7 Most Common Causes For Denials
The 7 Most Common Root Causes for Denials and Delayed Account Resolution
Excerpted from Healthcare Financial Resources
With health insurance denials at an all-time high, many hospitals and health systems are desperate to stem the tide to improve their accounts receivable. Combining lost revenue with the administrative costs of recovery and rework leaves almost every hospital wondering how to get to the bottom of the problem. By reducing the incidence of denials and resolving those that do occur more quickly, cash flow is increased, health insurance write-offs are reduced, and administrative staff time can be used more efficiently.
Here are seven root causes for denials and delayed account resolution, and steps you can take to prevent them.
Overcoming utilization denials requires that hospitals be well-versed in an insurance company’s clinical policy bulletins, which describe what the carrier will and will not cover, what they consider to be medical necessity, and the treatments they deem to be experimental. At the same time, hospitals must be ready to promptly and consistently develop appeal narratives that make a strong medical case for the treatment provided. Denials relating to authorizations also can stem from something as simple as an authorization code not being included in the appropriate field of the insurance claim. By reviewing denial information with intelligent automation capabilities, these kinds of mistakes can be quickly isolated and addressed.
As the name implies, coverage denials involve real or perceived errors or omissions surrounding health plan coverage limits. One surprisingly frequent problem in this area involves the willingness of many hospitals to ignore patient eligibility rejections flagged by their eligibility verification system. One common example involves billing straight Medicare when a Medicare Advantage managed care policy is the primary coverage vehicle. In this instances, resolution typically involves carefully tracing the policy guidelines as well as the nature of the illness or injury to determine which coverage is most appropriate.
Contractual denials can involve a wide range of issues. But one of the most common entails payer underpayments for specific services like surgery, ED, lab and radiology, therapies and observation. Denials also can arise over misinterpretations regarding per diems, bundled payments for multiple procedures and carve-outs. In avoiding contractual-related denials, it is essential that hospital staff be cognizant of, and responsive to, the multiple deadlines associated with the filing and appeals process. These time limits can include deadlines for submission of medical records, corrected claims, appeals, and reconsiderations. Creating the capability to automatically track and flag deadlines in real-time therefore is critically important.
Coding and Billing
A common problem involves Reason Code 97 rejections triggered by the failure of the hospital team to turn on National Correct Coding Initiative (NCCI) edits. The edits basically provide a system of checks designed to prevent bundling/unbundling issues due to inappropriate CPT and HCPCS code usage, as well as inappropriate combinations of codes. Crosswalks, which map or translate specific codes from one code set to another, also are a frequent source of denials. Minimizing the issue usually requires rule creation or edits in software coding applications.
Failure to include the primary EOB, crossovers between supplemental and primary insurance and missing medical records are common rejection reasons. Problems also occur due to bugs in the hospital’s electronic claims submission software or issues at the clearinghouse. Some clearinghouses, for example, are not properly equipped to efficiently process paper claims. As a result, the claim can often sit for an inordinate length of time. Continual communication with the clearinghouse is therefore important to ensure no reoccurring log jams or hidden delays.
This category of issues frequently involves determining the appropriate allocation of unapplied cash. For example, assessing the differences between recoupments, or refunds for overpayments, and offsets, which involve allocating unspecified funds to existing claims, requires careful analysis of policy language and covered services previously paid for.
Process issues usually involve payers taking an excessive amount of time to process a claim for reasons unrelated to the claim itself. It is therefore important for hospitals to identify and isolate payment delay patterns involving specific payers. This enables prompt follow-up with the carrier to ensure payments are made in accordance with the terms of payment delays the existing contract.