At the Margins

An ounce of prevention pays off: 90% of denials are preventable

by Morgan Haines

Denials management is a perennial topic. Most hospitals have ongoing efforts in this area—but very few can say definitively, “We’ve cracked the code on denials.”

Part of the challenge is that denials management is not just a do-one-thing-and-do-it-well issue. You have to master three core skills—recovery, prevention, and contract negotiation—to truly stomp out denials. But other initiatives have a way of taking priority, causing teams to default to focusing their efforts on revenue recovery.

As you make your list of goals for the coming year, I challenge you to consider this: Preventing denials is always better for your bottom line than recovering them. Only about two-thirds of denials are recoverable, but almost all (90%) of them are preventable. Though prevention is not easy, fixing the root cause of denials has a much larger financial impact than overturning them.

Set up the task at-hand

The first thing you need to succeed is a strong denials prevention team. Here are four key components to building one:

  • Identify stakeholders. Denials prevention cannot work in isolation. Engage strong leaders from across multiple departments who are affected by denials
  • Establish structure. Schedule a firm monthly meeting to ensure your efforts will be ongoing. At the meeting, have each department leader share their top two denial issues
  • Secure executive support. Executive support sends a powerful signal. Include the CFO, COO and VP of Nursing on your team. Make sure that an executive presence is always felt by having them rotate attending.
  • Provide transparent data. Prior to each meeting, circulate a report that includes the current state of denials and drills down into root causes. This will foster transparency across departments..

Denials prevention goes beyond showing up for meetings

Of course, denials management is not a universal competency. Assuming that people know how to work through data and analytics can cause a lot of problems.

Once you’ve assembled your denials prevention team, you need to look for skill gaps. Ask yourself, ”Do the members of your team have some business office knowledge? Do they all agree what a denial is? “

We often work with members who find that the individuals on their denials prevention team are not data savvy. In fact, an important outcome of forming this type of committee can be to identify managers who do not have the skills or experience needed to dig deep into the denial data and come up with a plan to resolve issues.

After working to get the data together, make it transparent, and get the right people in the room, you don’t want your prevention efforts to come to a halt because there is a lack of understanding of denials due to complexities and nuances which contribute to non-compliance.

If you suspect there is a denials knowledge gap among your team members, consider a “Denials 101” boot camp that provides:

  • Details on denials types and typical causes
  • Insight on denial resolution and the effort involved to overturn denials
  • A breakdown of pan-revenue cycle concepts showing the value of coordination between patient access and the business office
  • A sense of the financial impact that denials have on your bottom line

Root cause analysis is not a skill that every service line leader naturally possesses, but it is key to tracking down the source of denial issues and ensuring the success of your prevention efforts.

An ounce of prevention is really worth a pound of cure

At Mission Hospital in Asheville, N.C., Benjamin Franklin’s famous quote has proven true for denials prevention. In the past two years, through dedicated root cause analysis and prevention efforts, the staff at Mission has decreased its denial rate by 17%.

To achieve this, Mission’s denial prevention team met regularly to identify root causes and make adjustments. When denials kept popping up from the lab department, the denials team took a deeper look.

It turned out that the lab was short-staffed. Feeling the pressure of getting everything done, staff members were skipping the verification process, which was leading to an increase in denials.

Even with the best of intentions, the reality of a clinical environment is that denials are not the top priority every day. It doesn’t mean you can’t move the dial on denials. You just need to build in a process to hardwire a commitment to denials prevention, even when the latest fire forces you to pay attention to something else.

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