1. Denials Management
April 2017

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Presenters
Peter
Angerhofer
Peter is a principal at Colburn Hill Group; he brings experience in operations, strategy and health policy to both daily operations as well as long- term vision.
Jeff Means
Jeff is a principal with Colburn Hill Group, and works in product development as well as operational consulting. He has designed, supervised the development and launch of several successful technologies.
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What we will cover
Identify the common problems faced by efforts to improve Denials Management
Provide Key Metrics and Benchmarks
Review Best Practice Denials Management processes
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Introduction
Denials represent the largest category of avoidable financial leakage for most health systems (2% - 6% of NPSR)
There are countless tools, vendors, and programs available … yet the problem persists
At best, most Denials programs keep lost revenue from increasing when they should be driving steady improvements over time
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5. Common Problems with Denials Management
Denials come in many shapes and sizes
The goal posts keep moving
Most analytical tools are inadequate
Most Denials programs are under-resourced
This presentation suggests a structured approach to solving the problem
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Key Metrics
Initial Denials
Denials Write Offs
Denials in Active Accounts Receivable
These metrics need to be considered holistically and in context of one another. Systems to track performance at this level can be costly, but are essential to driving systematic improvements.
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Initial Denials
Definition: Remittances from payers that indicate lack of payment for service(s) – usually in the form of an ERA (835) or paper remittance advice
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐷𝑒𝑛𝑖𝑎𝑙 𝑅𝑎𝑡𝑒 = 𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐𝑙𝑎𝑖𝑚𝑠 𝑟𝑒𝑚𝑖𝑡𝑡𝑒𝑑 𝑤𝑖𝑡ℎ 𝑎𝑡 𝑙𝑒𝑎𝑠𝑡 1 𝑑𝑒𝑛𝑖𝑎𝑙 𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐𝑙𝑎𝑖𝑚𝑠 𝑟𝑒𝑚𝑖𝑡𝑠
PROs
Timely feedback
Process focus
CONs
Difficult to calculate
Payer anomalies
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8. Initial Denials – Example Scorecard
Ensure common definition of denial categories
Aggregate enough history to show relevant trends
Summarize in a format that enables benchmarking
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Write Off Adjustments
Definition: Amount ($) adjusted to transaction codes mapped to “denials” on the general ledger
𝑊𝑟𝑖𝑡𝑒 𝑂𝑓𝑓 𝑅𝑎𝑡𝑒 = 𝑠𝑢𝑚 𝑜𝑓 𝑎𝑑𝑗𝑢𝑠𝑡𝑚𝑒𝑛𝑡𝑠 ($) 𝑁𝑃𝑆𝑅 ($)
PROs
Measure of actual loss
Financial focus
CONs
Variable use of codes
Significantly lagging indicator
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10. Denial Write Offs – Example Scorecard
Measures how current the write offs are
Compare the trend in Amount written off and Age for context
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Active AR with Denials
Definition: Amount ($) of Active AR that has been initially denied
𝐴𝑐𝑡𝑖𝑣𝑒 𝐴𝑅 𝑤𝑖𝑡ℎ 𝐷𝑒𝑛𝑖𝑎𝑙𝑠 = 𝐴𝑅 𝑤𝑖𝑡ℎ 𝑎𝑛 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐷𝑒𝑛𝑖𝑎𝑙 𝐴𝑅
PROs
Indicator of future risk
Financial focus
CONs
Difficult to measure
Requires workflow system
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12. Denial Write Offs – Example Scorecard
Critical Age Group for Follow Up
Most “At Risk” Age Group
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13. Key Elements of an Effective Program
Organizational Commitment
Cross-Functional Team
Dual Approach
Denials Recovery
Denials Prevention
Measurement System
Disciplined Project Management Process
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14. Organizational Commitment
Organization-wide goals around reducing inefficiencies and leakage from Denials
Communication across administrative and clinical chains of command
Realistic expectation of time and resources required to make improvements
Health system leaders should include regular denials management updates in their organizational updates / financial performance communications
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15. Cross-Functional Team
Representation Across Revenue Cycle Areas:
Patient Access
Patient Accounts
HIM / Coding
Revenue Integrity
Case Management / Utilization Review
Physician Advisor
Clinical Denials Appeals Lead
Most persistent and difficult denials issues require teamwork across departments to fully understand and drive sustained changed performance
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Dual Approach
Denials Recovery
Denials Prevention
Effective Insurance Follow Up Processes in Patient Accounts
Dedicated / Skilled Clinical Appeal Team
Escalation Process
KPIs:
Recovery Rate
Denials in AR
Turn-around Time
Process Engineers
Dedicated time and resources to perform process improvement initiatives
Cross-functional collaboration
KPIs:
Initial Denials
Process Metrics
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17. Denials Prevention Process
Benchmark
Root Cause
Engineer
Implement
Systematically measure performance to highlight problem areas
Drill-to-detail to understand specific upstream defects
Rewrite processes to reduce defects before they happen
Implement changes in the organization
Measurement & Data Analysis
Process Engineering & Change Control
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18. Denial Prevention Example
Problem: No Auth denials in Radiology due to Authorized Procedure is not the same as the Billed Procedure
Root Cause: Radiology technicians read an order differently than financial clearance agents
Solution:
Develop common understanding of orders
Regular reviews between radiology and financial clearance
Feedback to most affected physicians
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19. Denials Team Meeting Agenda
Metrics Review
Review of Follow Up Actions from Previous Meeting
Updates from Functional Areas
Retrospective Case Reviews
Summarize New Follow Up Actions

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Conclusion
The problem of Denials is common, across systems of all sizes and specialties, and there are a number of approaches to dealing with Denials. A Denials Management program needs to start by:
Quantifying your current performance level;
Estimating the value of achieving benchmark performance; and
Prioritizing your opportunity areas.
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21. For more information on Denials
Please visit the Business Intelligence (BI) Denials Management Demonstration Portal available for your use at
For additional information, feel free contact CHG at
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