Managing Denials in the Wake of ICD-10

Guest post by Lindy Benton, president and CEO, Vyne.

Lindy Benton

The world of denials management is a constantly shifting landscape, one that has changed dramatically with the onset of ICD-10. Now more than ever, denials management requires an organizational focus with built-in workflows for prevention, monitoring and tracking of claims through the system.

In the years leading up to ICD-10, providers were apprehensive about the potential drain it would place on both resources and reimbursement.  CMS predicted that – with the onset of ICD-10 – denial rates would increase by 100 to 200 percent, days in A/R would grow by 20 percent to 40 percent and claims error rates would more than double. CMS warned that error rates could reach a high of 6 percent to 10 percent, significantly higher than the 3 percent average error rate with ICD-9.

Providers also feared cash flow problems stemming from coding backlogs, expected to increase by at least 20 percent because of the complexity of the new coding system. “A typical turnaround time for claims processing of 45 to 55 days could end up being extended another 10 to 20 days,” cited Healthcare Payer News.

And the change has been momentous. With ICD-10, the number of diagnostic codes increased from 13,000 ICD-9 codes to 68,000 ICD-10 codes. The new system challenges providers to document conditions more specifically, supporting codes with thorough and accurate medical documentation.

Despite the gravity of the change, many providers say it has been a smooth transition thus far, with minimal delays in productivity and reimbursement. But as the industry moves through this period of adjustment, providers must continue to seek opportunities to protect revenue and generate cash flow for a successful claims management strategy in the wake of ICD-10.

Organizational Approach

ICD-10 requires an organizational focus around the management, prevention and defense of denials. Denials management is no longer an effort reserved just for the revenue cycle but for all departments. For coding to complete a claim, pieces of information must be collected from multiple areas across the organization. For this reason, all departments should be educated on the part they play and how cross-department collaboration can aid the process.

In preparing providers for ICD-10, the Healthcare Financial Management Association (HFMA) noted, “Claims denials will not strictly be a matter of clarification that can be handled by a nonclinical person in the billing office. Denials will raise questions about medical necessity or the clarity of medical documentation supporting a code; such questions will require input from a physician, nurse specialists or outside expertise.”

Workflow processes are also critical as hospitals work to achieve accurate coding and get bills out the door. Technologies that streamline hand-offs between departments can help reduce bottlenecks that often delay reimbursement. A work queue keeps denials moving, assigning and tracking accountability at each checkpoint and monitoring progress to ensure no claim falls through the cracks.

Track and Trend

Tracking and reporting of denials trends provides valuable analytics to measure team performance. Compatible tools can be used to reveal the effectiveness of denial management efforts across teams and identify the root causes of issues or delays in resolution.

Determining denial sources helps providers avoid rejections on the front end and prevent them from occurring. Are there ongoing issues related to lack of authorization or medical necessity? Or are manual errors and oversights such as timing miscalculations leading to the rejection of claims?

Once trouble spots have been pinpointed, providers should take immediate action to resolve issues. For example, tools can be implemented to capture communication with payers for proof of authorization and documentation submitted to support medical necessity. Systems with flags and reminders can also help streamline denials and appeals while maintaining reports for denial prevention.

Automate, Automate, Automate

Perhaps one of the most important steps a provider can take to improve its claims management process is automating its denial management approach. Manual and paper-based activities such as printing, scanning and mailing consume valuable resources and make data security and tracking a challenge. Hospitals need reliable tools to automate inefficient and error-prone processes and quickly move claims toward resolution.

Systems that support electronic exchange between providers and payers are proven to expedite response times, lower denial rates and improve the fluidity of cash flow. Electronic exchange facilitates secure, two-way collaboration with health plans through the cloud. This gives hospitals a way to securely transfer medical documentation such as patient records, test results and histories to support claims. File sharing also gives organizations an audit trail of file delivery, receipt and access for auditing purposes.

One area where automation has great impact is in the exchange of medical documentation in support of audits and claims adjudication. CMS’ RAC program, for example, is ramping up again after a pause in audit activity due to changes in inpatient status reviews. To avoid denials, hospitals need systems in place to respond in an accurate and timely manner to audit requests.

At Boca Raton Regional Hospital, leaders replaced a manual process with a secure electronic portal to reference information exchanged with CMS and track claims documents throughout the audit process.

As a result, the hospital improved the turnaround time of Medicare reimbursements from up to four weeks to as few as six days and experienced a total savings of more than $4 million. A solid denials management approach can help providers prevent unreasonable denials, as well as navigate appeals after a negative finding.

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