Facing both revenue and expense issues and exasperated by clinician shortages, hospitals are increasingly noting denials in the danger zone.  “Danger zone” translation: Denials are increasingly higher than 10%, costing significant dollars in lost or delayed reimbursements—as well as more overhead for rework and resubmitting claims. A recent Crowe RCA benchmarking analysis provided the industry-wide numbers: Claims denials rose to 11% of all claims last year, up nearly 8% from 2021. 

Winning with denials means focus on both administrative and clinical denials. On an average, clinical denials account for 45-50% of the total denials.  Not included in this number are payer post-pay audit payment takebacks.  Payers get a second chance at these denials, often two and three years post payment, but there is no second chance for a provider once service is rendered.  

Across both denials types, many outside experts bring a good mix of experience and capabilities across four critical areas of denials overturn: root-cause analysis, audits, analytics, and the right resources.

Root-cause analysis
Today, data on denials by every way it can be sliced—payer, revenue source, type—are available or can be built with limited investments.  Revenue cycle management (RCM) issues and inefficiencies have many root causes, and it is critical to track these to avoid revenue loss.  A stringent review of root cause analytics shows that the major sources of revenue savings are:

• It’s key to fix staffing shortages in critical areas of system and process integration.  Pressure on provider revenue cycle and other administrative teams to reduce costs, like labor, across all non-clinical areas of work have led to key controls and critical resources being let go. The experts, typically the middle management or consultants, required to bring together payer knowledge, clinicians, process, and technology are not available or have competing priorities.
• Implementing AI solutions to monitor service quality and coding will help keep pace with the increased AL based scrutiny by payers.
• There is a need for accelerated monitoring medical necessity requirements of payers, brought about due to the change in forms of reimbursement such as telehealth, remote monitoring, implants, and mainstream adoption of experimental procedures.

Audits
Successful auditing includes a strong foundation of clinical SMEs and a robust audit sampling solution, such as querying the 835 denial reasons against medical records and appeal letters. This will result in detailed focused audit samples that enable robust coaching and feedback mechanisms to the nurses that are preparing the appeal letters. Additionally, quarterly clinical quality rounds and reviews by MDs and specialists will facilitate accurate documentation of clinical criteria that reflect medical necessity in the appeal letters.
A scalable and holistic denial management approach keeps the patient in the center of the denial and looks for relevant and accurate information across consultants and episodes of care.

Similar to clinical audits, periodic reviews of the each non-clinical step involved in overturning a denials is essential.  Perhaps not the entire process but several processes controls can be automated.  Untimely filing write offs can be limited if worklists are automated based on appeal filing limits.  Often this information can also be used by contracting.  Some payers have a 30-day filing limit but a three-year timeline on payer post payment audits. Data on denial reversals, lag times, and medium of claim submissions can be made readily available based off information on PA systems. 

Analytics
Once there is clear understanding of the predictive nature of the denial trends, common findings can be applied into a predictable matrix based on historical trends. Then, AI-led querying of unstructured data and robust statistical methodology will allow propensity models to be deployed for managing efficient operations.
Also critical are payer processing rules, whether Milliman or Interqual, LCDs or NCDs and integrating automated controls. While case complexities impact the effectiveness of controls, providers continue to write off large amounts for authorization and medical necessity on recurring and other therapy services.  For example, it is possible for an automated control to be developed reminding a registrar that Ocrevus needs to be re-authorized or analytics to highlight non-typical variations in service coding from one month to another that could potentially impact payment.

The right resources
The cost of managing clinical denials operations is constrained due to the high cost of recruiting high-demand nurses and clinical teams. Highly cost-effective operations, without compromising on quality, leverage decoupling of the workflow between offshore clinicians and onshore SMEs and specialists.
With a routinized governance process with review of clinical acumen across specialties, supported by audits, multi-shore teams will achieve significant learning curve optimization. With conducting of Inter-rater reliability tests between the onshore and offshore teams, there is consistency in the quality of the appeal letters and establishing medical necessity.

The industry trend has been to skinny down on non-clinician staffing to control cost.  But successful denials overturn, ultimately, means finding the right Denials Team balance of clinical support and revenue cycle expertise. Often a clinician’s time is spent filing in appeal forms and uploading documents on portals—tasks that a non-clinician can perform and/or can be automated should be routed to non-clinical staff.   A revenue cycle management team that integrates the clinician, patient and payer, irrespective of location, is typically the most effective.