Managing denials is something healthcare organizations have wrestled with since they first started submitting claims to payers. While a typical program often focuses on reaching defined benchmarks with certain key performance indicators (KPIs), such as initial and final denials, these traditional metrics can be somewhat misleading. Merely monitoring denial rates and working to keep them in check can mask an underlying resource issue that is driving up the cost to collect.
Embracing a new mindset
In October 2018, Universal Health Services (UHS), a publicly traded, for-profit hospital management company with facilities across the United States, decided to rethink its approach to denials.
“As healthcare claims became more complex, and payers demanded more detailed information, we found we were spending increasing amounts of time responding to denials,” says Keith Siddel, vice president of UHS. “When we started looking at the staff allocation for denials work, it became apparent that we had a lot of personnel across different areas that were spending significantly more time than we realized keeping our final denial rate low. Although we were achieving good results on several key performance indicators related to denials, the metrics were not indicative of the effort that was going on behind the scenes. We decided to reframe our work in this area, moving to a more proactive strategy.”
As a first step, UHS redefined what it considered to be a denial. “We began thinking of denials as anytime we were not paid timely the amount that was due, as based on the contract,” says Siddel. “If, for example, a payer repeatedly requested paper medical records, sometimes for the same claim, which slows down the payment process, we began considering that as a form of denial because it causes additional work on our side. After adjusting our perspective, we discovered that we didn’t have a reliable way to measure or categorize denials or strategize around how to resolve them. It became clear that we needed a partner that had the scope and depth of knowledge to work with us to manage the window between initial denial and final payment.”
Taking a collaborative approach
During the initial phase of the work, UHS reached out to Ensemble Health Partners, a revenue cycle management company that emphasizes technology-enabled performance improvement.
“With Ensemble, we found a partner that was willing to work with us to design a strategy around our unique needs,” says Siddel. “Based on several conversations with their leadership team, we felt the company not only understood what our objective was but could bring expertise to the table and give us actionable information in a timely manner allowing us to more efficiently resolve denials and prevent their recurrence. Ensemble was able to provide us with ideas and suggestions based on their work with numerous healthcare organizations across the country. We put our experts together with theirs and collaboratively came up with a strategy that we felt would be the most effective in today’s payer-provider environment.”
At the start of the project, Ensemble spent considerable time mapping out UHS’s current processes and talking to stakeholders, including patient access, health information management and billing office teams.
“As a company of former hospital and physician practice operators, our leadership team has direct experience in the market and understands the nuances and challenges involved in running a healthcare organization,” says Judson Ivy, CEO for Ensemble Health Partners. “Our work with clients involves adapting our methodology to solve their needs. We are committed to uncovering root causes, enabling process improvement and providing continuous education to fix chronic issues that span the health system.”
Marrying the reactive with the proactive
Ensemble and UHS have taken a two-pronged approach to the initiative. “Our team assigns Ensemble the initial denials from across our facilities and they categorize them, identifying and addressing those that require further work, such as a clinical appeal,” says Siddel. “Because Ensemble is a national organization, it can handle our denials quickly on a large-scale. Even more important, they can provide us with insights into what’s going on across all our facilities. We operated in a more siloed manner before partnering with Ensemble, with each facility’s business office only having insight into the denials occurring in that facility. Now Ensemble aggregates the data and provide us with real-time feedback on what’s occurring across our facilities for a particular payer, service or denial type. They also provide education to our staff and strategize with us on ways to prevent issues from happening again — rather than just addressing them once and then re-addressing them later.”
An off-site team handles the categorization, appeals and educational pieces, and an on-site team reviews the organizationwide data, identifies root causes for recurring issues and helps develop plans to tackle those problems. “What makes us different is our focus on pinpointing the root cause of a denial, whether that’s a payer issue, a provider problem or some combination of the two,” says Ivy. “Although it takes more resources to address the root cause, in the long term, it allows our clients to substantially improve the efficiency of denials management while enhancing revenue capture and speeding cash flow.”
Early results are positive
Since partnering with Ensemble, UHS has seen some encouraging results in many areas. “The company has provided comprehensive education for our physicians and coding teams based on areas it identified as needing improvement, and these have been quite helpful. They have also supported our managed care team, making sure they know about areas where payers are not complying with the contract and pointing out things we could bring up during negotiations. Overall, Ensemble has been crucial in uncovering and resolving persistent issues and lowering the cost of addressing denials.”
An added benefit to UHS’s new methodology is it is more patient friendly. “You can’t forget about the ripple effect from denials and how they impact patients,” says Siddel. “Let’s say I spend three months working to get a denial overturned. Even if I ultimately get paid, where’s the patient during this time? They don’t know whether their insurance will cover the costs or whether they will need to pay for things out of pocket. That can be frustrating and stressful. There’s a whole patient component of this that is often overlooked and can negatively affect patient trust and satisfaction. Even though patients are not directly involved in denial discussions, they are certainly stakeholders in the entire process. By focusing on denial prevention instead of management, we are limiting the impact to patients and improving their financial experiences along with our own.”
Despite the steady progress, there is more work to do. “We continue to identify opportunities,” says Ivy. “Healthcare is evolving, and payer requirements are changing at a faster pace than hospitals and health systems can handle. We are working with UHS to not only tackle today’s problems but get ahead of and stay on top of the new issues and challenges that are emerging.”
A fresh look at an old problem
Although addressing denials is a topic that’s been around for a while, organizations are still struggling to cost-effectively curb the problem. “I think many hospitals and health systems would be surprised at their total costs for denials management and how much this work is adding to their cost to collect,” says Siddel. “You may not realize how many times you’re fighting the same issues over and over. Reexamining your methodology allows you to spot ways to prevent some of these concerns through tighter contracts, conversations with payers, stronger performance from internal staff and so on. By establishing a new program with a proactive mindset and working with a partner that embraces continuous improvement, you can realize long-term benefits that reach far beyond lowering your KPIs.”
About Ensemble Health Partners
Spurring innovation in revenue cycle management takes experience blended with a performance improvement mindset. Ensemble Health Partners is working with organizations to tackle long-standing problems like denials, offering a collaborative approach that uses data and technology to address the root causes of recurring issues.