Denials: Stop Correcting the Problem and Fix the Issue

May 9, 2019 11:10:39 AM / by Jeff Tennant, Executive Director Revenue Cycle



At the Becker’s Spring Conference I attended a few weeks ago, denial management was among the hot topics of discussion. More and more, creative solutions that address denials (and their core root causes) are rapidly moving to the forefront of healthcare. Executives understand that claims need to be managed appropriately on the front end to avoid denials.


Denials Come in Many Forms

A recent publication from Medical Economics identifies the Top 13 reasons for claim denials; some of which include:

  • Lack of medical necessity for a specific service (s).
  • Duplicate claim submission.
  • Patient ineligibility for services related to insurance plan changes.
  • Errors on claim forms (missing modifiers, inconsistent place of service, incorrect codes or data).
  • Missed filing date deadline.


If you are tired of correcting and re-submitting claims, look up stream to identify the process that triggers these denials.

According to Modern Healthcare, the Healthy Hospital Revenue Cycle Index reports that $262 billion in healthcare claims are initially denied. With 90% of these types of claim issues being preventable, think about proactive strategies that could be implemented within your organization to ensure claims are submitted correctly and reimbursed, instead of being denied.


Have You Ever Wondered Why We “Manage” Denials?

It is a necessity to ensure the financial health for every health system and hospital, across the board.
Denials are managed to ensure that claims can be submitted and that compensation can be received for services provided to patients. However, the primary goal should be to prevent denials, not manage them.

When a formal denials prevention process either does not exist or is not adhered to, the number of denials inevitably increase. This potentially places your organization at risk.  Over time, the denials volume and inconsistently followed processes can become a daunting task for any healthcare organization to review and optimize.


Poor processes and lack of appropriate follow up remain a huge problem… As I collaborate with organizations nationwide, I am continuously surprised by the limited focus on the little things. These minor aspects can add up to millions of dollars in real bottom line improvement.  With organizations being forced to do more with less, it’s easy to let the “little things” slip. It is important to face the problem head on, remembering that the appeals process incurs recovery costs, requires more resources to rework a claim, and wastes resource efforts within your organization.


Here’s an example… There are many organizations that do very little to address Advance Beneficiary Notices (ABN’s) in a meaningful way. These notices inform a patient that a specific service may not be covered by Medicare, leaving the responsibility of payment to the patient.  Ideally, a provider should issue this form if a potential denial is anticipated.

There are a few factors unique to managing ABN’s. Though a patient may be responsible for payment related to services, the goal of a well- established ABN process is to work with the provider to justify the procedure and/ or tests. Inferring that the patient should be the responsible payer for the service is only a last resort.


Organizations can add millions to their bottom line by implementing denials prevention and management best practices.

“One Rural NY hospital focused efforts on their ABN process, making an investment of $30,000 in an engagement of establishing and following best practices resulted in an immediate return of $10,000 within the first month, in reduction of medical necessity denials. After a year of maintaining their revamped ABN process, the return increased substantially to $120,000.”

With a focus on assessing your current processes and attention to department work flow, you can move away from managing denials and work to eliminate the cause of them.


Medical Necessity: One of the Top Denial Reasons

Over the years, medical necessity has been listed as one of the top five denial reasons.  The more organizations use a reactive approach to correct denials after the claim has been submitted, the longer the issue will continue.

If the average provider only performs procedures and tests that are necessary, then the problem stems from a lack of appropriate explanation of the need for the procedure. Registration staff must be educated to request clarification and additional documentation if needed. Appropriate clinical documentation should support correct coding, resulting in claim forms that are error free and have a clear explanation description, prior to submittal for payment.


How Can You Break the Cycle?

Use a comprehensive denials prevention strategy that will allow you to identify where your processes are misaligned with industry best practices.

Understanding revenue cycle improvement is an opportunity for organizations to invest in an initiative that shows significant and immediate ROI.

Use this list of solutions as a guide to help you achieve optimal revenue cycle practices.

  • Start with an operational
  • Use an interdisciplinary approach to fine tuning your denials prevention process.
  • Scrub outgoing claims to ensure that there is accuracy up front.
  • Dedicate specific resources to follow up on claims.
  • Automate as much of the denials management process as possible.
  • Invest in revenue cycle technology and leverage embedded analytics tools.


If Others Have Done It, You Can Too… with the right support

After a revenue cycle assessment identified the admissions process as not meeting best practice expectations, one Southern California medical center engaged a project team to restructure their process -- the project cost was $40,000. In the first 3 months, denials decreased significantly, they achieved a $60,000 return on investment, with an annualized return of $240,000.”

The residual year over year improvement goes directly to the bottom line and provides additional capital that can be invested in the many needed improvements and enhancements for the organization.

While you contemplate your denials prevention strategy, also check out blog entitled, “You Are Not Alone - The DNFB Challenge” to understand the common reasons that accounts are held in DNFB status, 6 steps to reduce DNFB’s, and how your back office can help as you streamline your process.


Engage ROI to Help You Get Started

ROI’s Best in KLAS team of certified revenue cycle experts are available to offer insights and answer your burning questions. With extensive knowledge in leading practice consulting, revenue cycle roadmaps, and system optimization, ROI has the team and approach to help you to drive revenue cycle excellence within your organization. CONTACT ROI HEALTHCARE SOLUTIONS



Topics: Revenue Cycle Management, Revenue Cycle Solutions

Jeff Tennant, Executive Director Revenue Cycle

Written by Jeff Tennant, Executive Director Revenue Cycle

Jeff is focused on revenue cycle transformation in healthcare. With over 20 years of IT services and consulting experience, his passion for business spans leadership, innovation, business development, and quality. Over the course of his career, he has driven success through multi-million-dollar revenue cycle performance improvement services, revenue cycle gap analysis, remediation services, and population health strategy efforts focusing on appropriate workflow processes and industry best practices.