Strategies to manage the claim denial process

It is critical to report data for every current procedural terminology (CPT) code that is denied. If, for example, you perform an office visit, a minor procedure, and a blood draw, and one of the services is denied, you need to know which one, and why. It’s not enough to identify a denial at the claim level. You need to have the details.

Work with your practice management system, clearinghouse, or reporting mechanism to structure the denials into categories, aligning with the functions of your practice. Categorize denials related to coding (the diagnosis is inconsistent with the procedure) with your coder, eligibility issues (patient cannot be identified as our insured) with your front office, and pre-authorization (the authorization number is missing, invalid, or does not apply to the billed services or provider), and with the provider assigned to this task.

Improving denial management

Now that you have the basics of reporting, let’s delve into using this business intelligence to improve the performance of your revenue cycle.

Once denial reporting is in place, the initial reaction usually is bewilderment. Once thought to be the exclusive purview of the business office, these data confirm that every area of the practice is an essential stakeholder in getting paid. Indeed, without the right codes, the proper eligibility, the correct pre-authorization and so forth, your claims are not going to be paid.

Related:Improve the claims management process: Preventing payer denials

Next, establish a game plan to manage the denials. Determine which ones can be worked by the business office, and resubmitted with the correct information.

It may be as simple as switching a -51 modifier for a -59 modifier (if the latter is appropriate and supported by the documentation in the medical record), or locating the image of the patient’s insurance identification card to find and correct the group number, which was originally keyed incorrectly.

Or it may be accepting that you need to perform an appeal. The days of stamping “APPEAL” in red letters on the claim form and mailing it back in are over. Appealing for payment often requires an insurer-specific form, or perhaps making your case in a letter.

Regardless of the format of the appeal, state your case professionally, and accompany your appeal with supporting documentation. For example, literature that supports the medical necessity of the service, an image of the description of the code in question from the CPT manual or the insurer’s own coverage policy).

NEXT: Preventing denails

Preventing denials

While the process of managing denials is ongoing, it’s critical also to focus on preventing denials.

Using the data you gathered about your denials, begin to concentrate on reducing the denials in each area of your practice. Although you can launch your initiative in many ways, here are some tips for success:

Be positive. Do not use the data simply to blame and criticize. The “it’s all your fault” attitude may actually run counter to efforts to improve, because employees may respond by failing to explain their workflow or no longer take pride in their work. Instead, use a positive attitude to engage employees.

Focus on process. Although people may make mistakes, all too often it’s the process itself that is broken. As you assess the workflow surrounding your denials, ensure that the training, process steps and handoffs are all optimized. Once the process is fixed, then you can hold people accountable for performing their jobs.

Assess tools and resources. Mistakes are often made when employees are in a rush. Determine what tools and resources your employees need to reduce the error rate. These may be real-time eligibility to confirm the insurance coverage of patients, or dual monitors to avoid losing precious seconds by toggling between programs.

Measure success. As you initiate efforts to reduce denials, track your progress. Report the volume and revenue associated with the denials in each category to the individual or team involved in your initiatives. Use tables, graphs or other images to display the success of the project to evoke pride from those involved with the initiative.

Focus on controllable denials. Not all denials will fit neatly into a category, but the key is to focus on the controllable denials. These controllable denials are defined as the ones in which there is a rationale in your participation agreement with the insurer that would explain the lack of payment. In other words, if it’s your problem that the service isn’t being paid.

Examples of controllable denials include the following:

• the time limit for filing has expired;

• the authorization number is missing, invalid, or does not apply to the billed services or provider;

• referral is absent or exceeded;

• lifetime benefit maximum has been reached;

• procedure/treatment is deemed experimental/investigational by the payer;

• claim/service not covered by this payer/contractor. You must send the claim/service to the correct payer/contractor;

• these are non-covered services, and

• patient cannot be identified as our insured.

As noted above, a cohort of denials may be balance billed to the patient, including “controllable” denials. If the group code associated with the denial is PR, shift the financial responsibility to the patient unless there are extenuating circumstances.

Related: Claim denials: 15 ways to fight back

If you can anticipate these denials, it’s best to present a waiver form for the patient to sign before the service is rendered to notify and confirm the patient’s financial responsibility. Of course, your practice also will experience a bevy of denials related to the contract. Although you may have to write off these services, it pays to assess each one to determine if an appeal could reverse the insurer’s decision.

Denials are an unavoidable aspect of the revenue cycle in every physician’s office. By concentrating efforts on managing denials, your practice can avoid having to make unnecessary, unwelcome adjustments on accounts. Perhaps the greatest opportunity, however, especially in the long run, is to use data about denials to prevent them from occurring in the first place.

Elizabeth Woodcock, MBA, FACMPE, CPC, is a consultant, speaker, trainer and author with Woodcock & Associates in Atlanta, Georgia. Send your practice management questions to medec@advanstar.com.