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Executive Roundtable | Denials Management

Simplifying the revenue cycle while building resilience

Sponsored by Xtend Healthcare
Executive Roundtable | Denials Management

Simplifying the revenue cycle while building resilience

Facing internal and external pressures, many U.S. health systems are struggling to stabilize their revenue cycles. Unfortunately, the road ahead doesn’t appear any easier, and the healthcare complexities that exist today are poised to further evolve. In this roundtable, sponsored by Xtend Healthcare, several senior financial leaders discuss their organizations’ revenue cycle management (RCM) optimization initiatives, focusing on a variety of strategies, including eligibility checks, denials prevention programs and automation.

How do your current systems use transaction set data for denials management and automation?

Robin Herbner: At Froedtert Health, we perform eligibility checks for our lab direct billing through a third-party vendor. We don’t have as many denials in the lab space as you would see in a hospital, however those we do have are more technical. Checking eligibility has provided a boost for us in terms of catching problems. We’ve been able to uncover underlying causes and make adjustments early in certain processes to avoid issues. For example, we have phlebotomists that go onsite to nursing homes to perform blood draws. Sometimes, patients will get blood drawn two times per week for several months. If we don’t have the correct information for the patient, repeated denials can have a significant financial impact. It is beneficial from a patient care perspective to have the phlebotomist come on-site to perform the draws. But, when we get paid $3 for each one, we can’t afford to do it without making sure we’re getting paid for every draw. So, we started embedding information directly from the nursing homes through an electronic process and performing a pre-service insurance validation. When the order is placed, there is a hard stop that prevents the patient from getting blood drawn until we know we have all the information we need for billing. As a result, our denial rates have dropped, and our first pass clean claim rates have gone up.

John Doyle: From the denial side, Northern Light Health is transitioning from a vendor solution to an internal database, and we’re using our performance improvement resources to get information out of the internal solution. By bringing this in-house, we’re hoping to better analyze our denials and dig further into root causes. We’re just starting out, so we’ll see where it goes.

James Heilsberg: I think not having access to good denial data is a common problem that a lot of hospitals have. At Tri-State Memorial, we have denials, but we don’t have the ability to easily identify our top 10 on an ongoing basis. To get everybody focused on our top 10, we have to go to many different sources, which can be confusing and potentially inaccurate. We’re currently looking at a power business intelligence solution that will allow us to bring all the data into one location. The solution would use common descriptors that are already in the data, as opposed to trying to come up with the descriptors on our own. I’ve experimented in the past with spreadsheets, just trying to grab, sort and categorize the data in meaningful ways. However, I haven’t been overly successful. We are now looking at several vendor solutions to tackle denials, eligibility and pre-authorization at the same time. That said, I have found there is no perfect solution, and one vendor is unlikely to deliver on everything. As a health system, we have to find the right mix of internal tools, third-party options and subject matter experts that can work in tandem to address denials effectively.

Mike Simms: I agree with you on the wisdom of the right expertise. Cone Health has prioritized creating a clinical revenue cycle team, which was a suggestion HFMA mentioned a couple of years ago. To fully get a handle on denials, you need to get clinical people involved. It’s not all back end, especially on prior authorizations and medical necessity. Our team has categorized where we’re seeing specific denial trends and then focused on reducing them. For instance, we have been able to reduce status denials by making sure we identify from the beginning if a patient meets the requirements for an inpatient stay versus observation. Since we hired physician advisors, they have made a great impact on reducing status denials. Our physician advisors also play an important role in overturning status denials after the claim has been submitted.

Mike Morris: That’s an important point. The regulation does allow certain out-of-network providers to seek written consent from patients that will then allow the provider to balance bill. But this is limited to non-emergency services and not allowed for specialties, such as radiology, anesthesiology and neonatology – or – services provided by assistant surgeons, hospitalists and intensivists. So, I agree, getting it right on the front end is important because consents are not likely to make providers whole. And more importantly, patients deserve and are demanding accurate estimates and no surprises. There’s a lot of providers that have strong, real-time eligibility on the front end, but they still get a lot of out-of-network denials. Now is the time to dig into what’s causing that disconnect. Why did the organization think they had insurance captured correctly when they really didn’t? The sooner we can figure that out, the better it will be for everyone.

