Improve your bottom line by reducing claim denials Presented by: Mark R. Anderson, FHIMSS, CPHIMS CEO of AC Group, Inc.

• Mark Anderson webinar presentation

• Polling and Q&A session

• Sponsor overview – Care360

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Mark Anderson, FHIMSS, CPHIMS is a leading expert in ACOs and physician practice management best practices.

• 40+ years In healthcare IT

• CIO at 4 IDNs

• Spent over $2B in HCIT

• National speaker > 1,000 sessions since 2001

• Consultant to over 25,000 physicians and over 200 hospitals

• Advisor to the numerous medical societies

• Annual survey of top hospital and physician-based EHR products by function, size, end-user satisfaction, price, ability to effect change.

• Expert witness on numerous legal cases involving HCIT software

• Helped establish 2,300 provider ACO run by providers

Today’s industry expert

1. What is denial management and how does it affect my practice?

2. What are the differences between a rejection and a denied claim?

3. What are the most common reasons for denials?

4. What are common denial management policies and procedures?

5. How does an enhanced denial management program help to reduce denials?

6. What steps should I take to reduce the cost of denials?

7. Summary and what should I do next?

Questions for today

• Health plans use a term called “denial” when they receive a promptly coded claim from a practice and the health plan “denies” the claim for a specific reason.

• The claim has been received by the adjudication system of the payer, and cannot be resubmitted because the payment determination has already been decided upon.

• There are more than 350 denial reason codes.

• Each denial code has a unique process for resolving.

Question 1: What is denial management and how does it affect my practice?

• Claim denials can be a major source of frustration for physicians and their practice managers, and can have a real impact on cash flow and the financial performance of a practice.

• Depending on the office doing the billing, denial rates average between 8% and 35% nationwide.

Claim denials

• The average practice cost to handle a denial is around $25.00.

• There is a limited time to respond to a denied claim, usually from 30-90 days.

• Let’s say your practice collects $100,000 per month and your denial rate is 18% - the average across the nation.

• Let’s assume that 55% of your denials are for reasons that can’t be appealed.

• Patient not covered • Timely filing • No authorization code

• Let’s assume your practice is late on refiling denial claims appeals – national

average of 29%.

• This equates to losing $153,252 per year in services rendered that cannot be collected or billed to the patient.

Assumptions

Common RCM software

• Most RCM software tracks which claims are denied.

• Most software gives you the ability to appeal denials.

Enhanced RCM software

• Can track denials by denial reason and by insurance carrier/plan.

• Allows you to correct a “denial reason” code and all denied claims related to the code are resubmitted together.

• Helps eliminate claim denials.

RCM and denial management software

% Denials by year by business process

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Common Enhanced2005 2010 2012 2014 2016 2018

Source: AC Group study of 85 practices with a minimum revenue of $100,000 per month

Annual loss in payments because of denials

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

$24,000

2005 2010 2012 2014 2016 2018

Common Enhanced

Source: AC Group study of 85 practices with a minimum revenue of $100,000 per month

In the simplest sense, a rejection occurs because the submission lacks pertinent data or the proper coding.

Denials are claims that are received and reviewed, but found to be inadequate from the perspective of the insurance company, be it due to insurance plan coverage, limits or an untimely filing.

Question 2: What are the differences between a rejection and a denied claim?

Rejected claims:

• Claims that do not meet the specific data requirements or the basic format necessary have been rejected.

• Rejected claims will not be processed because they are not considered to have been “received” by the payer, thus do not make it into the adjudication system.

• It simply means that a rejected claim must be resubmitted when the error (or errors) is corrected appropriately.

• It’s important to note that beneficiaries of a rejected claim cannot be held liable because the services were never actually billed.

Rejections

Denied claims:

• The claim has been received by the adjudication system of the payer, and cannot be resubmitted because the payment determination has already been decided upon.

• A denied claim however, can be appealed by the request of the payer to necessitate the proper modifications, additional required documents, etc.

Denials

Change in claim processing by year

0%

5%

10%

15%

20%

25%

2005 2010 2012 2014 2016 2018

Denials Rejected

Source: AC Group study of 85 practices with a minimum revenue of $100,000 per month

There are more than 350 denial codes

• Patient is not eligible

• Duplicate claim

• Not matching CPT to ICD-10 codes

• Timely filing

• Service is not covered

• Out-of-network

• Outdated codes

• Problems with modifiers

• Insufficient information

Question 3: What are the most common reasons for denials?

• Once a denial is received, the biller posts the information into the RCM system.

• The same person or a secondary person is assigned the denial to work on.

• This person reviews the denial reason and follows up on correcting the denial (45%) or posting the denial as unrecoverable (55%).

• The amount is written off as contractual allowance and there is no tracking of the write-off by denial reason.

• Of the denials that can be fixed the billing clerk makes the necessary changes and re-submits the claim with newer information.

• 29% of denied claims are not processed in time and have to be written off as untimely filing – which is rarely tracked.

Question 4: What are common denial management policies and procedures?

• Advanced denial management systems identify the number of claims by denial reason and by insurance plan.

• Staff reviews prior month denials and looks for trends.

• When trends are identified, processes can be changed, codes updated, eligibility checks automated, etc.

• The goal is to identify trends and to eliminate the reason for denials – not just to correct one denial at a time.

• Denied claims are reduced by up to 40%.

Question 5: How does an enhanced denial management program help reduce denials?

• If a claim is denied, the denial is automatically routed to the appropriate follow-up person.

• The reason for denial is tracked.

• If the claim must be written off, the adjustment code is coded as “denied” with the denial code so that all claims can be tracked.

• The denial is placed on a daily work list by date and by dollar amount.

• When the denied claim is within a week of timely refiling, the claim listing changes color/status.

• Automated tracking has reduced the number of timely filing claims by 93%.

Question 5: How does an enhanced denial management program help reduce denials? (continued)

1. Automate pre-eligibility checking at the time of appointment.

2. Automate eligibility checking, again, 2 days before patient’s appointment.

3. Automate eligibility checking as soon as the patient checks into the practice.

The cost is the same: you are charged a flat amount for 1 eligibility check or 1,000.

These few steps can help eliminate up to 38% of denials.

Question 6: What steps should I take to reduce the cost of denials?

1. Make sure your EHR and RCM software is automatically checking for correct coding (CCI) and local codes (LMRP).

2. Make sue your RCM product scrubber is checking for clean claims and that your clean claim rate is greater than 98%.

3. Confirm that your EHR is automatically checking for appropriate CPT code and ICD-10 matching.

These steps alone can eliminate up to 32% of the denials.

Question 6: What steps should I take to reduce the cost of denials? (continued)

1. When you receive a denial, make sure you code the denial so that you can track the reasons for denials by health plan.

2. Track the number and cost of denials by denial reason and by health plan.

3. Create a strategy for eliminating high cost denials.

4. Touch each denial within 24 hours and respond to every denial within 7 days.

5. Fix the reasons for the denials – don’t just fix a denial without correction.

6. Monitor and track your success – optimally, denials should be less than 1% of all your claims.

Question 6: What steps should I take to reduce the cost of denials? (continued)

Understand your denial management Key Performance Indicators (KPI)

If you don’t have an enhanced denial management program – get one.

Develop a strategy for reducing your denials.

Automated eligibility and prior authorizations

Clean claim operations over 98.5%

CCO and LMRP editing

Advanced claim scrubber

Denials < 1%

Don’t just fix a denial – fix why the denial occurred.

Question 7: Summary and what should I do next?

Poll and questions for Mark…

Mark Anderson Website: www.acgroup.com

Email: mark.anderson@acgroup.org