Deciphering Denials
“Denial ain’t just a river in Egypt.” – Mark Twain
No, Mark, absolutely not.
In the healthcare industry, denials are generally accepted as a certainty when dealing with insurance companies. They are an inevitable part of the payment process.
Some denials are preventable with effective front-end processes – lack of preauthorization or referral, inactive coverage, medical necessity, timely filing – these should all be avoidable. Other denials are more geared towards issues related to the mid-revenue cycle – provider documentation and medical records. There should be an awareness of the areas that are causing denials. For example, it would be best if you were generating denial reports monthly, at a minimum, to measure denials and trends. Then present the results and discuss them with key stakeholders within the revenue cycle, generating corrective action for repetitive issues.
When resolving denied claims, you must differentiate types of denials. For example, "Soft" or interim denials are simply payment delays. These issues can be corrected, usually relatively quickly, and rebilled for payment. "Hard" or final denials are typically unrecoverable. The key word here is "typically" because that is not always the case.
Insurers know how providers classify these denials, so you cannot always take the denial reason at face value. Often you will find that a final denial reason is not the primary reason for the denial. In working on the claim, you determine that the claim is still payable, and the correction needed is unrelated to the denial reason presented on the EOB. Therefore, you should work on every denial carefully to make a final determination.
Suppose that all front-end processes are in place and functioning extraordinarily well. Your HIM department is flawless. Case Management, or Utilization Review, is on top of their game. No denials, right?
A recently released report from the Kaiser Family Foundation analyzed denial data from 2020 and found that insurers denied approximately 18% of in-network claims. The denial rate varied by the insurer, "ranging from as little as 1% to more than 80%." As I stated earlier, denials are inevitable regardless of all other contributing factors. The data further reveals that insurers classified 72% of the identified denials as "all other reasons" with no specifics. Shockingly, the study found that consumers rarely appeal denied claims.
What does that 18% represent to your facility's reimbursement? Is it $180k per month? $1.8 million? Wherever you fall on this spectrum, cash is at risk. Effective denial management is paramount to ensure that your facility is winning back as much of that 18% as possible.
So, how can your facility start winning more of these battles?
1. Examine your current denial reporting process
Simply generating a report is not enough. You need actionable data. You need trending data. Then, it would be best if you communicate your findings to those who will be responsible for addressing negative trends.
2. Inspect the tools at your disposal
Denial management can be so much more efficient than it once was. Affordable software is now widely available for even the smallest facilities to streamline their denial workflows. There is no excuse for not identifying and working on every denied claim. If you are not aware of the available tools, please email me, and I will be glad to share the information of vendors I have worked with successfully in the past.
3. Scrutinize the skill level of the people working your denials
Not everyone is cut out for working denials. Even some seasoned billers do not have the confidence and assertiveness to go toe-to-toe with insurance companies. Individuals who work denials should be professionally assertive in their communication with insurers. They should be critical thinkers who can decipher the information they receive from insurance representatives. It can sometimes take 2-3 calls before speaking to someone who is truly helpful from an insurance company. If you are not confident that your people are capable, you may need to look for an alternative solution.