Erynn Johnson: At CentraCare, we look at the root cause of denials and determine how to leverage our system for automation opportunities and to enhance workflows to close gaps resulting in denials. Our team works with key stakeholders in revenue cycle and our clinical leaders. We, too, are working on how to identify patients with coverage where we are out of network. Verifying active coverage is no longer enough.

Julie Clutter: If we’re relying on front-desk staff to navigate the nuances of eligibility, prior authorization and other complex topics, we’re not going to be successful unless the front-desk team has a certain degree of clinical expertise. At Seneca Health Services, we have a team that handles patient clearance, and they have a higher skillset than a typical front-desk department, so they are familiar with referrals, prior authorizations, securing funds, helping patients get connected to financial resources and so on. But having this team review everything is not possible. Not getting the information correct upfront has the potential to be a huge administrative burden when we consider the scope of services we provide on a daily basis.

How do you analyze denials data for trends and patterns?

Heilsberg: This is where silos can become a factor. I have found that people usually think that others work in silos, but they themselves do not. In reality, everyone works in silos to a certain degree, and that limits our ability to understand and respond to information effectively. An out-of-the-box idea we’re testing to break down silos is to have the revenue cycle team engage in safety huddles, just like our clinical colleagues. Two days a week, the department comes together virtually or in-person to talk about safety issues from an operational standpoint. The intent of these huddles is to open up dialogue, talk about things that people find difficult or discuss any roadblocks they’re experiencing. In other words, where are we having issues as a department? We’ve started to see some success with these. After several months of doing them, people are now bringing up topics, where before it was just me leading the discussion. We’re now finally starting to dig into systemic issues.

Simms: Zero-balance reviews are another valuable denials analysis strategy. By working with a vendor that has attorneys on staff, you can see a pretty solid ROI. We’ve found that vendors who use attorneys have done a good job in overturning denials that our internal team has not been able to do. The next step is to share information about those overturned denials with your managed care contracting team, so they can talk with the payer about the denials you’re seeing from their organization. This has the potential to help with the negotiation process. Ideally, it would be great if we could get to the point where both sides (payers and providers) could accept a specific flat percentage of denied claims. This could avoid so much of the rework. There is just too much rework going on, and it’s not helpful for anyone.

“At Xtend, we have developed complex mapping tables for most payers to combat constant payer policy changes and inconsistent use of reason codes.” — Mike Morris

Johnson: Payers are hesitant to do this, but I think that’s the direction we must go, as we can’t play this ransom game with our revenue anymore. We analyze our denials data a variety of different ways — including by payer, department, CPT, DRG, provider, reason code, remark code, modifier and diagnosis code — looking at both number of denials and denied amount. We take a multi-disciplinary approach and look at every step of the patient’s journey to understand where improvements are needed and who we need to work with to reduce denials in that area. As providers, we’re spending additional money hiring staff or vendors to review denials and appeal them and putting our patients in the middle. They finally get their statement, and it says they owe a balance from services they received 18 months ago while we worked to resolve the denials. It’s confusing, frustrating and provides a terrible patient care experience.

Suzette Duhe: From a prior authorization standpoint, UHS Gulfport Behavioral Health System has been able to get a little more predictability with one of our payers. They give us a reference code if we call to notify them of a qualified patient. This allows us to skip on some of the clinical documentation — although it’s not a full-proof system, and the payer still denies some of our claims on the back end. Even so, the approach does save us time during intake, and since the payer is our main managed Medicaid provider, it helps. As long as we notify them upfront, we don’t have to do all that paperwork.

What are the data points that you feel you’re missing from vendors? Where are the disconnects that frustrate you?

Johnson: If payers don’t use reason and remark codes consistently or in the same way as other payers, it’s super frustrating, and it’s difficult to understand the root cause of a denial. With the No Surprises Act, who is going to hold payers accountable to process claims correctly and to use reason codes appropriately, so we’re billing patients accurately? That’s something we’ll have to monitor as the legislation takes hold.

Simms: Another thing that’s maddening is that payers are always changing their medical policy. This makes it hard for us to keep up with everything because they regularly refer to updates that may not be in our contract. To address this issue, we have a vendor that basically watches all of the changes in medical policy and makes us aware when we need to alter our processes, procedures and so on. We have found it’s the best way to effectively keep up with the volume of change in the market.

