Fundamentals of Denials Management

Fundamentals of Denials Management

Fundamentals of Denials Management Haaris Ali, MD, CDIP ACDIS Agenda Denials Commonly Used Terminology What We See and Why Root Causes Denials Management and Prevention How CDI Plays a Vital Role The Comprehensive Solution Current Payor Trends Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 2 What is a Denial? Anything at risk for write off You expected to get paid for it and you didnt Typically categorized into 2 groups Clinical: does not appear to meet medical necessity, no authorization, LCD/NCD, DRG Downgrade

Technical: administrative in nature (timely filing) Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 3 Definitions Remit Notice of and explanation of reasons for payment, adjustment, denial, and/or non covered charges of a medical claim 835 Electronic remit from payor through claims submission system 837 is the actual submission from the provider to the payor ANSI Code American National Standards Institute Standardized claim adjustment reason codes (whatever) EOB Explanation of benefits Denial Code ANSI code present on remit Contractual Negotiated discount between payor and provider Expected Net is expected payment after discount applied Gross is total charges with no discount yet applied

Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 4 Gross vs. Net Example: Total charges of $10,000 with a negotiated payor discount of 75% GROSS NET $10,000 Total Charges $10,000 Total Charges $0 Discount Applied $7,500 Negotiated Discount $10,000 Account Balance Proprietary Confidential Information of R1 RCM Inc.

$2,500 Account Balance 02/06/2020 5 Who Denies These Claims? Medicare hires contractors referred to as MACs who are fiscal intermediaries who make payments on behalf of Medicare. RACs are contractors hired by Medicare to audit and collect overpayments to hospitals. QIOs- Quality Improvement Organizations For commercial, generally someone with advanced medical training will review these claims (i.e. Medical director, nurses with advanced training). Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 6 What We See and Why Inpatient No Authorization

Inpatient Not Medically Necessary Other Lack of process Severity of illness and failure to evaluate exclusionary criteria Mental health diagnosis (in an acute setting) Lack of skillset Plan of care, therapy notes, MD documented clinical evidence IP Rehab lack of documentation Lack of capacity

Intensity of service DRG Validation Length of stay Lack of process Lack of process Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 7 Root Causes Primary No attempt to get an authorization Authorization attempted and the payor said no Authorization attempted but for the incorrect service or level Secondary

Lack of documentation present Lack of reaction to payors denial of authorization Incorrect/insufficient documentation pushed to payor Lack of timeliness with throughput process Under utilization of tools available (Midas, Allscripts, etc.) Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 8 What is Denials Management? Prevention Recovery Where is your ROI? Proprietary Confidential Information of R1 RCM Inc.

02/06/2020 9 Prevention Standardization Education Accountability Throughput Payor Policy Daily Peer to Peer Third Party Criteria Historical vs. Current Reporting Documentation

Reportable Timeliness Monthly Financial Impact Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 10 CDI and Denials Prevention Strengthen the case Code to the highest level of specificity Capture acuity by coding CCs and MCCs according to the updated coding clinics and coding guidelines o If you have 1 MCC, try finding another o AKI verify the physicians documentation supports CC Look for missed documentation opportunities Focus on DRGs with CCs and MCCs Robust query process to prevent under-coding, but dont over code Quality queries Productivity is important, but quality is key

Develop and periodically review processes Develop hospital medical staff policies on commonly audited CCs/MCCs- AKI, malnutrition, ac resp failure, sepsis and follow them Identify workflow breakdowns early on Post-Discharge Reviews SOI, ROM Quality Assurance Programs Education Use the PEPPER report to proactively compare performance to other facilities Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 11 Comprehensive Denials Solution What is it? Diagnostic Framework Prevention Roadmap Accountability Framework

Workflow Framework Why is it important? Root cause identification of denial reason at actionable level Denial reporting complex must have robust, accurate reporting to determine: Which denials are worth cash Which areas are causing denials Which processes are not working Implement prevention best practices Solutions have many flavors technology enhancement, process redesign, physician education Industry best practices must be often tailored to specific payer requirements, specific processes Must focus on early warning systems to capture potential denials before they occur

Define operation rhythm of meetings, action items, owners, timelines Goal setting Frequent meeting cadence with key stakeholders Regular tracking of metrics Problem solving sessions Follow-up/appeals post denial Best strategies to win appeal Feedback loop to avoid future denials Often, denials can be appealed and won, 50%-60% industry overturn rate Payers make mistakes too! Must be integrated with prevention work for robust feedback loops Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 12 Revenue Recovery Appeal

Track Learn Understand denial reason Levels won Consistent post mortem Understand payor policy Levels lost Payor behavior Exhaust all levels of appeal Root cause Process improvement Understand what you cant appeal

Establish history & baseline Cross functional effort Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 13 Current Payor Trends ALJ Modified criteria 2 MN rule Complex audits Extrapolation methods Transmittal 541 Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 14 Questions?

Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 15 Lets take some questions back with us Do you know what your hospitals clinical denial rate is today? Do you know if those clinical denials are appealed? Do you know what the root cause is on those clinical denials? Do you know what your recovery rate is for appealed cases? Do you know how much your organization writes off each month in clinical denials? Proprietary Confidential Information of R1 RCM Inc. 02/06/2020 16 Terminology Term Definition

Revenue AR Reimbursement Total charges for all services provided to a patient (line item charges) Accounts Receivable Reimbursement is the amount of cash paid to the provider by health insurance plans, other payers, and Patients for healthcare services. The cash paid to the provider is = to reimbursement Gross revenue; gross shop total charges Net revenue; net shop actual cash expected for services provided (gross minus contractual) Contracted discount applied to gross revenue with insurance companies The revenue cycle represents the cycle of revenue: how revenue is generated and turned into cash for the provider the process begins when the patient enters the health system and ends when the account balance is zero AKA known as PFS (Patient Financial Services) Patient Access (PTAC): Scheduling, pre-registration, authorization (including case management), verification, cash collections Pricing, chargemaster, charge capture, documentation & coding Billing, cash posting, AR management (reimbursement monitoring, follow up, appeal submissions), & analysis Uniformed bill claim form created for hospital services with each encounter and submitted to insurance for claims processing HCFA 1500 used to bill physician services Standard alpha or numeric code used by insurance codes to explain a denial AKA Remittance Advice (RA) or EOB; provides notice of and explanation of reasons for payment, adjustment, denial, and/or uncovered charges of a medical claim Electronic remittance advice Health Information Management (Medical records, coding, release of information (ROI)) International Classification 10th edition a coding system used to describe the diagnoses associated with an

IP hospital stay Diagnosis Related Grouper Summary diagnosis for inpatient claims Standardized 3 level coding system used to describe supplies, drugs, etc. Standardized codes representing Level 1 HCPCS to used describe procedures Evidence based care guidelines used by payers and providers to determine if a patient stay is medically necessary Insurance company providing healthcare coverage to the patient The provider may or may not be contracted with the payer Gross Net Contractual Revenue Cycle Front End Middle Back UBO4 ANSI Code Remit 835 HIM ICD 10 DRG HCPCS CPT

Criteria Commercial/ Managed Care Payer Information of R1 RCM Inc. EMR Proprietary Confidential Electronic Medical Record 02/06/2020 17 Thank you! Haaris Ali, MD, CDIP Manager, PAS Integrated Denials Management [email protected]

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