March 13, 2019

Do’s and Don’ts for Denial Root-Cause Determination

There are a few pre-requisites when determining “denial root-cause.” First, you’ll need a relatively robust Denial Analytics System that can segment denied data by payer, category, physician, diagnosis, CPT-Code, and etc. The system should be self-feeding, meaning your EDI Files are automatically ingested without anyone having to copy files or manually move EDI files from one folder to the next. It should also have some visual ques for quickly recognizing your most valuable denials. Lastly, a work-flow component that’s integrated with your denial reporting is necessary. This function allows pre-defined business rules to automatically route specific denied claims to the appropriate staff member within your organization. This feature helps your team stay organized, drive accountability, and measure progress.

Another important pre-requisite is developing a denial team. There are many different types of denial teams, and the most affective ones are those where senior leaders directly participate and understand the current landscape of their denials. There must also be experienced revenue cycle personnel on board who typically lead the team. Their diverse experience throughout the entire revenue cycle (scheduling to claim adjudication) is a good fit for tracking down denials, determining their cause, and devising a plan to resolve them at their point of origin.

Now that we’ve set the stage for an effective denial management program, lets discuss “denial root-cause determination,” and the challenges associated with it. The starting point for determining the root-cause of your denials lies in the CAS reason codes that are included in your ANSI 835 remittance files. The CAS reason codes are used by payers to describe the reasons “why” or “why not” your claim was paid or denied. In certain scenarios for certain payers, the CAS reason codes can accurately portray, in terms of their description, the actual reason for the denied claim. However, in many cases, the CAS reason codes can be misleading and can create confusion for your denials team as to who is responsible for the denial. In addition to the vagueness of CAS code descriptions, payers have the liberty to interpret them however they want.

It is common to see a wide range of discrepancies between payers and CAS reason codes. Depending on your hospital’s payer mix, it is vital to segment denied claims by payer before attempting any root-cause determination. This will ensure that your CAS reason code interpretation and root-cause determination will be applicable for all claims with the same payer and same reason codes. Once the root-cause determination is made for a subset of claims with the same primary insurance and reason codes, you can assume the cause of the denials is the same across those accounts.

Depending on your hospital’s payer mix, it is vital to segment denied claims by payer before attempting any “root-cause determination.”

Documenting a “policy and procedure” around denial root-cause determination is important to staying organized and applying your staff’s efforts to fixing the denial at its point of origin.The most common issue we see in Hospital Denial Management Programs is the lack of documentation and planning associated with root-cause determination, solution design, and denial fiximplementation. A predetermined process must be in place to affectively resolving denied claim issues at their root. Developing a step-by-step approach to identifying high-volume denials by considering the following:

  • Know the current value and impact they have on your organization’s revenue cycle,
  • Determine how and where the denial is being created up-stream,
  • Design a new process or system enhancements to fix the issue,

Document the date of the implemented fix, which will provide a benchmark for measuring your denial effort outcomes over time,

  • Create “denial templates” to guide denial analysts through the process of identifying and resolving denial issues (we have included a sample template here). The templates should be working documents that are kept up-to-date as progress is made on the denial determination. When the process is complete, and the denial is presumed resolved, the denial template will act is a historical reference for future denials, as well as act as a place marker for measuring the overall revenue impact the denial solution has had.

Do’s and Don’ts for Denial Root-Cause Determination

  • Do employ a robust denial management software system that can segment denial data and automate your denial follow up.
  • Don’t try to interpret your EDI files with the naked eye.
  • Do focus on account level CAS reason codes—they are arguably the most important data element for denial analytics.
  • Don’t take CAS reason code descriptions for face value and as the absolute denial determination. Payers have the freedom to interpret and utilize reason codes as they see fit. There’s vast variability between payers when it comes to CAS reason code usage.
  • Do develop a denial management process and procedure. Make sure to create denial templates for normalizing root-cause determination efforts across your staff.
  • Don’t get complacent when it comes to denial management. Set expectations around denial documentation to ensure resources are focused on the most important and most valuable denials. Make sure to document denial fixes so that the impact can be measured down the road.

Denied revenue represents about 10% of most organization’s total revenue. There are millions of dollars being delayed or lost due to payer denials. Investing in a quality denial management system and dedicating time and resources to planning and executing is well worth the effort.

RevSpring’s team of consultants are experts in revenue cycle management and utilize a denial management platform. As a result, our team offers a wide range of revenue cycle consulting services and technologies to combat your hospital’s denials. From providing a full-service denial management team, rooting out your organizations most valuable denials, to supporting individual physician groups and interpreting their ANSI 835s, our consultants provide the right mixture of revenue cycle, workflow guidance, technical expertise, and project management. By working with our consultants, you can increase your clean claims percentage and eliminate denials for good. Contact to arrange a meeting.