Denials Management Prevention and Best Practices

Denials Measurement Definitions Data Reporting Management and Prevention Denial Capture Denial Appeals Workflow Management

Measuring Denials

Denial Rates Dependent on accurate capture of denial adjustments and well designed denial code structure Benchmark Total Net Denial Rate ≤ 2% ≤ 1% Net Technical Denial Rate ≤ 1% Clinical Denial Rate Utilize payer, service line, and physician level groupings to identify targeted areas of opportunity Gaurav and then Srarh

Reporting & BI Application Connect the Data Reporting & BI Application Revenue Cycle Workflows Contract Management EDI Data (835/837,etc.) Linkage of previously disparate data promotes root cause analysis & action plan development Integration of data into a single reporting system will drive workflow processes and provide consolidated reporting

Ex: Gross Denials Sarah

Compare across payers to analyze how payer behavior compares to peers Ex: Gross Denial Rate Payer 1 Payer 2 Payer 3 Payer 4 Payer 5 Compare across payers to analyze how payer behavior compares to peers Payer 4 Denial Rate for Patient Info = 6.12%, compares to <2% for other payers Sarah

Ex: Net Denial Write Offs Sarah

Ex: Net Denial Rate Sarah

Leakage: Payment Variance to Expected Leakage = Expected Reimbursement – Total Payments to Date If your Contract Management system does not generate a valid expected reimbursement amount, use the Cash Factor Cash factors at payer and service line levels should be calculated using accounts that have had a period of time to liquidate Important Restrictions: Evaluate 0 Balance Accounts Use a lag period (At east 90 Days) to allow accounts to resolve Cash factor = payment to gross charge ratio. But you want to be as specific as possible – and find the cash factor not only at the payer level and service line level.

Measure 1: Leakage Rate Leakage rate hits a high of over 5.5% for Commercial and Medicaid HMO Financial Clusters Payer-specific comparison of leakage rates shows revenue lost and targets areas of focus

Speed to Cash as % of Expected X Days – Broken out into 30 Day Increments out to 180, 180 to 270, 270 to 360 and 360+ Measures both Revenue Cycle Goals – Totality and Speed Answer the age old question “Why/Where is cash up/down/flat?” Relies on good Net Revenue and Expected Reimbursement data Total % for sufficiently aged periods are leakage to expected Leakage goal best practices Medicare/Medicaid – 99% Commercial Payers – 95% Variance to Target Leakage x Annual Expected for payer = P+L Opportunity Trends are key. Performance changes will appear quickly in this analysis. Creating this report for specific payers, services is key. Sarah

0 – 30 Day increment is driven by DNFB reduction Ex: Speed to Cash as % of Expected Reimbursement Improvement in the 0 – 30 Day increment is driven by DNFB reduction Sarah

Ex: Speed to Cash as % of Expected Reimbursement Improvement in the 30-90 Day increment is driven by more efficient follow-up practices Sarah

Ex: Drill to Isolate Specific Payer/Services Sarah

Management and Prevention

Capturing and Routing Clinical Denials Faxes/mailed denial letters Case management system for Daily Reviews/Concurrent Processes Parses raw 835 files, identifies denials CARC codes Mine PAS data for denials identified via Patient Accounting Follow-up Review denial letters Capture output file from case management system Merges discrete data sources to identify all denials that have been either upheld completely, partially upheld, or not worked during peer-to-peer. Flagged for review by denial rep Denial rep confirms denial day/service with payer, validates appeal timeframe & $, and assigns case to clinician Clinician reviews case, generates appeal letter or closes if no clinical merits Denial rep packages appeal letter and medical record, submits to Payer Denial rep commences follow up activity, noting receipt date of appeal Appeal overturned, posts cash, Denial rep validates and notes in system Appeal partially overturned, posts cash, Denial rep validates and notes in system, refer back to clinician for Level II or III Appeal Appeal upheld, Denial rep validates and notes in system, refer back to clinician for Level II or III Appeal

Denials Management Services AGGRESSIVELY APPEAL MANAGED CARE DENIALS Retrospective Appeals Logical structure Sense of clarity Level of clinical proficiency External appeal option External appeal process should be pursued for clinically worthy cases Know your legislative and payer requirements Legal Remedies Challenges based on contractual issues Challenges based on ERISA and other regulatory issues A High overturn rate with a low appeal rate is no good Payers know who is asleep at the wheel and who fights back

Strategic Workflow Prioritization and Routing Utilize the ERA information to drive workflow to front line staff at the highest priority Further refine the payer responses to identify the type of work required: Classify your CARC/RARCs into denial types that can feed into workflow Compare remaining balance to Patient Liability Amount to isolate accounts requiring balance transfers (AR at Net) Compare payment amount to Expected Reimbursement to find remaining expected reimbursement (AR at Gross) Prioritize work by remaining expected reimbursement (high to low) Denial Resolution Action Required Actionable CARC/RARC on ERA $0 Payment Transaction Payment Posted ≠ Expected Amount Requires Balance Adjustment/Transfer Payment Posted but Balance ≠ 0 Balance = Patient Liability

Workflow Productivity Productivity should be just as important in revenue steering committee meetings as other KPIs Break down your productivity to show productivity on denied accounts to make sure that denial inflow is appropriately covered and prioritized Average total weekly productivity is approx. 2,400 accounts Average weekly touches to denied accounts is approx. 650 Average total weekly productivity is approx. 2,400 accounts

Analysis of Work Performed Review specific user activity to analyze actions applied on denied accounts Assess correlation between denial leakage rates and how accounts are worked on the back end Drill further to see actions by specific employee Assess correlation between denial leakage rates and denial resolution on accounts during A/R follow-up Pinpoint exactly where to focus additional training or QA efforts!

Analysis of Work Performed Drill into specific user activity to analyze actions applied on denied accounts Assess correlation between denial leakage rates and how accounts are worked on the back end Drill further to see actions by specific employee Drill further to see actions by specific employee Assess correlation between denial leakage rates and denial resolution on accounts during A/R follow-up Pinpoint exactly where to focus additional training or QA efforts! Pinpoint exactly where to focus additional training or QA efforts!

Key Measures to Focus Your Revenue Cycle Reporting & Dashboard BI Application Workflow Contract Management 835 Remittances Net Payments to Expected Ratio Leakage Rate Speed to Cash as % of Expected Reimbursement Gross Denial Rate Leverage ERA data to drive workflow processes Analyze actions applied to denied accounts Prioritize workflow using Remaining Expected Reimbursement Net Denial Rate