Three Denials Prevention Mantras to Mitigate Post-COVID Financial Fallout

Publish Date
Read Time
December 3, 2020

It’s an unfortunate reality: Today’s healthcare organizations don’t have the same financial reserves they did a year ago. Patient volumes plummeted in the wake of COVID-19, and now hospitals are faced with mounting denials and audits as payers ramp up documentation scrutiny. The good news is that CMS recently announced new repayment terms for Medicare loans made to providers during the pandemic. Providers now have one year after the payment was issued with additional flexibility for those experiencing additional financial hardships. Although this announcement will surely help cashflow in the short-term, it doesn’t negate the inevitable: Without a proactive strategy for denials prevention, organizations run the risk of post-COVID financial fallout.

Following are three denials prevention mantras every revenue cycle manager should repeat daily to ensure financial stability in the months ahead:

Data is our most valuable asset

Before diving into a denials prevention strategy, organizations need clear direction on what to target and why. This helps ensure resources are allocated for the biggest return on investment. For example, data can help answer these and other critical questions:

  • What are our top five denials by payer?
  • What is the root cause of those denials? (Remember: Querying for clinical validation is just a band-aid unless there’s a team that identifies and addresses the root cause.)
  • What is the financial impact of those denials on our bottom line?

The last question is particularly important because it can help justify the financial resources—and perhaps even additional staff members—necessary to prevent denials. Denial rework, for example, costs providers roughly $118 per claim. The American Academy of Professional Coders provides a calculator that organizations can use to determine their specific costs and lost revenue. By focusing on denials prevention, organizations can significantly reduce the need for costly rework while also ensuring revenue integrity.

Keep in mind that payers also provide valuable data that organizations can use to prevent denials. Consider the following:

  • 835 file. This file includes remittance information, including charges that were paid, reduced, or denied; deductible, coinsurance, and copayment amounts; and details about bundling and splitting of claims.
  • 277 file. This file includes information about claim status.

835 claim files are the payer’s response to the electronic submission of healthcare claim information via the 837 file. Likewise, 277 claim files are the payer’s response to a 276 status request. The 277 file, in particular, includes critical information that can help organizations quickly identify whether claims must be recoded and resubmitted. It can also help immediately pinpoint compliance vulnerabilities and opportunities for physician and/or coder education. Without this file, organizations must wait for payments or monthly statements from insurance companies. Today’s organizations don’t have the luxury of waiting. They need cashflow, and they need it consistently. Best practice is to appoint a revenue cycle staff member to monitor the 835 and 277 files daily and set steps in motion to address pending and denied claims immediately.

Leadership sets the tone

When done effectively, a successful denials prevention initiative includes leadership buy-in and support. Hospital leaders must be committed to making denials prevention a priority. They must acknowledge that although it may take time and resources, their organization—and their patients—are worth the effort. This messaging must come from the top down, and everyone within the organization must embrace it and be willing to commit as well. Denials prevention must truly be everyone’s responsibility.

However, messaging shouldn’t be all about the organization’s finances. Leadership must also reiterate how poor documentation affects each individual physician in terms of risk-adjusted payments and outcomes. In addition, it affects continuity of care and physicians’ ability to provide high-quality care.

With that said, leadership must support clinical validation queries. Hospital executives must require physicians to respond to these queries and take them seriously. However, physicians are tasked with more responsibilities today than ever before. The queries they receive must be valid and worthy of their time. One way to ensure this is to use a vetting process. A physician advisor can review and approve any queries before they reach the provider. This process provides an opportunity for the physician advisor to educate CDI staff on how to pose a valid query while also keeping tabs on which physicians need education requiring documentation of clinical indicators.

Collaboration is the key to success

A value-based care revenue cycle must include representation from multiple departments across the healthcare system, including nursing, care management, quality, ancillary departments, and others. It cannot be a back-end or business office-driven team.

The time to break down existing silos between coding and CDI is now. The two disciplines should have a united front. We like to use the swiss cheese analogy. The more layers of swiss cheese you have, the less likely a hole shows all the way through. Documentation errors that could ultimately affect coding accuracy should ideally be caught on the front end by CDI. If those errors are missed on the front end, coders should ideally catch them on the back end. In essence, with everyone working together, very few errors should be able to penetrate both layers and end up going to the payer.

How can organizations enable this collaboration? Knowledge sharing. Encourage coders to share their coding knowledge with CDI, and vice versa. Encourage them to talk about how their work has positively impacted one another using specific examples. How did a CDI specialist’s query, for example, help a coder assign a more specific code? How did a coder’s explanation of a coding guideline help prepare a CDI specialist to provide physician education? The key is to foster a sense of appreciation and teamwork.

Looking ahead

Nobody knows what the future holds in a post-COVID environment. However, what we do know is that denials prevention will be critical. Organizations that have a clear, data-driven strategy will be most successful. The goal is this: With proper education, denials will decrease over time. It’s about raising awareness and creating a culture of accountability.

Read Five Actions to Take for Proactive Denial Management and learn more about building a clinically integrated revenue cycle in Geoff’s article in the Journal of AHIMA.

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