Patricia Kroken, FACMPE, CRA

Jennifer Kroken, MBA

Imagine Users Meeting 2010

Charlotte, NC

DENIALS MANAGEMENT:A CASE STUDY

Hospital-based case studyRadiology Consultants of North Dallas17 radiologists

Primarily hospital-basedAlso read at numerous imaging centers

13.5 billing/collections staffImagineRadiology installed 2004“Denial” = claim denied for payment on

first passMay eventually be paid

ResearchVery little published data to support

development of baseline comparison or benchmark

General consensus 15-30% denial ratesNot radiology-specific

Anecdotal: 15% in radiology “not bad”

Denials managementGoals

Reduce first pass denials by identifying and correcting root causes

Improve follow-up processes for denied claims

Identify compliance risksDenials management does not just involve

sending appeal letters

Six SigmaDeveloped 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

Radiology Billing is Process-Driven

DemographicsDemographics

Radiology ReportsRadiology ReportsMatchedMatched CodingCoding Charge

Entry

Charge Entry

Claims Submission

Claims Submission

PaymentPaymentSecondary insSecondary ins

Patient co-payPatient co-pay

Insurance Follow-upInsurance Follow-up

•Correspondence

•Denial

•No activity

ResearchResearch

Re-fileRe-file

Self paySelf pay

•Payment plan

•Payment

•File insurance

Collection AgencyCollection Agency

PaymentPayment

Bad debt write-offBad debt write-off

Small balance write-off

Small balance write-off

Methodology:Six Sigma DMAIC

DMAIC for Denials ProjectDefine

Denied claims represent an opportunity to improve profitability

Processes surrounding claims submission and follow-up appear to be inefficient

MeasureCategories of denied claims

DMAIC for Denials ProjectAnalyze

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 occurringImprove

Implement technology to eliminate manual processes and standardize

Train those involved regarding standardized processes

Change workflow and transition to paperless environment

DMAIC for Denials ProjectControl

Verify standardization of denials management processes

Continue to measure to ensure replication of results

Define—circular process starts again

Logic and OrganizationCompliance 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

Condense CategoriesUse general areas identified under

compliance and administrative categoriesDenial categories set up in system

maintenanceInsurance company variations assigned to

categories by payment poster posting denialsNote: also found to improve payment posting

production when compared to using hundreds of insurance company categories

EOBs/denials scanned into system and accessible from workstationsRemoves objection of having to see insurance

denial reason

Results: Total Denials

Comments: Total DenialsBaseline 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 anotherChanges in Medicare LCDs or payor editsPayor computer problems (BCBS in early 2009)

Consistent improvement annually to 6% 2009

Results: Coding

Comments: Coding DenialsCoding denials 2004: 4.26% of all

procedures42.6% of denials

Represented a potential compliance riskFinancial plus risk management priority

From 2006-present: fewer than 1% of all procedures denied for coding issues2009 denial rate .41% of total or 7% of

denied procedures

Coding: Root Cause CorrectionsPhysician dictation

Often a cause for inaccurate or under-coding problems

Review of dictation patterns identified issuesPhysician leadership supported educational

and “enforcement” effortsReports compared to objective resource

ACR Communications Guidelines

Coding: Root Cause CorrectionsPhysician education

Discussion of coding basicsHistory/reason for examNumber of viewsSeparate paragraphs for complex studies

Example: CT of chest, abdomen and pelvisComplete/limited ultrasound dictation elements

If it isn’t dictated, it didn’t happenNo assumption coding or “protocol”

Coding: Root Cause CorrectionsCustom workbooks by physician

ACR Communication GuidelineHow physician’s reports compared to ACR parameters

Indication/reason for study Views, contrast, limited/complete study Impression

Samples of that physician’s problematic reportsDifficult to codeWould have to be down-codedDifficult to appeal based on available documentation

Samples of “good” reports containing all elements

Coding: Root Cause CorrectionsTemporarily: administrative employee at

hospital reviewed reports dailyReturned those without histories, views, etc.

for re-dictationPhysician leadership reinforced the program!

Ongoing: feedback and/or updatesChanges in dictation requirements for

complete vs. limited ultrasound studiesProblems and/or trends

Results: Medical Necessity Denials

Comments: Medical Necessity DenialsConsistently less than 1% of total

proceduresLess improvement year-to-year

Changes in LCDsPETVascular proceduresVertebroplasty/kyphoplasty

Improvements in coding documentation supported medical necessityDenied claims did not show deficiency in

dictation but still denied

Results: Eligibility

Comments: EligibilityAdministrative denial

Usually human errorControllable in imaging center setting, but

not hospital-basedSolution

Use available technology Front-end editing

Value-added clearinghouse with automated eligibility checks

Comments: EligibilityIndustry: 45% of denials due to eligibility

Clearinghouse database: 29% of claims denied for eligibility

RCND 2004: less than 1% denial rateEligibility denials rose 2007-2008Value-added clearinghouse added end of

2008Eligibility dropped nearly 50% 2008-2009Checks eligibility for 200+ health plans

Results: Eligibility

Comments: Eligibility2008-2009 dramatic gains in top payors

BCBS experienced internal computer issues in early 2009 so improvement less dramatic

Substantial gainsMedicareMedicaidUnited Healthcare

Results: Timely Filing

Comments: Timely FilingTimely filing 2004: 2.2% of total claims

Impacted by conversion to new softwareStaff member resistance to changing systems

= “former employee”United Healthcare impacted

Timely filing 2009: .06% of total claims.01% of total denialsApproximately 11 days from DOS to claim

release

Discussion and ConclusionsRoot 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 denialsNo control over data gathering processes

High-turnover positionsLack of experience/education

Imaging centers should theoretically be able to eliminate administrative

Prioritizing the ProgramMedical necessity

Frequently high dollar proceduresBoth financial and compliance risk

Coding Physician education/behavior modification

efforts pay off quicklyCoder education/certification emphasis

EligibilityUse available technology!

Final ThoughtsTechnology is critical and available

You can’t manage what you can’t measureNeed high volume processing—can’t be done

manuallyBilling and collections activities involve a

series of defined processesDetermine where problems originateReduce variability in processes and improve

resultsAs one process stabilizes and

demonstrates control, move to the next

Thanks!

Pat Kroken, Albuquerque, NM505-856-6128pkroken@comcast.net

Jennifer Kroken, Dallas, TX817-403-3355jkroken@radconsultants.com

Healthcare Resource ProvidersP.O. Box 90190Albuquerque, NM 87199