How to Improve Denial Management Throughout the Patient Journey

Like all businesses, physician practices are sustained by getting paid for the work they perform. But healthcare providers are unique, not only in having to wait about 30 days from time of service to insurance reimbursement, but also in the sense that their “buyers” (health plans) can use a host of reasons to deny that payment.

On average, health plans deny 5–10 percent of the claims physician practices submit. ¹ And even though the stakes keep getting higher, practices still don’t spend enough time on improving this aspect of revenue cycle management, says Ken Hertz, FACMPE, a principal consultant with the Medical Group Management Association (MGMA).

“Expenses are going up, reimbursements are going down — and leaving money on the table is not an option,” he says. “We’ve got to do a better job.” Despite the thousands of dollars lost by denied claims, data show practices rework fewer than half of them. ²

Hertz notes that reworking a claim is not the same as refiling. With the latter, the practice simply resubmits the claim to the payer without any changes, often without even looking at the reason for the denial. “It’s like the definition of insanity,” he says. “They keep doing the same exact thing and expecting different results.”

This habit is shockingly common, he says, and especially wasteful, considering that it costs about $25 to rework each denied claim.³

Before the Patient’s Visit

Denials can be triggered by mistakes that occur before, during, or after a patient’s visit. Improvements before patient encounters can result in preventing the bulk of denials before they ever reach payers, says Eric Arnson, a senior vice president and general manager with Change Healthcare. “The simplest, easiest thing any practice can do to avoid denials is to uniformly check eligibility for every patient encounter,” he says.

Practices should also check eligibility multiple times, including before the encounter and when the claim is filed. The reason this information needs to be verified — and verified again — is that eligibility on one date doesn’t necessarily apply to the date of service, which can occur if patients change jobs that provide their health insurance, says Penny Noyes, president and CEO of Health Business Navigators, a consulting firm that specializes in payer contracting and credentialing. “Most contracts have a very clear provision that even when you verify eligibility, there’s no guarantee of payment.”

It’s also essential to ensure the clinician providing care is contracted and credentialed with the exact insurance product the patient is covered by. “Most practices don’t even know precisely who they’re contracted with,” Noyes says. “They’re pretty confident they’re with the Blues, Aetna, et cetera, but they don’t know for sure if they’re in the HMO, PPO, Medicare Advantage, or private Medicaid products.”

To resolve this problem, Noyes recommends practices conduct a periodic review to confirm which products each clinician in the practice is linked to. It’s time well spent, regardless of how long it takes. In a small practice, this information can be gathered through one or two phone calls to each payer, she says.

These inquiries must be as specific as possible, she warns. Sometimes payer contracts are different from one clinician to another, or some physicians may be part of group contracts while others are individual. This research also includes verifying what contracts are tied to what tax ID numbers and National Provider Identifiers (NPIs). Multisite practices must also confirm their clinicians are credentialed at each location.

“Every once in a while, you just need to stop and find out what the payers have in their systems,” she says. Practices often mistakenly assume that payers have correct and thorough information, but you can’t know for sure. “Sometimes systems have gremlins that change things that were perfect six months ago,” Noyes jokes. “So periodically, you have to do a meticulous review.”

Current contract and credentialing information must then be relayed to the front desk. “They need to have a really solid list when they’re scheduling so they know what products the clinicians are participating in,” Noyes says. “If a new provider comes on board, the front desk needs to know which payers he or she is already credentialed with and which ones to hold off on because they don’t yet have an effective date.”

In addition, practices must confirm patients have received the necessary prior authorizations before providing any treatments that require them.

"It’s really important that billing staff understand the procedures the practice regularly does that require prior authorization and have a documented process by which to check for them routinely,” Arnson says.

During the Patient’s Visit

Submitting clean claims depends on accurate coding and adequate documentation. This can be a trouble spot for small practices, which may not have a certified coder on staff, Hertz says. Therefore, he encourages physicians to undergo coding training themselves — and for groups to have their charts audited by an outside expert every other year.

“There are a lot of groups that do internal auditing,” he says. “But that’s almost like having the wolf setting up the security system for the henhouse.” External auditors, on the other hand, not only provide objectivity, but also the opportunity for the practice to learn from their mistakes, he says.

Linda Girgis, MD, FAAP, agrees that physicians should become educated about coding. “You have to make the time for training, or you’re going to be losing money,” she says. “Especially now with ICD- 10, which is so complex, we want to be sure we’re actually coding for what we’re documenting.”

Her advice, therefore, is to hire or work with a coding expert who really knows the specialty of the practice. The consequences of relying on a generalist can be severe, she says, recounting a client who lost tens of thousands of dollars because it incorrectly coded a procedure that was always done bilaterally for just one side — for three years. Someone with a deeper understanding of specialtyspecific procedures and codes might have caught that mistake sooner.

While Girgis, a primary care physician in New Jersey, does all of her own coding, practices can also benefit from technologies designed to ease the process. Arnson says practice management and EHR systems can help practices document what’s needed to get a clean claim.

Some vendors, such as Change Healthcare, offer a range of coding services from full outsourcing of coding to supplemental screening edits that essentially provide a second set of eyes to potentially correct errors before they get the payer. “It’s helpful to get a second opinion so that you’re not 100 percent reliant on your practice management system and EHR to catch all of that,” Arnson says.

Prioritize and Analyze

Even when practices do their best to submit clean claims, denials can still occur. It’s not uncommon for a practice to receive 100–200 denials on any given day, Arnson says. “Every practice needs to have a process by which they analyze and prioritize denials.”

