What is Denial Management?
Denial management is how healthcare organizations study the root causes of denials to implement corrective action to avoid future denials. Avoiding future denials is important because denials have a direct hit on the bottom line.
The Traditional Process
Let us look into how traditional healthcare organizations manage their denials.
The first step is to find and identify the causes that lead to denied claims. After distinguishing the root cause, the next step is to categorize and notify the department or team responsible for the denial to make corrective actions.
The emergence of value-based reimbursement in healthcare over the last decade has placed an increased emphasis on organizations to improve operational and financial efficiency.
Staying competitive is now comprised of not only a system’s ability to deliver quality care, but also delivering care at a lower cost, all while securing timely and accurate reimbursement.As health insurers have improved algorithms and systems for determining payment, healthcare organizations need to improve processes and technology to match.
One critical component is a vigorous denial management and improvement program to ensure that rigorous standards for payment are met.Approximately 60% of data on a claim comes from upstream departments such as patient access, clinical departments, HIM/Coding while the remainder comes from core technical configuration and automated rules.
Decoding the opaque insertion points of such data items is important for key decision-makers of an organization as preventing denials prior to occurrence needs to be an ongoing practice.
Imagine putting all your money in a bag with a hole!
But denials, the proverbial holes in the coffers of healthcare businesses are mostly left unmanaged.
Here are some helpful strategies for healthcare businesses to get a better grip on their denial management process.1.
Metrics like Initial denial rate, claims, and dollar rates give you the exact picture of the problem.
So it makes more sense to focus your denial prevention efforts on the initial stages of the cycle.3.
Since the root causes of denials can be buried in the processes and practices of any department, effective denial management demands concerted efforts and shared accountability from all departments and staff.
Millions of Americans depend on small, rural hospitals for healthcare.
An additional 673 rural hospitals are at-risk for closure.Today’s climate may seem daunting for small, rural hospitals – but it doesn’t have to be.
One of the smartest things a small hospital can do is to conduct a 360-degree financial analysis using at least five years’ worth of data.An objective third party – like HMI LLC or other medical consulting organizations – can pore over the data to issue concrete recommendations.
You can see how your hospital compares to other organizations with a similar size and market.Financial audits can reveal surprising problems with smaller, rural hospitals, including:• Revenue cycle issues• Denials management issues• Longer lengths of stays compared to other hospitals• Outdated systems still in use• Medical coding and compliance issues• Billing and purchasing problemsA top-to-bottom financial analysis can show a small, rural hospital what they’re billing and buying and how the hospital is doing it.
If the hospital can learn to effectively manage this debt, it can be the difference between surviving and shutting down.Debt management strategies vary between organizations but can include all of the following:Judicial Reorganization: Judicial reorganization is a bankruptcy handled through the court.
However, it’s not the right choice for all hospitals in all situations.Non-Judicial Reorganization: With non-judicial reorganization, hospitals restructure their debt and payment plans with debtors outside of the court.
