Infrastructure

Establish a multidisciplinary team to serve as the Denial Management Task Force. This team should include Patient Accounting, Patient Access, Case Management, Denial Management or Revenue Integrity, HIM, Information Technology, and the vendor, if one is utilized. The executive sponsor should be someone at the Vice President level, such as the Chief Financial Officer or Vice President, Revenue Cycle. This will give the team the necessary clout to do its job properly. Others may be brought into the group on an as-needed basis, but the number in the core group should be held to manageable levels.

Define the Task Force’s objectives and approach to problem resolution.

Schedule regular Task Force meetings, at least monthly, and review the denial data on a routine basis. The Task Force will review individual denials to determine why they occurred, what procedures can be implemented to prevent the same denial in the future, and what training needs to occur.

Determine the key performance indicators (KPIs) that will be used in the denial management process.

Compare facility performance against industry benchmarks. Benchmarks may come from a variety of sources, including but not limited to Healthcare Financial Management Association (HFMA), American Association of Healthcare Administrative Management (AAHAM), Hospital Accounts Receivable Analysis (HARA), and any state or local data that may be available.

• Develop and implement a communication plan to ensure denial data and KPIs are distributed to all who need that information, and that there are focused discussions regarding denials, how to avoid them, the process for filing appeals, and following–up on those appeals.

Recording Denials

Establish a central repository for denial tracking and reporting. This can be a part of an existing system, such as patient accounting or EDI, or it may be a separate system or data base.

Develop a standard set of denial codes (maximum 25) to record the denials.

Document clear definitions for the denial codes, and establish a crosswalk between the X12 835 codes for denials and the denial codes in the data base (not all 835 codes will be classified as denials).

Establish responsibility for addressing each denial code, by department.

Record as many denials directly from the 835 as possible.

Conduct staff training to ensure that manually recorded denials are assigned to the correct denial code.

Create denial write-off codes in the patient accounting system that correspond to the denial codes in the denial management system.

Ensure that both denials and write-offs are tracked, and that everyone understands the difference. Denials are those claims for which an insurer has refused or partially refused payment, and a write-off occurs only after the denial is deemed uncollectable.

Reporting Denials

Develop reports from the denial management system to report denials by type and by responsibility for the denial.

Develop reports from the patient accounting system to report write-offs due to denials, by type of denial.

Set goals for both denials and write-offs, and track the actual results monthly. Goals should include maintaining write-offs due to denials at < 2% of net revenue.

Preventing Denials

Ensure that staff members are well-trained in payer pre-admission, admission, discharge, and billing requirements. This will help to reduce some of the preventable denials, such as failure to obtain necessary pre-certification or referrals, non- covered services, inappropriate level of care, medically unnecessary services, inadequate documentation, untimely filing, etc.

Publish timely filing requirements, by payer, for billers, follow-up representatives, coders, and other applicable staff to ensure deadlines are always met.

Limit denial exposure through routine attempts to negotiate no denial or limited denial clauses in future contracts with major payers.
Appealing Denials

Ensure that timely and assertive clinical representation is available for providing support for clinical appeals.

Ensure that relevant staff members have access to, and understand, payer contracts, Medicare/Medicaid regulations, and state insurance regulations to more effectively contest denials.

Use qualified vendors or attorneys to assist in contesting denials, if necessary