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Analysis

6 Action Items for Your Denials Management Plan

By Alexandra Wilson Pecci  
   November 10, 2020

Kimberly Scaccia, vice president of revenue cycle at Mercyhealth, outlines a methodical, multistep action plan for creating a denials management solution.

There's so much noise around denials management that it can be hard for even the most seasoned revenue cycle executives to cut through the clutter, find clear solutions, and make a solid plan.

But that's exactly what Kimberly Scaccia, vice president of revenue cycle at Mercyhealth in Wisconsin and Illinois, helped listeners do last month during a HealthLeaders webinar sponsored by Change Healthcare.

"Denials management is a really big undertaking," Scaccia said. "Don't expect overnight success."

Instead of overnight success and promises of easy fixes, Scaccia outlined a methodical, multistep action plan for creating a denials management solution that revenue cycle executives can put into place.

Here are six key takeaways from her presentation, which is available in full and for free on demand.  

1. Realize your "denials" might not be true denials

While most health systems assess their 835 remittance data, create a baseline, and call them denials, Scaccia said that this data from the payer should be considered what she calls "first-pass rejections," or claims that need reworking.

"I believe that there's a major difference between first-pass rejections and true denials," she said. "True denials as we report them out to executive teams are those claims that have been completed, [for which] we have done all the work in revenue cycle that we can by the follow-up team, denials team, case management … and we were unable to successfully obtain reimbursement for our services."

Doing this requires tracking and trending, a critical component of understanding how data is coming in from payers compared to what the organization actually ends up writing off.

2. Embrace flow charts

Understanding why a claim was rejected requires not only understanding the root cause of what went wrong in the process, but also having a clear understanding of the process itself.

For this, Scaccia advocates business process modeling notation, which uses flowcharting to outline every step in a claim from beginning to end, starting from the point the patient initially contacted the organization.

"It is a flow chart method that models out the steps of the process from end to end and it visually depicts the detailed sequence of business activities and information that flows to complete the process," she said, recommending that leaders create small subgroups for creating these flow charts and process redesigns.

Such a method is also helpful in "translating" revenue cycle processes to clinicians.

"Nurses and revenue cycle people talk two different languages but if you put it in a picture, that conversation becomes much easier," Scaccia said.

3. Identify opportunities

Once the process is outlined, it's time to look for gaps—or as Scaccia likes to call them, opportunities—to make the process work better.

She suggests approaching this work like an audit: Analyze each step and look for what could go wrong. Are there workarounds in place? Does the IT system allow users to bypass necessary steps or ignore alerts? For instance, does the system allow patients to be checked in without verifying whether an authorization is needed?

Asking these questions can help answer others: Why does the failure happen? What are the controls to prevent the failure? What controls are missing? Which ones can they put in place?

"When you're going through opportunity identification or root cause mitigation, you've got to think of it like an audit," Scaccia said. However, leaders should avoid the blame game.

"We want to do it so it's not blaming or shaming," she said. "How can we make it better?"

4. Take action and continually reassess

Once those audits are complete and opportunities for improvement have been identified, it's time to take corrective action based on the findings. Set completion dates for each element of the work and employ a "how many, how much" philosophy that realizes roughly 80% of total dollars owed comes from 20% of the volume.

"If I focus my staff on that 20% volume, I can fix 80% of the problem, and it's no different in root cause identification and denial management," Scaccia said. "We have to focus on where we're going to get the biggest bang for our buck."

In addition, reassessing should be immediate and continuous.

"When you put a change in place that you've identified related to first-pass rejections, it is critically important that you immediately start the reassessment project," Scaccia said. "Because the worst thing that could happen is for you to put a change in and six months down the line find out the problem is even worse."

5. Create a denials management team

There's another element of taking action that's often overlooked.

"We know what needs to be done but there's no clear 'who,' " Scaccia said.

That's why it's critical that team members and leaders have a clear understanding of who is responsible for implementing the newly identified controls and processes.

Scaccia recommends creating a denials management team to rework rejected claims.

The right people to do this work, "in my opinion, [is] not the front-end staff," she said. "It's a true denials management" team that includes a clinical denials and appeals specialist with a medical background; a reimbursement analyst; a financial analysis, and a coordinator who can oversee and implement the process and ensure appropriate and accurate reporting to executives.

6. Score your payers (they're scoring you)

Once you've cleaned up your denials-management process, it's time to turn your attention to how well payers live up to their end of the bargain.

"One of the things that is probably paramount to denials management is creating a managed care scorecard," Scaccia said.

This allows revenue cycles to rate their payers using metrics like how often claims are paid correctly; how often claims are paid on time; how often the payer asks for documentation that the contract doesn't require; their first-pass rejection rates; and their appeal to overturn rates.

Regularly monitor this data and share it with your managed care team to rework contracts where needed. Scaccia said her organization has even terminated a contract with one payer because of its high denials and slowness to pay.

And remember, payers rate providers, too, Scaccia notes.

"The payers are great at this," she said. "They have scorecards, they track our quality metrics, they track how our claims come in."

To hear Scaccia's full presentation, find it free and in full here.

Alexandra Wilson Pecci is an editor for HealthLeaders.


KEY TAKEAWAYS

Differentiate between first-pass rejections and true denials

Use flowcharts to outline processes and look for gaps

Assign the right people to take corrective action

Create scorecards to rate your payers


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