Denial Analysis Often Improves Healthcare Profitability
Denial Analysis Tactis to Improve Reimbursement

What gets studied gets improved.

This is one of the simplest management concepts yet one of the most challenging when it comes to ambiguous data. What is understood gets improved is the more accurate maxim for analyzing the ambiguous, often uncharted, sea of denial data being generated in the initial stages of healthcare denial management.

“The statistics change by the way you manage the data,” said Carol Shetland, denial database coordinator for Eisenhower Medical Center. “You can float the number in any direction you want to.”

Shetland’s facility created an access database for analyzing denials. As the database tracking has evolved, Shetland has identified a number of factors that are necessary for clear, accurate and actionable information.

The critical first step, according to Shetland, was the charting of every ANSI code according to denial type and responsibility. This allows for more consistent denial analysis over time because denials are always compared with like denials. This level of detail also provides management with the roadmap for assigning denials to the appropriate personnel for resolution.

“Using excel for making a crosswalk is easy and can be changed easily. This allows us to have the most up-to-date data,” Shetland said.

Shetland also recommends that denial reporting routinely display account adjustments.

“We track the expected reimbursement, the paid amount and the adjustment. When you look at the numbers, you have to first ask yourself why you expected the money to begin with.  Sometimes you are looking for money that you were never going to get and that is just fictionalizing your accounts receivables.”

Shetland said they have recently moved to automated data entry of denials. Although automated data entry may be unavoidable for large facilities, Shetland states that there is often a loss of consistency in the data.  Identification of denials which were merely pending were often easier to reroute under their manual data entry system. Further, the automated process has resulted in the need for training in the departments which are the source of the data which may, in some cases, involve many employees in different departments.

Many denial experts cite multi-departmental involvement as one of the biggest challenges in denial management. Not only is training necessary in many departments but software must be compatible.

The University of Mississippi Medical Center in Jackson, MS, put together an in-house system for tracking denials a number of years ago. However, one downfall of such independent systems is that they are often implemented in a specific department. Therefore, the information generated may not be widely utilized in other departments. This can result in one department, such as medical records, submitting information on claims which have already been denied and sent to collections.

Despite the numerous challenges, many hospitals report that tracking denials leads to more insurance dollars. Howard University Hospital in Washington, D.C., is one such hospital which developed an in-house solution to reviewing insurance denials. Recognizing the need for a coordinated approach throughout the hospital, Judy Dixon, M.D., said her position at Howard University Hospital – physician advisor to the medical director - was created within the hospital to centralize responsibility for appeals and compliance training. 

Dixon downloads denial information into an independent database which allows her to manipulate the information to her needs, including reviewing denials by carrier, type of denials and types of denial by hospital department. Her responsibilities include not only generating this information but also appealing denials and training hospital personnel on how to reduce such denials. Her department was responsible for $1.2 million in overturned denials in 1999. Further, Ms. Dixon said that she has identified an upward trend in the number of denials with about 4% denial rate on claims at Howard.

When she notices such trends she can do further research to determine if the higher denial rate is originating from a specific carrier or even on the hospital end, from a specific department.

“These statistics let me know if I need to talk to the insurance company medical director and nurse reviewer and that has really worked. And sometimes it is a question of what can we do better. Then I go back to the medical staff and work on documentation and which diagnosis are appropriate for admission and which are not.”

Tracking denials also allows Dixon to better track their success rate. Dixon said her department generally overturns 30 to 40 percent of the denials they appeal. And the success rate is even higher on unfavorable concurrent reviews that Dixon is involved with. Dixon, who previously practiced family medicine, said her background definitely contributes to the success of their appeal program.

“My being a doctor is very beneficial. I can address these issues colleague to colleague and talk to them on a different level,” Dixon said.

Another benefit of denial and recovery tracking is a more coordinated effort to recover interest which may be due related to the denial.

When Eisenhower implemented denial tracking, they initially identified many two year old claims which had not been resolved. They analyzed these accounts in more detail to determine which claims had sufficient documentation to allow them to ask for payment with interest and were successful at collection on the majority of these claim where they were able to clearly establish the date a claim was filed with the carrier.

“You have to have records that can prove exactly when the billing was submitted and deemed a clean claim. That is where the interest has to be calculated from. If that information is accurate and you can provider the proof to back it up, interest collection is easy,” Shetland said.

Shetland said they routinely send out appeals and follow-up letters which cite the exact amount in interest they believe they are entitled to. Follow-up on these requests is often the key to success and the result has been interest payments in the thousands on single accounts.

“We initially pursue it and we have an attorney that we can refer to also. Sometimes if you fight long enough and hard enough, you get paid but you have got to ask for it,” she said.

Medical offices considering tracking denials may find some upfront costs to putting together a successful program. Changes may also be required in staffing responsibility and authority for denial resolution can be centralized. But the end result may be millions of dollars in increased revenue over time.

Extensive information about denial management is also available at the company’s web site – www.appealsolutions.com or by calling 888-399-4925.