1. Patricia Kroken, FACMPE, CRA Jennifer Kroken, MBA Imagine Users Meeting 2010 Charlotte, NC DENIALS MANAGEMENT: A CASE STUDY

2. Hospital-based case study Radiology Consultants of North Dallas 17 radiologists Primarily hospital-based Also read at numerous imaging centers 13.5 billing/collections staff ImagineRadiology installed 2004 “Denial” = claim denied for payment on first pass  May eventually be paid

3. Research Very little published data to support development of baseline comparison or benchmark General consensus 15-30% denial rates Not radiology-specific Anecdotal: 15% in radiology “not bad”

4. Denials management Goals Reduce first pass denials by identifying and correcting root causes Improve follow-up processes for denied claims Identify compliance risks Denials management does not just involve sending appeal letters

5. Six Sigma Developed by Motorola Measured error rates for manufacturing processes Established framework for breakthrough process improvement Utilizes a series of defined steps that can be continuously repeated until a process is maximized

6. Radiology Billing is Process-Driven Demographics Radiology Reports Matched Coding Charge Entry Claims Submission Payment Secondary ins Patient co-pay Insurance Follow-up Correspondence Denial No activity Research Re-file Self pay Payment plan Payment File insurance Collection Agency Payment Bad debt write-off Small balance write-off

7. Methodology: Six Sigma DMAIC

8. DMAIC for Denials Project Define Denied claims represent an opportunity to improve profitability Processes surrounding claims submission and follow- up appear to be inefficient Measure Categories of denied claims

9. DMAIC for Denials Project Analyze Processes in place for claims preparation, submissions and follow-up Potential risk and/or gains from addressing certain denial categories Root causes of why denials are occurring Improve Implement technology to eliminate manual processes and standardize Train those involved regarding standardized processes Change workflow and transition to paperless environment

10. DMAIC for Denials Project Control Verify standardization of denials management processes Continue to measure to ensure replication of results Define—circular process starts again

11. Logic and Organization Compliance denials Practice potentially placed at risk Could be in violation of regulations  Coding (including bundling/unbundling)  Medical necessity  Duplicate claims Administrative Usually due to process error or omission Theoretically preventable  Eligibility  Missing/incorrect information  Prior authorization  Timely filing  Non-covered service  Denied—no reason given

12. Condense Categories Use general areas identified under compliance and administrative categories Denial categories set up in system maintenance Insurance company variations assigned to categories by payment poster posting denials  Note: also found to improve payment posting production when compared to using hundreds of insurance company categories EOBs/denials scanned into system and accessible from workstations  Removes objection of having to see insurance denial reason

13. Results: Total Denials

14. Comments: Total Denials Baseline in 2004:10% denials rate Aggressive editing software had already improved the percentage to some degree at the time the project started In some cases improvement in one category might be offset by increases in another  Changes in Medicare LCDs or payor edits  Payor computer problems (BCBS in early 2009) Consistent improvement annually to 6% 2009

15. Results: Coding

16. Comments: Coding Denials Coding denials 2004: 4.26% of all procedures 42.6% of denials Represented a potential compliance risk Financial plus risk management priority From 2006-present: fewer than 1% of all procedures denied for coding issues 2009 denial rate.41% of total or 7% of denied procedures

17. Coding: Root Cause Corrections Physician dictation Often a cause for inaccurate or under-coding problems Review of dictation patterns identified issues Physician leadership supported educational and “enforcement” efforts Reports compared to objective resource ACR Communications Guidelines

18. Coding: Root Cause Corrections Physician education Discussion of coding basics  History/reason for exam  Number of views  Separate paragraphs for complex studies  Example: CT of chest, abdomen and pelvis  Complete/limited ultrasound dictation elements If it isn’t dictated, it didn’t happen  No assumption coding or “protocol”

19. Coding: Root Cause Corrections Custom workbooks by physician ACR Communication Guideline  How physician’s reports compared to ACR parameters  Indication/reason for study  Views, contrast, limited/complete study  Impression Samples of that physician’s problematic reports  Difficult to code  Would have to be down-coded  Difficult to appeal based on available documentation Samples of “good” reports containing all elements

20. Coding: Root Cause Corrections Temporarily: administrative employee at hospital reviewed reports daily Returned those without histories, views, etc. for re- dictation Physician leadership reinforced the program! Ongoing: feedback and/or updates Changes in dictation requirements for complete vs. limited ultrasound studies Problems and/or trends

21. Results: Medical Necessity Denials

22. Comments: Medical Necessity Denials Consistently less than 1% of total procedures Less improvement year-to-year Changes in LCDs  PET  Vascular procedures  Vertebroplasty/kyphoplasty Improvements in coding documentation supported medical necessity Denied claims did not show deficiency in dictation but still denied

23. Results: Eligibility

24. Comments: Eligibility Administrative denial Usually human error Controllable in imaging center setting, but not hospital-based Solution Use available technology  Front-end editing Value-added clearinghouse with automated eligibility checks

25. Comments: Eligibility Industry: 45% of denials due to eligibility Clearinghouse database: 29% of claims denied for eligibility RCND 2004: less than 1% denial rate Eligibility denials rose 2007-2008 Value-added clearinghouse added end of 2008 Eligibility dropped nearly 50% 2008-2009 Checks eligibility for 200+ health plans

26. Results: Eligibility

27. Comments: Eligibility 2008-2009 dramatic gains in top payors BCBS experienced internal computer issues in early 2009 so improvement less dramatic Substantial gains Medicare Medicaid United Healthcare

28. Results: Timely Filing

29. Comments: Timely Filing Timely filing 2004: 2.2% of total claims Impacted by conversion to new software Staff member resistance to changing systems = “former employee” United Healthcare impacted Timely filing 2009:.06% of total claims.01% of total denials Approximately 11 days from DOS to claim release

30. Discussion and Conclusions Root cause corrections reduce denials Higher number of clean claims = less work on the back end and faster cash flow Hospital-based practices will have a higher rate of administrative denials No control over data gathering processes  High-turnover positions  Lack of experience/education Imaging centers should theoretically be able to eliminate administrative

31. Prioritizing the Program Medical necessity Frequently high dollar procedures Both financial and compliance risk Coding Physician education/behavior modification efforts pay off quickly Coder education/certification emphasis Eligibility Use available technology!

32. Final Thoughts Technology is critical and available You can’t manage what you can’t measure Need high volume processing—can’t be done manually Billing and collections activities involve a series of defined processes Determine where problems originate Reduce variability in processes and improve results As one process stabilizes and demonstrates control, move to the next

33. Thanks! Pat Kroken, Albuquerque, NM 505-856-6128 pkroken@comcast.net Jennifer Kroken, Dallas, TX 817-403-3355 jkroken@radconsultants.com Healthcare Resource Providers P.O. Box 90190 Albuquerque, NM 87199