Denials Management: Finding the Root Cause & Creating a Plan
At Moffitt Cancer Center, a robust denial prevention program resulted in reducing denials from 14% of gross charges to 8% of gross charges billed. The process involves a multidisciplinary team, a data-driven strategy, a preventative approach and a missional, patient-centric perspective that extends across the organization. The first step to their success was the creation of a multidisciplinary steering committee. Next they focused on determining the root causes of their denials. After the cause was determined, they created a path for success and a plan for improvement.
Perform Denials Root Cause Analysis
Determining Denial Causes
Trace the reasons for denials back to the processes from which they originated. Denials can be traced to issues throughout the revenue cycle, but most commonly relate to errors on the front end.
It’s critical that your denials prevention program is driven by data rather than anecdotes. Before the first denial steering committee meeting, perform some analysis to drive the agenda. HFMA Texas recommends visually trending the following data to find patterns and prioritize work:
- Claims denied by reason
- Dollars denied / adjusted
- Claims denied and reworked
- Dollars / claims appealed and recovered
- Cost of rework
Begin with a random sample of claims by payer and analyze each payer’s use of codes. Then set a threshold to perform group analysis of any claim over a certain amount. Push the lower-hanging fruit out to individual departments for working. This allows the steering committee to remain at a high level while subgroups, which know their processes best, dive into the details of claim analysis.
How it works
Moffitt found that radiation oncology claims were being delayed or denied because, even though the diagnosis passed medical necessity, coding wasn’t looking in the right place to get specificity needed for claims submission. This discovery led to recovery of millions of dollars in claims.
Create a Plan for Improvement
Present data at your first meeting and discuss potential solutions as a group. Many issues can be resolved through staff training and/or new technology. Research shows that 30 to 40% of denials result from registration and pre-service related challenges, so this is a good place to start. The problem may stem from insufficient documentation, an issue on the payer side or any number of errors in patient access/registration, coding/billing or utilization/case management.
“Once the root cause is identified, it must be analyzed to determine which has the greatest impact: whether a certain physician, service line, or payer, a certain type of code, or a process in need of redesign in both the clinical and revenue cycle areas. Armed with an analysis, you can begin to both prevent and manage denials in a more strategic, deliberate manner.” – Rethinking Denials Management, HealthLeaders Media
Potential Issues and strategies
Use business rules and tools to improve the accuracy, completeness and consistency of registration data. Fixing errors in real time helps prevent downstream denials.
Secure authorization in advance, and update for any clinical changes. Important areas of focus include payer policy maintenance and medical necessity.
Ensure that staff perform thorough eligibility verification and confirm multiple times prior to the date of service.
Document registration, eligibility and authorization activity (phone, fax and electronic) for evidence to support efficient coordination and reimbursement of patient care.
Want to learn more about creating a denials management program?