This is evidenced by the Advisory Board’s 2017 revenue cycle benchmarks, which revealed the average 350-bed hospital saw denial write-offs increase from $3.9 million in 2011 to $7 million last year.
To address the problem of increasing denials, healthcare organizations should focus on categorizing claims by type, as well as success of appeals, according to Kemberton, which provides specialized revenue cycle management and revenue recovery services.
1. Don’t wait to identify denials: The earlier a hospital identifies denials, the greater chance they have to resolve the issue. However, hospitals still struggle to identify denials early enough to be effective, according to Mr. Rife. This could be due to lack of technology or not being familiar with coding from the payer.
As a solution, Mr. Rife recommends hospitals develop a clear understanding of types of denials, such as technical and medical necessity, and categorize them in a way that is logistically easy to understand. That way accounts are routed appropriately and claims don’t stay in accounts receivable too long for the appeals process.
“If a hospital lets an account age in their receivables, they can quickly let six months lapse and any rights to appeal the denial can go by the wayside,” says Mr. Rife. “So timely and early identification is important, whether that’s dedicating a team to it or spending money on software to help them identify and then categorize the types of denials the hospital is seeing.”
2. Track denial appeals: Mr. Rife also recommends hospitals keep an eye on each denial appeal to see if it is successful. Then organizations can build on those successes. “Know what you’re good at, know the payers you’re having success with and go back … and identify the accounts that are denying with that payer with that same issue …,” he says. “Don’t do appeals in a fragmented, disconnected environment. Do it where there’s a reported methodology where the hospital is benefiting from the knowledge that group of people doing appeals is gaining.”
3. Dedicate employees to claim denial work: Hospitals may have employees who work on claim denials but also do other things besides appeals. Mr. Rife said hospitals should instead optimize the people working claims, allow them to become a subject matter expert in that area, and [allow employees] to build a knowledge base from what they’ve learned. “The hospital will benefit from it. That subject matter, that knowledge that they [the employees] gain won’t walk out the door,” he says.
4. Bring in nontraditional hospital employees: Hospitals, particularly those in smaller geographic areas, shouldn’t be afraid to bring in some nontraditional hospital employees, such as a paralegal or attorney, to help with the denial appeal process, according to Mr. Rife. He says these nontraditional hospital employees are good at advocating, which is essentially what appeals are. “It’s advocating for the hospital. It’s crafting an argument in a light most favorable to the patient and the hospital to get the insurance company to do what they were supposed to do and indemnify the patient,” he says. “You can find great business office staff, but if you look at nontraditional hospital employees like paralegals and attorneys, they may give your business office an additional resource that traditionally you’re not going to have access to.”
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