of the survey respondents indicated that they currently cross-train their coders and billers. Experts agree that this is a smart practice to employ, as it reduces errors and allows for greater understanding, which helps minimize denials.

Overall, the data suggests that having a cost-effective and efficient denial management program in place is critical to optimizing revenue within healthcare organizations today.

About the Author

Christopher M. Vairo is the chief revenue officer for Signature Performance Inc. Mr. Vairo has 20 years of healthcare experience assisting many of the nation’s most respected healthcare organizations to optimize their efficiency and revenue. Mr. Vairo received his Bachelor of Science in marketing from the University of Nebraska, Lincoln, and has been involved with Healthcare Financial Management Association (HFMA) since 2000.

Contact the Author

cvairo@SignaturePerformance.com

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