Denials Management

Ask the Experts: Managing Denials

May 15, 2017 2:40 pm

I took over our patient financial services department in June 2016. I’m updating most of the department’s processes, but I am having difficulty ensuring I make the right decision about managing denials. Currently, the denial process involves our department manually moving accounts to other departments for resolution. Our overturn rate is not where it should be. I am considering creating a denials team and managing all the denials in patient financial services. How have you managed denials and achieved success?

As background, we are a safety net hospital with 1,691 beds. In FY15, we admitted 86,367 patients and had more than 1 million hospital outpatient visits.

Answer 1: Most medical/surgical hospitals where I have worked have had a denials team. The team has usually worked on cases that were either completely denied or partially denied, but not on underpayment cases.

For underpayment cases, a different small team would use specialized software to identify and correct underpayments—or overpayments when they occurred. To avoid or minimize future underpayments, it was best when the contracts for all of the payers were loaded into the contract management software by outside professionals who did this full-time, rather than by hospital staff.

If behavioral health services were provided by a given hospital, there often was a special denials team just for those services because the denials for behavioral health often were very different from those for medical/surgical cases and because many of the payers were different. I believe having two teams was the best way to go for such hospitals.

The two teams, that is behavioral and medical/surgical teams, sometimes had cases that overlapped. Often, a small task force would be created with a couple of members from each team to address the overlap issues. This usually worked well.

At some hospitals, some cases that were Medicare denials were instead incorrectly written-off by patient accounts staff to Medicare bad debt. Attention was needed to prevent this from happening and to identify cases already “buried” as Medicare bad debt so that they could be identified and reclassified as Medicare denials and then given to the denials team.

A regular meeting with payer representatives and hospital patient account staff, perhaps monthly, was usually helpful.

Chemotherapy cases seemed to be particularly difficult to bill correctly and to resolve when they were denied. Focused attention to chemotherapy cases was especially cost effective when corrective action was taken.

At several hospitals where I worked, a large percentage of Medicaid cases were denied, and there was a short deadline to get them rebilled and resolved. Sending denied Medicaid cases to an outside contractor for Medicaid rebilling after 90 or 120 days was often the best way to get them rebilled correctly. Although there was some reluctance to send cases to an outside contractor, it was often the best way to get older Medicaid denial cases paid before the payer imposed deadlines.

When contracts with private payers were being negotiated by a hospital, it was best to have some members from the denials team directly involved, so that “grey areas” could be identified and properly defined.

This question was answered by: Robert J. Ellertsen, FHFMA, former hospital CFO with more than 35 years of experience in healthcare finance, and a member of HFMA’s Massachusetts-Rhode Island Chapter.

Answer 2: Robert Ellertsen’s answer above is comprehensive and what I would have suggested. The following are a few additional recommendations:

  • Create a special underpayment project team, focused on evaluating payer payments.
  • Outsource the difficult and quick turnaround payer denials.
  • Focus on chemotherapy cases, which have low complexity, but introduce big risks for loss.
  • A denials management team should exist, and it should report trends to the front-end revenue cycle staff, compliance, and operations to reduce avoidable patterns and issues.

This question was answered by: Curtis H. Bernstein, CHFP, CPA/ABV, ASA, CVA, a principal, Pinnacle Healthcare Consulting, and a member of HFMA’s Colorado Chapter.

What do you think? Please share your thoughts on this question in the comments section below.  

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