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Denials Management Once Again Strikes a Chord with Revenue Cycle Leaders

Analysis  |  By Amanda Norris  
   April 20, 2023

Revenue cycle leaders were asked to rank the most time-consuming tasks at their organization, and the results aren’t surprising.

556 chief financial officers and revenue cycle leaders at hospitals and health systems across the United States were asked to rank the most time-consuming revenue cycle tasks at their organizations in a new survey commissioned by AKASA.

Topping the list of the most time-consuming revenue cycle tasks were denials management and prior authorizations.

In the survey, respondents were able to select up to five out of a list of 15 different revenue cycle tasks. Of the tasks listed, the following five were selected the most by the leaders:

  • 76%, denials management
  • 60%, prior authorization
  • 58.6%, insurance follow-up
  • 26.6%, eligibility and medical necessity checks
  • 26.4%, patient cost estimation and price transparency requirements

Seeing denials management at the top of the list is no surprise as HealthLeaders has dubbed 2023 as the year of reducing denials for revenue cycle. An abundance of recent studies have been pointing to the growing concern of denials for revenue cycle leaders as more pressure is put on these leaders to help increase their bottom lines.

As denial rates continue to increase, establishing a streamlined denials management strategy is key for healthcare organizations to reduce complexity and workload for staff and avoid reimbursement delays, AKASA noted.

“When thinking about the biggest bang for your buck as a revenue cycle leader, few things are as effective as focusing on denials management,” said Amy Raymond, VP of revenue cycle operations at AKASA, said in a statement shared with HealthLeaders.

“But it’s important to avoid the common mistake of only focusing on working denials, and instead address the root causes. Leveraging robust, AI-driven automation can help overcome shortcomings of a typical denial management strategy—improving processes holistically to reduce denials in the first place and better address them when they occur,” Raymond said.

Seeing prior authorizations at the top of the list is of no surprise either, especially since prior authorizations are having a large impact on denials. In fact, a separate study earlier this year highlighted the burden prior authorization denials have had in the revenue cycle in 2022.

According to that study, denials rose to 11% of all claims last year, up nearly 8% from 2021, and prior-authorization denials were at the heart of the cost increase. Prior authorization denials on inpatient accounts were a key driver behind the dollar value of denials increasing to 2.5% of gross revenue in August 2022 up from 1.5% of gross revenue in January 2021—an increase of 67%, according to the report.

Earlier this year, HealthLeaders spoke with Stacy Reck, director of CDI/utilization review at Avera Health, about denials management, and another area Reck recommended revenue cycle leaders should place their focus on is clinical validation denials.

Clinical validity denials occur when there is a lack of clinical evidence in the patient chart to support a billed diagnosis. Claims may be denied, for example, if they lack clinical criteria necessary to support a diagnosis, contain inconsistencies, or do not meet payer-specific diagnostic criteria.

A key defensive strategy for preventing these denials is provider education, Reck said. This can involve bringing data on the financial impact of documentation inconsistencies to providers and explaining how they can be prevented. Streamlining this process to avoid these clinical validation denials will help to lessen the burden of overall denials management.

 

“When thinking about the biggest bang for your buck as a revenue cycle leader, few things are as effective as focusing on denials management.”

Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.


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