Hospital gets aggressive in turning around denials

InterQual helped with appeals

Before engaging a law firm to take the appeal of reimbursement denials to the next level, Johns Hopkins Hospital in Baltimore undertook a comprehensive revenue recovery initiative that doubled its recovery rate on denied days, explains Dan Wassilchalk, MHA, RHIA, director of performance improvement and utilization management.

Wassilchalk was hired in July 1998, and in January 1999, he says, the hospital began what it called "rapid-cycle process improvement."

As part of that initiative, he says, "We learned that we were leaving millions of dollars on the table for care that had already been provided for which we were not being paid. Our department took a much more aggressive stance internally and externally in reducing denials and appealing them, as well as in working old appeals pending response."

During the process, Wassilchalk notes, "We learned that by writing a better [appeal] letter, and concentrating on improved clinical documentation, we doubled our rate of overturning denied days." Between fiscal year 1999 and fiscal year 2000, he adds, the rate went from 10% to 20%, which represents an annual increase of $1 million.

Denials are another way of discounting

Many hospitals are not aware, Wassilchalk points out, of their denial or recovery rate or of the ratio between clinical and administrative denials. "It’s scary not to know what they don’t know," he adds. "Some do not have a data collection process on denial management to have their arms around their denial losses."

It’s important to realize, Wassilchalk says, that denials, in reality, are another way of discounting services. "So any time your managed care contracts reflect certain negotiated rates, you might as well consider denials an additional discount — and we can’t afford it."

The first step hospitals should take in addressing the problem, he suggests, is to "find out how bad you’re hemorrhaging from denials. Work closely with the accounting office to establish a tracking mechanism."

"Through typical root-cause analysis process," Wassilchalk adds, "come up with an action plan that would include a strong data collection process, an aggressive approach to appeals, and then a proactive plan to work internally with the care providers to document better and uncover delays in service."

In November 1999, the performance improvement and utilization management department at Johns Hopkins began using InterQual criteria to appeal denials and improve documentation, he says. InterQual, a product of Atlanta-based McKesson HBOC, helps providers measure intensity of service and severity of illness, Wassilchalk adds.

Before turning to a Towson, MD, law firm, the hospital first looked internally for help, he explains. "We gained some assistance from other departments that were employing nurses who were looking for part-time work. We also turned to nurses on workers’ compensation who were on light duty. When we realized we couldn’t handle the volume and could use some assistance in interpreting the appeals and grievance process, we turned to Siegel & Fotheringill," Wassilchalk says. "After the word got out a little bit, a couple of other hospitals started turning to them for similar services. Without a doubt we broke new ground in working with them on this."