In this first blog in our Managing Revenue Risk series, Marcy Utley, Senior Product Manager at SAI Global, discusses the importance of revenue integrity and techniques for improving revenue capture by reducing denied claims.
It’s no secret that hospitals in the U.S. are in a period of unprecedented change. As baby boomers age, the growth of individuals eligible for Medicare benefits is impacting the payer mix, reimbursements are lower for care provided, and there’s a shift from inpatient to outpatient care. Due to these trends, revenue growth for hospitals is below historic levels.
To combat declining revenue, many hospitals have established revenue integrity roles and departments. Revenue integrity is defined by the National Association of Healthcare Revenue Integrity (NAHRI) as “preventing recurrence of issues that can cause revenue leakage and/or compliance risks through effective, efficient, replicable processes and internal controls across the continuum of patient care, supported by the appropriate documentation and the application of sound financial practices that are able to withstand audits at any point in time.”
There are many processes and systems that need to be coordinated across functional areas throughout the revenue cycle to achieve revenue integrity.
At the heart of revenue integrity is risk management. It involves assessing the risks impacting revenue leakage and non-compliance and applying policies, process and controls to those areas to mitigate the loss of revenue. For most healthcare providers, one of the highest risk areas within the revenue cycle – and therefore a potential obstacle to achieving revenue integrity – is denied claims. If you can identify the root causes of various denials, and then pivot to process remediation and appeals, you can significantly impact your revenue.
Why Are Claims Being Denied?
Identifying the reasons for denials of a healthcare claim is the first step to implementing an effective process for reducing denials. Payers use the ANSI standard 835 transactions to transmit payment to healthcare providers electronically; hospitals can leverage information from this transaction set to track and analyze trends in claims.
Through careful analysis of claim adjustment reason codes (used by payers to indicate why a claim was paid differently than it was billed) and the remittance advice remark codes (used to provide additional explanation for an adjustment), hospitals can organize these data elements into denial categories by payer and identify patterns and crucial potential problem areas.
This process will enable revenue integrity teams to target the areas that are most problematic for the organization. For example, by compiling the highest volume denied procedures by the payer and adding up the dollars lost over time, the organization may uncover significant potential for revenue to be recaptured and protected going forward.
Reducing Revenue Leaks
This process of analyzing and triaging claims denials must be done on an ongoing basis to stay ahead of issues and reduce revenue leaks. In our complicated payment environment for healthcare services, new problems arise with payers that require timely identification and response, or you risk losing legitimately earned revenue. For example, to avoid paying the high cost of an Emergency Department visit, a payer starts denying those visits for a specific set of lower severity ICD-10 diagnosis codes. Or a payer has an error in their software that pays all procedures at an incorrect reduced rate for an entire month.
Finding these types of denial issues is very difficult using manual methods such as spreadsheets that must be refreshed by someone keying in remit data. Having “always-on” monitoring of your 835 transactions with automated alerts as soon as a denial occurs allows you to quickly appeal the denials before the claims are considered ineligible for appeal due to timeliness.
In the second piece of the Managing Revenue Risk blog series, Marcy discusses how automated workflows differ from work queues in supporting collaboration on payer audits and denial appeals.