1. Fundamentals of Denials Management
Haaris Ali, MD, CDIP
ACDIS

2. Agenda Denials Commonly Used Terminology What We See and Why
Root Causes
Denials Management and Prevention
How CDI Plays a Vital Role
The Comprehensive Solution
Current Payor Trends

3. What is a Denial? Anything at risk for write off
You expected to get paid for it and you didn’t
Typically categorized into 2 groups
Clinical: does not appear to meet medical necessity, no authorization, LCD/NCD, DRG Downgrade
Technical: administrative in nature (timely filing)

4. Definitions
Remit
Notice of and explanation of reasons for payment, adjustment, denial, and/or non covered charges of a medical claim
835
Electronic remit from payor through claims submission system
837 is the actual submission from the provider to the payor
ANSI Code
American National Standards Institute
Standardized claim adjustment reason codes (whatever)
EOB
Explanation of benefits
Denial Code
ANSI code present on remit
Contractual
Negotiated discount between payor and provider
Expected
“Net” is expected payment after discount applied
“Gross” is total charges with no discount yet applied

5. Gross vs. Net
Example: Total charges of $10,000 with a negotiated payor discount of 75%
GROSS
$10,000 Total Charges
$0 Discount Applied
$10,000 Account Balance
NET
$10,000 Total Charges
$7,500 Negotiated Discount
$2,500 Account Balance

6. Who Denies These Claims?
Medicare hires contractors referred to as MACs who are fiscal intermediaries who make payments on behalf of Medicare.
RACs are contractors hired by Medicare to audit and collect overpayments to hospitals.
QIO’s- Quality Improvement Organizations
For commercial, generally someone with advanced medical training will review these claims (i.e. Medical director, nurses with advanced training).
Medicare
Managed
Commercial
Complex Medical Judgement of a Physician
IQ, MCG
HMS

7. Inpatient No Authorization Inpatient Not Medically Necessary
What We See and Why
Inpatient No Authorization
Inpatient Not Medically Necessary
Other
Lack of process
Severity of illness and failure to evaluate exclusionary criteria
Mental health diagnosis (in an acute setting)
Lack of skillset
Plan of care, therapy notes, MD documented clinical evidence
IP Rehab lack of documentation
Lack of capacity
Intensity of service
DRG Validation
Length of stay
Lack of process
Lack of process

8. Root Causes Primary Secondary No attempt to get an authorization
Authorization attempted and the payor said no
Authorization attempted but for the incorrect service or level
Secondary
Lack of documentation present
Lack of reaction to payor’s denial of authorization
Incorrect/insufficient documentation pushed to payor
Lack of timeliness with throughput process
Under utilization of tools available (Midas, Allscripts, etc.)

9. What is Denials Management?
Prevention
Recovery
Where is your ROI…?

10. Prevention Standardization Education Accountability Throughput
Payor Policy
Daily
Peer to Peer
Third Party Criteria
Historical vs. Current
Reporting
Documentation
Reportable
Timeliness
Monthly
Financial Impact

11. CDI and Denials Prevention
Strengthen the case
Code to the highest level of specificity
Capture acuity by coding CCs and MCCs according to the updated coding clinics and coding guidelines
If you have 1 MCC, try finding another
AKI – verify the physician’s documentation supports CC
Look for missed documentation opportunities
Focus on DRGs with CC’s and MCC’s
Robust query process to prevent under-coding, but don’t over code
Quality queries
Productivity is important, but quality is key
Develop and periodically review processes
Develop hospital medical staff policies on commonly audited CCs/MCCs- AKI, malnutrition, ac resp failure, sepsis and follow them
Identify workflow breakdowns early on
Post-Discharge Reviews
SOI, ROM
Quality Assurance Programs
Education
Use the PEPPER report to proactively compare performance to other facilities
Be careful. we see a lot of denials that are too robust a query process where they have taught the physicians key words but then it is not supported by the documentation. Sepsis is prime example but also AKI, and respiratory failure.
20-40% 25% cases queries – how fruitful are the queries
18-25 case reviews
PEPPER identifies multiple CDI issues

