Hospitals' denial management operations face an evolving payer market as high-deductible health plans and narrow provider-payer networks multiply. Due to these trends, hospitals are increasingly seated with denials and uncompensated bills. As a result, hospital leaders are rolling out innovative denial prevention strategies to keep unpaid claims from compromising their bottom line.
"Everybody tends to solve the denial problem in either a proactive, preventive way or throwing a lot of resources at the backend to try and chase the denials," said Keith Slater, vice president of business development for the patient access call center at San Francisco-based McKesson. However, he said finding the right approach to denial prevention requires health systems to identify reoccurring denials and reevaluate their management techniques to stop them.
Mr. Slater and hospital leaders at Becker's Hospital Review's 5th Annual CEO + CFO Roundtable on Nov. 8 in Chicago discussed various denial management strategies, and analyzed best practices and areas for improvement.
Here are six claims denial management strategies leaders are using today.
Systematic refresh of RCM strategy. Completely overhauling a hospital's RCM operations is daunting and "seems like taking a shotgun to a fly," the senior vice president of a 325-bed hospital in the Midwest said. However, she said revamping her hospital's RCM methodology paid off. Her hospital was addressing denials as "non-bucketed" piles of claims in which the reason for denial — be it a documentation or compliance issue — was unclear. Now, the claims data is segmented to improve efficiency, she said.
Hire the right people and invest in them. Mr. Slater said "hope is not a strategy anymore," when it comes to denials management. Rather, hospital administrators need to invest in RCM employees and encourage accountability. The president of a 429-bed Midwest hospital said the "only possible strategy is to hire the right people for the right job." He said compensating accordingly, like offering performance bonuses, is one way to enhance accountability of denials prevention. The CEO of a Southern acute and specialty care hospital said retention efforts, like handing out thank you cards and participating in hospitalwide community events, can motivate RCM employees to sustain their positions.
Define and address reoccurring denials. Mr. Slater said the top three reasons for denials are registration and eligibility issues (28 percent), duplicate claims and services (19.2 percent) and services not covered (15 percent), according to data from Atlanta-based RelayHealth, McKesson's RCM division. David Dyke, vice president of product management and business development at RelayHealth, said when "you think about denial management, you think about things the payer did as opposed to the way you do business or the way that we motivate folks." Mr. Dyke said viewing reoccurring denials as more than a downstream problem is a big cultural shift but could help hospitals prevent denials.
Centralize RCM departments. Some hospitals are centralizing their RCM departments, culminating coders and staff from varying departments to streamline denials management. Mr. Dyke said to centralize RCM operations, hospitals need to change culturally. The senior vice president for advancement at a 900-bed health system in the Pacific West said the centralization of her hospital's RCM department was "met with a little more resistance than other" initiatives, and it necessitated an organizational commitment to culture and education.
Develop a denials prevention mindset. Effective denials management requires collaboration from all hospital levels. The president of a 208-bed Midwest hospital said fostering a relationship between the financial administration and clinicians can create an environment in which finance has a leg in all hospital responsibilities. In addition, the COO of a 495-bed Midwest hospital said day-to-day team huddles that bring in financial details on a regular basis can advance a denials prevention mindset that infiltrates the entire hospital or system.
Fix internal issues, then compare outcomes with third-party benchmarks. While comparing a hospital's denial management outcomes to local and national competitors helps administrators map future steps, the COO of a 495-bed Midwest hospital said, "If you're doing poorly, first you have to clean up your own shop. Then you can look at benchmarks and other [organizations]."