Revenue Cycle

Tip: A team-based approach to reduce denials

Patient Financial Services Weekly Advisor, October 29, 2004

To avoid a Band-Aid remedy to reducing denials, it's crucial to identify the reason behind them to fix the process before they happen, says independent healthcare consultant Tina Clark.

Use a spreadsheet to help you more specifically define denials by type. Keep it concise and simple by breaking down type according to

  • Administrative denials: These are from the payer to which the subscriber is not a member or is not being insured on or during the date of service, or the CPT-4, ICD-9, or revenue codes are not valid for the time of service. As your team identifies the reason for the denial, procedures can be instituted to identify that denial prior to the bill being sent to the insurance company for adjudication and reimbursement.
  • Historical denials: These can be identified in the same manner with the exception that they may be more difficult to find. The denial will need to be found within the massive number of accounts your facility already has on its books. Depending on the financial system, certain reports can be generated to identify specific types of accounts that have been denied.

    If your facility's financial system posts adjustments upon billing, then underpays could be tracked. Of course, an account with a zero payment or no payment received within 90-120 days after discharge can be identified in a report.

    In this case, is it procedure for the staff to enter comments on accounts indicating the claim was denied or in some form of a review process?

    If the staff enter comments hard coded in the system, the payer could generate a report could looking for a particular comment code. It's possible that you may find a particular service or procedure is not being precertified and causing a denial.

    Clark offers the following action steps:

  • Produce a report by the CPT code or procedure code that is being denied. The report should also identify the payer.
  • Redesign the process to ensure the identified CPT codes or procedure codes are appropriately precertified.

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