Automation Plays Important Role In Improving Denials Management

October 5, 2005

Hospitals across the country lose millions of dollars every year due to problems in the billing process. The reasons range from inaccurate charging, such as undercharging for a service or procedure or missing a charge altogether, to sending out claims that are for various reasons deemed inaccurate by the insurance carrier and therefore denied.

While knowledgeable, well-trained employees are fundamental for any organization to function successfully, some in the industry say that the sheer volume of services, supplies, and procedures that a health system provides calls for an automated system of checks and balances that can help to ensure accurate and prompt payment. A new educational supplement prepared by HFMA and MedAssets discusses the scope of billing errors and two key components to improved denials management: better staff training and system automation.

Case Study: Editing Claims Data

In 1999, Lexington Clinic, a multispecialty clinic with 21 branches in nine Kentucky counties, began investing in several software enhancements, beginning with a claims scrubber. The software checks the claims data and format so they will be submitted to the carrier as error-free as possible. Claims with problems are sent back for correction before being sent to the payer. For example, coding denials go back to the coding department and claims denied because of medical necessity or precertification issues go back to the physicians' offices.

Physicians weren't too keen about this change at first, says Kim Newland, director of patient financial services for Lexington Clinic. But once they realized how their offices' errors could affect their payment and that the clinic's business office couldn't address these issues, the number of denied claims routed back to physicians was reduced from an average of 100 to 150 per department per week down to less than a dozen per department.

Lexington hired a data analyst to create trending reports and a computer programmer who wrote a program that tackled the issue of claims that were technically not denied but for which the carrier gave no response. Lexington also used the system data to manage claims that were only partially paid.

All in all, in addition to having better-trained staff, automation has helped Lexington's bottom line. Despite Medicare's payment cuts and increased patient out-of-pocket payments, Newland says, "We have increased our net collection percentage by 6 percent."

Case Study: Capturing Charges

Carolinas HealthCare System, which includes six owned and an additional eight leased and managed healthcare facilities, based in Charlotte, N.C., decided to implement an automated charge capture audit system in some of its facilities when a manual audit of a few departments within the health system turned up some missing charges, according to Tony Lantzy, assistant vice president, finance chargemaster. During the audit, patients' charts were pulled, and the documentation in the chart was compared with the charge capture sheet and then with what actually was listed on the claim. "That's how we determined that there was a need for some type of safety net that could basically secure the revenue for us," Lantzy explains.

"An automated audit tool has been really helpful to us, both in catching those charges that are missed and then also in using that as an education tool for the department. They can actually see the charges they're missing and correct the situation on the front end," Lantzy said.

The automated system sends daily reports to the various departments on everything billed the night before that contains a charge capture issue. Therefore, the department responsible for correcting those errors can review the claims before they're sent out. "So the departments are doing a better job. As they recognize they have an issue, they're correcting it and getting better at what they do," Lantzy said.

SOURCE:

Improving Cash Flow with Better Charge Capture and Denial Management, an educational supplement by HFMA and MedAssets.

HFMA Wants You to Know  ISSN: 1540-0697. Volume IV, Issue 19. Copyright 2005, Healthcare Financial Management Association. All rights reserved.