12. Comprehensive Denials Solution
What is it?
Why is it important?
Root cause identification of denial reason at actionable level
Denial reporting complex must have robust, accurate reporting to determine:
Which denials are worth cash
Which areas are causing denials
Which processes are not working
Diagnostic Framework
Implement prevention best practices
Solutions have many flavors – technology enhancement, process redesign, physician education
Industry best practices must be often tailored to specific payer requirements, specific processes
Must focus on early warning systems to capture potential denials before they occur
Prevention Roadmap
Define operation rhythm of meetings, action items, owners, timelines
Goal setting
Frequent meeting cadence with key stakeholders
Regular tracking of metrics
Problem solving sessions
Accountability Framework
Follow-up/appeals post denial
Best strategies to win appeal
Feedback loop to avoid future denials
Often, denials can be appealed and won, 50%-60% industry overturn rate
Payers make mistakes too!
Must be integrated with prevention work for robust feedback loops
Workflow Framework

13. Revenue Recovery Appeal Track Learn Understand denial reason
Levels won
Consistent post mortem
Understand payor policy
Levels lost
Payor behavior
Exhaust all levels of appeal
Root cause
Process improvement
Understand what you can’t appeal
Establish history & baseline
Cross functional effort

14. Current Payor Trends ALJ Modified criteria 2 MN rule Complex audits
Extrapolation methods
Transmittal 541

15. Questions?

16. Let’s take some questions back with us
Do you know what your hospital’s clinical denial rate is today?
Do you know if those clinical denials are appealed?
Do you know what the root cause is on those clinical denials?
Do you know what your recovery rate is for appealed cases?
Do you know how much your organization writes off each month in clinical denials?

17. Terminology Term Definition Revenue
Total charges for all services provided to a patient (line item charges) AR
Accounts Receivable
Reimbursement
Reimbursement is the amount of cash paid to the provider by health insurance plans, other payers, and Patients for healthcare services. The cash paid to the provider is = to reimbursement
Gross
Gross revenue; gross shop – total charges
Net
Net revenue; net shop – actual cash expected for services provided (gross minus contractual)
Contractual
Contracted discount applied to gross revenue with insurance companies
Revenue Cycle
The revenue cycle represents the cycle of revenue: how revenue is generated and turned into cash for the provider – the process begins when the patient enters the health system and ends when the account balance is zero AKA known as PFS (Patient Financial Services)
Front End
Patient Access (PTAC): Scheduling, pre-registration, authorization (including case management), verification, cash collections
Middle
Pricing, chargemaster, charge capture, documentation & coding
Back
Billing, cash posting, AR management (reimbursement monitoring, follow up, appeal submissions), & analysis
UBO4
Uniformed bill – claim form created for hospital services with each encounter and submitted to insurance for claims processing
HCFA 1500 used to bill physician services
ANSI Code
Standard alpha or numeric code used by insurance codes to explain a denial
Remit
AKA Remittance Advice (RA) or EOB; provides notice of and explanation of reasons for payment, adjustment, denial, and/or uncovered charges of a medical claim
835
Electronic remittance advice
HIM
Health Information Management (Medical records, coding, release of information (ROI))
ICD 10
International Classification – 10th edition – a coding system used to describe the diagnoses associated with an IP hospital stay
DRG
Diagnosis Related Grouper – Summary diagnosis for inpatient claims
HCPCS
Standardized 3 level coding system used to describe supplies, drugs, etc.
CPT
Standardized codes representing Level 1 HCPCS to used describe procedures
Criteria
Evidence based care guidelines used by payers and providers to determine if a patient stay is medically necessary
Commercial/ Managed Care Payer
Insurance company providing healthcare coverage to the patient
The provider may or may not be contracted with the payer
EMR
Electronic Medical Record

18. Thank you! Haaris Ali, MD, CDIP
Manager, PAS Integrated Denials Management