Morris: At Xtend, we have developed complex mapping tables for most payers to combat constant payer policy changes and inconsistent use of reason codes. This level of sophistication takes dedicated resources to monitor payers and react to changes in real time. This investment has a strong return on investment, but in the long run it would materially reduce provider’s cost-to-collect if this inefficiency in the revenue cycle didn’t exist.

What’s next in terms of trying to further reduce the denial rate from where you are now?

Doyle: It comes down to getting the data in line and pushing it out to the people who can make the right changes. I mean that sounds simplistic, but that’s what’s required. The volume of denial codes is a problem, and some things that we classify as a denial we may never be able to appeal. This can lead to overstating the opportunity. When you have a vendor come in and say, “We can save you all this money,” they might be able to, but it’s important to narrow the scope of work and focus on areas that have the greatest ROI. Then you can use performance improvement and lean processes to ensure you’re making changes that solve the problems you’re facing and will stick long term.

Heilsberg: I’ve quit trying to look at what I can overturn. I’m looking at the stuff that’s going over the dam every day and fixing those issues. When I first started at the hospital, the team was focused on appeals, and these appeals weren’t necessarily the best use of time or resources. From my perspective, we need to fix more stuff upfront and move toward prevention as opposed to management. In some ways, it’s a terminology distinction. Denials include every problematic code, yet people often refer to denials as those things that we should appeal. If you’re just zeroing in on appeals, then the problem will keep happening. We need to look at the stuff we can fix and actually fix it, so we reduce the denials proactively. Sure, some appeals are still necessary, but they shouldn’t be our primary strategy.

Johnson: We’re definitely taking a closer look at the ROI of our appeals. This week, for example, we’re testing low-value denials adjustment automation. Let’s say I receive a denial, and the actual net worth is $3. I’m going to pay more in the cost to collect that $3 than the actual payment. In that case, it makes sense to adjust, not appeal, so we can focus on the things with the greatest impact. We’re also looking to automate the always situations to improve efficiency and reduce waste. We want to focus our staff resources on the items that need manual intervention and utilize automation or bring in some AI where it makes sense. We also want to increase the awareness and understanding of denials and write-offs and invest our resources to prevent future denials and subsequent write-offs by working with owning areas.

Clutter: For us, at this time, it’s more about education than anything else. I come from a critical access hospital. Behavioral health is a whole different world for me. I find that there’s not the education for my managers and billers, so they have a hard time keeping up with the nuances. They may end up writing off things they shouldn’t or focusing on things that aren’t as important. Having more education aimed at behavioral health organizations would be helpful.

Johnson: In addition to proactively addressing denials, we as providers also must improve our relationship with payers. We need to increase our collaboration efforts to reduce the administrative burden on both sides. Although we’ve had great success overcoming some issues with payers, there is so much left to do. We must come together to eliminate barriers, remove confusion and provide a better experience for patients. 

HFMA Roundtable Participants

JULIE CLUTTER is vice president of finance/CFO for Seneca Health Services in Summersville, West Virginia 

JOHN DOYLE is vice president of finance at Northern Light Health in Brewer, Maine

SUZETTE DUHE is CFO at UHS Gulfport Behavioral Health System in Gulfport, Mississippi

JAMES HEILSBERG is CFO for Tri-State Memorial Hospital in Clarkston, Washington

ERYNN JOHNSON is senior director of revenue integrity at CentraCare in St. Cloud, Minnesota

MIKE SIMMS is vice president of revenue cycle at Cone Health in Greensboro, North Carolina

MIKE MORRIS is president and CEO at Xtend Healthcare in Hendersonville, Tennesse

ROBIN HERBNER is the chief financial administrative officer at Froedtert Health in Milwaukee, Wisconsin

About Xtend Healthcare

Xtend Healthcare, a part of the Navient family of companies, is an industry-leading provider of revenue cycle and public health solutions. Our seasoned team, deep knowledge of local environments, proprietary technologies, agility, enterprise scale, and tailored solutions help optimize our clients’ programs, so they can continue delivering on their missions. Learn more at

This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA.

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