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Avoid claim denials by tracking data

Radiology Administrator's Compliance and Reimbursement Insider, January 1, 2007

Everyone wants to get paid appropriately for the work that he or she performs. In healthcare, that elemental economic process just isn’t that simple.

Radiology managers, perhaps, understand this truism best of all. Industry estimates indicate that 30% of all initial radiology claims get denied, said Joe Lineberry, CPC, CHC, vice president of compliance for Per Se Technologies in Alpharetta, GA, during the American Healthcare Radiology Admini-strators’ annual conference in Las Vegas in August 2006.

“I don’t know of any other business where you provide a service and 30% of the time you don’t expect to get paid,” Lineberry said.

Essentially, the problem works out like this: A patient presents for an MRI. The MRI costs $1,500, so you bill for $1,500. The potential collection amount on any given charge is fixed, but the cost associated with collecting on that same charge is variable.

Every time a person touches the claim, it costs money and slows the revenue cycle, Lineberry said. Each step in the billing process adds cost to the bill and, in essence, reduces payment.

“Resources are limited. Tracking, researching, and resolving denials takes time . . . a lot of time. So get focused in how you deal with claims. Ultimately, the plan is to allow every practice to achieve its maximum income potential,” he said.

The maximum income potential equals the greatest amount you could possibly collect for a given service.

Denial basics

Denials and rejections come in many forms. A rejection is an incorrect claim stopped prior to entering the payer’s system and resulting in nonpayment. Denials, on the other hand, are inappropriate claims stopped after entering the payer’s system and resulting in nonpayment. Many denial codes exist. And many of these denial codes mean essentially the same thing, said Lineberry.

Multiply the number of denial codes by the number of payers, and sorting and tracking hundreds of codes becomes problematic.

Measurement equals management

The bottom line is that you cannot manage what you cannot understand. You also cannot manage what you cannot measure. “It’s a simple business principal,” said Lineberry.

Look for overlap where volume and reimbursement are high. Pinpoint procedure and diagnosis code combinations with the maximum recompense to the facility.

For example, Lineberry said, head and abdomen scans offer the greatest financial return, so in this case you’d sort by body part, not modality.

Identify denial types in order of their highest influence on the practice and then deploy resources accordingly, he said. “This will speed up your cash flow significantly,” he added.

When a technological solution remains out of reach because of either time or expense, don’t give up on denial tracking, said Lineberry.

“It’s okay to start off small,” he said. At a minimum, create a manual process for employees to track denials themselves.

Choose a topic to target. Medical necessity, uninsured patients, diagnosis-prognosis mismatch, and bundled services are all good subjects to start with.

Next, create a translation table to post standard rejection codes in an easy-to-see spot. Have coders and your front-end support staff keep the sheet nearby. Then, make an easy-to-use spreadsheet to track specific denials daily. At the end of the week, collect that information. Such practices raise awareness and reduce denials, said Lineberry.

Now that you have all of this information, let the data drive your decisions. Once you know which denials cost you the most money and which occur the most often, develop individual plans for each type.

Once you track the reduction of that area of claim denials and the facility’s fiscal improvement associated with it, you should be able to obtain more resources and expand your denial prevention program.

Get cash quick

To realize the fiscal effect swiftly, move remedial actions to the front end, rather than the back end, of your financial management system.

“We all understand the back-end administration process. We all know it’s not the ideal situation,” Lineberry said.

Regardless of specialty, administrators are moving away from a back-end (i.e., business office) collection system. The front-end (i.e., the registration offices and patient processing) have started taking on more fiscal responsibility.

Due in part to human nature, it is easier to collect for services before the services are rendered. And it’s easier to eliminate payment roadblocks prior to treatment than after the work is done, said Lineberry.

Working denials on the back end is a critical safety net that’s vital to patient correspondence, carrier correspondence, explanation of benefits, etc., Lineberry warned. But back-end focus by itself “slows down cash flow and increases costs,” he added.

“Working toward a front-end solution while simultaneously working denials that slip through on the back end is critical,” Lineberry said.

Maximize efficiency

To boost the competency of back-end denial management, take the following steps: