Revenue Cycle Management in Healthcare: Managing Insurance Denials

September 3, 2014
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ID-10059317Eliminating claim denials is a crucial aspect to revenue cycle management.  Successful healthcare providers have streamlined operations and made the revenue cycle more efficient.  They understand that every step counts when it comes to securing reimbursements and obtaining revenues for their services.

ID-10059317Eliminating claim denials is a crucial aspect to revenue cycle management.  Successful healthcare providers have streamlined operations and made the revenue cycle more efficient.  They understand that every step counts when it comes to securing reimbursements and obtaining revenues for their services.  An operation that lacks efficiency, the necessary staff skill set or effective processes in place can have unnecessary insurance denials which can have a costly impact on your bottom line. 

To ensure revenue integrity for your practice, you must avoid the deficiencies and avoidable mistakes that undercut the effectiveness of your revenue cycle.  Managing insurance denials constitutes an important part of your business strategy.  Claim denials cost money in extra time and effort for resubmission and payment.  And, sometimes people may feel that resubmitting and/or appealing a claim is just not worth the effort. This couldn’t be further from the truth. The efforts made in your denial management and appeal process can be the linchpin in the success and profitability of your practice.

Better Coding Practices

Procedure codes (CPT) and supply codes (HCPCS) describe the services and supplies delivered to patients by healthcare service providers.  Because coding provides the numerical expression of the what, why and how of the services delivered, you must assure that it receives the same level of care as charts or operative reports.

Diagnosis codes (ICD-9) identify the reason the particular CPT and HCPCS codes were performed.  Only one code can be used as the primary reason for using a specific CPT or HCPCS code.  Consequently, if the diagnosis is insufficient, it can cause an insurance denial.

Some examples include:

  • Lack of important patient information, such as condition, diagnosis or types of conservative treatments attempted prior to specific surgeries for DRGs billed.
  • Illegible documentation, missing date of service or improper signature.

Sometimes, knowing when to use a modifier allows a reimbursement that might otherwise be denied.  Appending these two-digit codes to the CPT codes provides more information, especially for services that go above and beyond work typically associated with a minor surgical procedure or preventative medicine services.

Using a combination of certain codes or “unbundling” can also lead to claim denials.  Often, the procedure code may be inconsistent with the modifier used or the benefit for a particular procedure had already been included in a payment for another service or procedure.  Paying attention to specific payor policies is very important to minimize and manage denials. 

Accurate Clinical Documentation

Beside its importance for delivering improved patient care, clinical documentation has other important purposes such as:

  • a legal document,
  • a source for quality reviews and validation of patient care,
  • detailing compliance with payer regulations and guidelines, such as Medicare, Tricare and other third-party payers, and
  • having a direct impact on coding, billing and reimbursement.

Periodic auditing of your charts to assure proper payment will help you measure the accuracy of your coding and documentation.  Not only should your documentation be accurate and complete but it must also be concise, legible and timely.

Managing the denials properly

Denials in a practice are unavoidable.  There are predictable denials from the payors that are very difficult to eliminate, however then there are the preventable denials in which are caused by actions of you and/or staff.  Those denials whether front-end authorization, missing information, coding, etc. are issues that can be prevented for the most part.  A practice needs to keep a constant eye on the denials; measure them by type and trend them to identify surges and systemic issues.

Once issues are identified divvy the workload up by type to appropriate staff according to their skill and knowledge level. i.e.  Send a complex case to a certified coder experienced in that sub-specialty and a demographic error to a data-entry staff.  This is strategy helps to create efficiencies and further specialty experience.

Creating a repeatable managed process for identifying and adjudicating these denials and appeals is paramount and must be a focus for a practice now more than ever.

Medicare Claim Management

In the average practice, Medicare comprises about 35-40% of the claim volume.  Even the smallest inconsistency can cause an error leading to insurance denials. You may want to have duplicate review by different people before submission to identify errors and make corrections to prevent costly delays. The implementation of internal controls via staff or technology can create an extra “scrub” and quality control to ensure you are minimizing denials.

Healthcare providers must manage a constantly changing environment, deal with decreasing operating margins and do more with less.  Taking the corrective action steps to manage insurance denials and save money is an essential part of an effective business plan. Deploy a strong denial management process to improve your revenue cycle management and assure you get reimburse for all services rendered.

  • Sufficient identification of the patient and health plan subscriber.
  • Proper listing of the date and place of service.
  • Claim is for covered services for an eligible person.
  • Coding is accurate with appropriate use of modifiers
  • Documentation is complete and detailed to support the coding
  • Provides proof of prior authorization for services if necessary.
  • Includes additional documentation based on services rendered as required.

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