“It doesn’t make sense to chase the small-dollar denials in many cases,” Arnson notes. Instead, practices can make a bigger impact on their revenue cycles by prioritizing top-dollar denials or those with the highest likelihood of being overturned. For instance, if a practice has data that proves that claims were submitted on time, it may want to go after timely filing-related denials first — keeping in mind that resubmissions are subject to the same deadline, which is usually 90–180 days from the date of service.

Practices must not only document this methodology, but also ensure that all employees understand it. If possible, reworking should be routed to staff members with the most expertise in handling certain types of denials, such as those related to specific payers or procedures. Specialize whenever possible, Arnson advises.

That said, employees should also have a mechanism in place to help one another, especially if billing staff aren’t co-located with the rest of the practice. For example, if the biller who specializes in commercial denials is on vacation, the responsibility for those claims should automatically shift to a designated back-up person. Billers should also have tools in place to communicate and collaborate when they are unsure of how to proceed with a claim.

Finally, the system needs to be tested for success. Most practice management systems should be able to generate reports showing how many claims practices have appealed and their value, Hertz says. If practices aren’t recovering more than they’re spending on working denials, they need to re-evaluate their approach.

Learn From Mistakes

Despite the limited resources small practices often have, it’s essential to invest the time into truly understanding their denials-related numbers. “Practices need to know what’s happening, where it’s happening, and why it’s happening,” Hertz says. They must also calculate what their denial rates are and what denials are costing them, he adds.

In the past, practices would have to undergo this painstaking process manually, but today’s technology automates much of the number crunching. For example, practices can run reports that show the reasons certain claims are getting denied, such as being out-of-network, missing information, timely filing issues, or problems with coding, Noyes says.

This information is valuable for identifying patterns and trends. This investigation could reveal, for example, that a preponderance of denials are related to certain physicians, payers, or service types. Similarly, trends could emerge related to timely filing or lack of documentation to support certain codes.

“Practices have to step back and look holistically at their denials and see the forest for the trees,” Arnson says. Technology can help paint that complete picture for practices, so he advises looking for practice management systems, EHRs, and other products that do that task well.

While most systems have the ability to provide insight on the front end of claim filing, such as correct coding and submitting claims on time, they can have limited functionality around handling exceptions that trigger both rejections and denials, Arnson says.

“There are companies, including Change Healthcare, that provide vendor-agnostic tools to help supplement practices’ management system and EHR capabilities,” he says. “They don’t compete with existing systems but can potentially help practices improve overall performance with workflow capabilities, so practices can have a very comprehensive, well-rounded revenue cycle process to handle those exceptions.”

It’s common, however, for practices to not optimize a system’s capabilities, Hertz notes. Billers may need refresher training on how to run reports or take advantage of other tools, especially when there has been staff turnover. Practices looking to analyze their denials for the first time can work with vendors to learn how their systems can help.

“Use your clearinghouse tools and understand the capabilities they have. Leverage as much technology as you can,” Hertz says. Getting away from unnecessary manual work is increasingly important as healthcare gets more complex, he adds.

Close the Loop

Even with this precious data in hand, practices often fail to follow-up with action, Hertz says. For instance, they fail to communicate findings to physicians who may consistently make mistakes with a certain diagnosis code, or don’t re-evaluate registration processes when non-eligibility or missing prior authorizations are a problem, Hertz says.

Therefore, everyone from front desk staff to billers to physicians need to be looped in to improve denial management. Most essentially, physician owners must be informed and involved during the denial management process.

“Most of the people who are doing the billing are good people who try to do their job well, but they’re not stakeholders,” Noyes says. At the same time, she doesn’t typically see physicians rolling up their sleeves and learning about how the practice is handling denials.

Hertz agrees. “One of the things physician owners need to do is make sure they have a system in place to really find out what’s happening in the revenue cycle. It’s a trust-but-verify approach.”

He also recommends that physician owners or other stakeholders participate in approving which denials get written off rather than giving that authority to non-stakeholders.

Girgis, who reviews her practice’s accounts receivable monthly, is a strong supporter of physicians taking part in the revenue cycle. “Even if practices have billers, they need to take a hands-on approach to understanding what’s going on with their billing,” she says. “I’ve heard a lot of horror stories in which people trust their billers completely and end up losing tens of thousands of dollars because things are not submitted correctly.”

Take a Proactive Approach

Top performers have denial rates of 1 percent or lower of their first-submission claims. The national median denial rate rests at 3 percent. ⁴

Considering that 90 percent of denials are preventable ⁵, most practices have the opportunity to become top performers — not just for bragging rights, but also the opportunity to gain significant revenue.

Getting paid for the work they do is critical, especially in small practices with few ancillary opportunities, Hertz notes.

Taking a deeper look at the root causes of denials and developing new procedures to overturn and prevent denials are keys to revenue cycle improvement, experts agree.

“The biggest mistake practices make is not asking questions,” Hertz says. “The main pitfalls are not investigating, not analyzing, not understanding, and not setting up systems to handle denials and their causes.”

1 "The 6 Fundamentals to Prevent Denials," MGMA.
2 "You Might Be Losing Thousands of Dollars Per Month in ‘Unclean' Claims," Tina Graham, MGMA.
3 "The Cure for Claims Denials," Richelle Marting, Family Practice Management, 2015.
4 2017 MGMA DataDrive Practice Operations Data
5 "An ounce of prevention pays off: 90% of denials are preventable," Morgan Haines, Advisory Board, December 11, 2014.