Ten Steps to Reduce Denials, Win More Appeals, and Improve Hospital Performance
by TAMMIE PHILLIPS, RN
Hospitals everywhere are striving to answer this question: How can we better manage denials?
There’s tremendous pressure to reduce denials. According to the Centers for Medicare & Medicaid Services (CMS), 10 percent of CMS claims are denied,1 and Medicaid’s average denial rate is more than 18 percent.2 The American Medical Association found payers return up to 29 percent of claim lines with $0 for payment, while an MGMA study found more than half of denied claims are never reimbursed.3
The problem is worsening as claims processing complexity intensifies. Our population is aging, care needs are increasing, Medicare enrollment is rising, and comorbidities and chronic conditions are more prevalent. Population health management is also taking hold. Health systems are transitioning more patients across multiple settings and specialists, requiring multiple claims.
Denials related to medical necessity account for about five percent of denials nationally.4 But by closing common gaps that lead to medical necessity denials, your organization can quickly have a positive impact on the revenue cycle, while also enhancing care quality.
1. Make a Case for Case Management Leadership
A hospital needs strong case management leadership with a clear vision, focus, and goals.
Case management isn’t just a department. It requires an enterprise-wide approach to reduce variation and provide a forum to use best practices.
Are nurses, physicians, and ancillary departments vested in length-of-stay and transition management? Are they aligned around priorities and strategies? Is there a case management plan with documented workflows that integrates utilization and case management functions?
Is there transparency between case management and the CFO? In particular, does leadership help the CFO understand what case managers do, how their work helps close gaps, and how the CFO can help from a data perspective?
Case management is often seen as the case manager’s problem. In fact, every stakeholder has a significant impact and needs to understand his or her role.
2. Strengthen Your ED Case Management Program
Every hospital needs a robust ED case management program.
ED physicians should understand how to work with case management more effectively, and how to ensure entry points are covered not only in the ED but for direct admissions and transfers.
Spend time with ED physicians discussing key concepts such as the Two-Midnight Rule, the role that evidence-based content has in admissions, the importance of documentation, the correct level-of-care assignment, and what an ideal onsite ED case management model that functions 24/7 looks like.
3. Ensure that Observation Management Works
The review of observation patients should be a priority.
When patients arrive at the ED, they go through triage and are admitted for observation or as an inpatient. Observation must drive a rapid course of testing, diagnosis, and treatment, because treatment gaps or delays can lead to denials. But many hospitals don’t do much testing after 5 p.m. or on weekends.
That means patients who would have been discharged after tests are conducted are instead kept in short-stay units. To fix this, dive into the admission data. Once the types of cases that get admitted to observation are understood, the organization can ensure testing is available for typical cases, even on nights and weekends.
Prioritize those cases with high volume, where denials are higher due to treatment delays.
4. Take Level-of-Care Management to a Better Level
There are many cases in which admission is medically necessary, yet claims are still denied because care is not being rendered at the appropriate level.
This is often a sign that cases aren’t being elevated to the physician adviser for further discussion. For example, a need for telemetry doesn’t necessarily require admission to a higher-level unit. Any patient can be monitored and yet not require an intermediate level of care.
Documentation has to be specific to validate the level of care being requested.
5. Have Consistent Processes and Frequent Reviews
Most case management models need to develop consistent practices and more frequent medical reviews.
Look at whether all entry points—ED, direct, transfers, elective admissions—are covered around the clock. It’s crucial to make decisions and validate medical necessity for all admissions prior to the patient being admitted. Encourage the care manager to proactively participate in the rounding process and to focus on interventions and plans that demonstrate medical necessity.
Problems arise when ED reviewers, floor reviewers, and social services staff responsible for discharge planning don’t share an understanding of the rules and processes, or aren’t following established criteria effectively.
Next, look at the timing and frequency of medical necessity reviews. In many cases, it can take days after a patient is admitted before a case manager reviews the case, using decision-support criteria, to determine whether the patient still requires a particular level of care, and ensures a discharge plan is in place.
The ideal timing is to hold reviews daily or every other day, especially for those facilities reimbursed primarily by DRG. Otherwise, patients who could have been discharged or transferred remain hospitalized, patients who aren’t responding as expected aren’t managed appropriately, or new conditions and treatment needs are added without updating the case management or discharge planning documentation.
Use decision support criteria to help drive appropriate length of stay. The criteria should provide an outline of expected course of care and response by episode day, and provide proactive care management guidance to help address the patient who is not responding as expected. It should also incorporate benchmark length-of-stay data in the review process to help establish an estimated length-of-stay with the care team.
6. Boost the Clinical Documentation Improvement Program
Work with both physicians and nurses, as well as organizations, to establish more effective documentation processes.
Many hospitals have clinical documentation improvement programs. From a clinician’s perspective, those programs often lack documentation required for the initial and subsequent decision points. By working with physicians and nurses, organizations can improve their documentation processes.
Ensure the medical review demonstrates a holistic understanding of the patient, with clearly articulated medical and discharge plans. Documentation must support treatment and level-of-care decisions. Physicians must understand how cases are prioritized and how reviews are submitted to payers.
7. Make the Physician Adviser a True Member of the Care Management Team
Many hospitals employ dedicated physician advisers who spend time rounding on the unit and who can assist the case management team. Hospitals that enlist this support can have fewer denials, because they can intervene proactively to ensure documentation is robust and processes more effective.
That said, sometimes these physician advisers aren’t full-time employees but rather practicing physicians who perform this kind of work on a part-time basis. Such physician advisers might not see themselves as part of the care management team or have sufficient dedication to care management processes and goals. For best results, retain full-time physician advisers on staff.
8. Train Staff on the Use and Role of Decision Support Criteria
Ensure that staff use decision support criteria consistently and effectively to enable accurate medical-necessity determinations.
Provide annual refresher training on the criteria, tools, and best practices—including condition-specific review processes, use of episode days, discharge screens, and so on.
Organizations should also reinforce the need for adequate medical record documentation to support the criteria selected.
The organization also needs an effective auditing program. Some decision support criteria provide tools for evaluating staff consistency. If your vendor offers such testing tools, use them.
In addition, pull cases quarterly (at a minimum) to identify variation across the staff. Where variations are found, build action plans or educational programs to reduce them.
Lastly, build an onsite “Certified Instructor” program to create onsite expertise in the use of decision support criteria and supporting tools.
9. Engage the Staff with Data-Driven Insights
Share data at the staff service-line level to expand understanding of denial issues and close gaps that impede success.
While leadership might have an understanding of the resources wasted and revenue lost, and the case manager might have a strategy to improve performance, the staff rarely see a report on denials. They don’t know length-of-stay or denial rates, and they’re not being asked for input on how they can help improve processes.
Ensure operational reports from finance and revenue cycle are being circulated and reviewed. With the data on hand, teams can develop action plans and look for ways to reduce length of stay and cost, and help improve quality.
10. Use Specific and Objective Criteria Regardless of What a Payer is Using
No matter which vendor’s guidelines or decision support criteria a payer is using, an organization should employ technology to support the medical necessity of care provided. For example, InterQual from McKesson provides specific and objective evidence-based guidance, so there’s no gray area in determining whether a patient meets the criteria for necessary care.
Guide your staff in a consistent approach to gather the clinical information used as part of the review. The evidence-based criteria can help ensure appropriate care and documentation of decisions, and that can help increase appeals win-rates dramatically.
Denials are an increasingly serious problem at most hospitals and health systems. The good news is that, when denials relate to medical necessity, noticeable improvements can come early and easily.
Measurable progress in the first few months will help affirm the importance of the work. The positive impact to the hospital’s bottom line can be significant and, more importantly, can also help ensure patients receive the most appropriate care.
- ICD-10 Transition Moves Forward, Centers for Medicare and Medicaid Services, 2015-10-29, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-10-29.html
- Quantify Denial Rates for Smooth Revenue Cycle Management, RevCycleIntelligence, 2015-05-30, http://revcycleintelligence.com/news/quantify-denial-rates-for-smooth-revenue-cycle-management
- The Cure for Claims Denials, Family Practice Management, 2015-Mar.-Apr., http://www.aafp.org/fpm/2015/0300/p7.html
- McKesson research
Tammie Phillips, RN, is Vice President, Business Consulting, at McKesson Health Solutions.