How to Avoid Four Types of Denials
A proactive approach is best
Some payers deny reimbursement for cases just because they can, says Tina Davis, RN, MS, CMAC, consultant for the Center for Case Management.
That’s why case managers must take a proactive approach to reducing the denial rate — and the best way to do it is to prevent the denial, says Toni Cesta, RN, PhD, FAAN, partner and consultant in North Bellmore, NY-based Case Management Concepts.
The cause of denials varies across the country and depends on the patient population and, often, the size of the hospital, says Beverly Cunningham, RN, MS, ACM, consultant and partner at Oklahoma-based Case Management Concepts. “In urban areas, a significant portion of denials tend to be driven by contracts while in rural areas, they’re more likely to be Medicare-based or Medicaid-based,” she says.
The following are the most frequent types of denials:
• Administrative denials. These occur when the hospital’s actions fall outside of the contract requirements. Case managers must be informed about the insurer’s requirement for authorizing the care as well as the requirements for clinical reviews.
“If the notification falls outside the time frame specified in the insurance contract, the hospital will get an administrative denial,” Cesta says.
Become familiar with payers’ requirements for precertification and clinical review notifications and make sure the calls take place within the timeline the payer defines, says Brian Pisarsky, RN, MHA, ACM, director at KPMG Healthcare Solutions.
“If a patient comes in on Friday afternoon and nobody calls the insurer until Monday, the hospital is three days behind and may get a denial or penalty based on not notifying the insurer in a timely manner,” Pisarsky says.
Make sure you have information about the patient’s current insurer. If you don’t have the correct information about the payer and their requirements, a denial may be unavoidable, Pisarsky says.
Pisarsky recommends working with the business office staff at all portals of entry to develop a series of questions about insurance coverage that the registration staff asks every patient, even if the patient has been treated at the hospital in the past.
“Even if patients have been to the emergency department multiple times in the last month, their insurance may have changed. If you just accept that they have the same payer and find out a couple of days later that it has changed and the insurer requires precertification, that’s an administrative denial,” he says.
Other denials may occur when a patient comes in unconscious or disoriented with no payer information, and by the time the family is located and provides the insurance information, the time frame required for authorization has passed, Pisarsky says.
• Clinical denials. When patients don’t meet admission criteria or stay past the time their condition was acute, the hospital will receive a clinical denial.
Poor documentation is the most frequent cause for clinical denials, followed by lack of medical necessity, says Yomi Ajao, vice president at Cope Health Solutions. “When we work with a hospital and analyze denials, what we discover most is lack of documentation or incorrect information,” Ajao says.
Case managers should work with the medical staff from the beginning to ensure that the patient status is correct and that the record contains clinical proof of the patient’s condition and treatment, Davis says.
“Medicare has been very clear: The patient record has to contain a good history and physical, with a plan of care, along with information about why the patient needs to be hospitalized. If we can get the physician to document clearly what the illness is and the expectations for the patient, we are in a better place for preventing and fighting denials,” she says.
Case managers should develop a good relationship with physicians and educate them about the need for documentation in the medical record to support the case for billing, Davis says.
“Documentation should include information on why the patients need to be in the hospital and why they can’t be managed at another level of care,” she says.
Some clinical denials may occur because of the hospital’s internal processes, or by people outside the hospital, Cesta says.
Some insurers carve out the days when the patient was admitted but not being treated, Cesta says. For instance, a patient who comes in Friday night needs cardiac catheterization, but the lab is closed until Monday and the insurer denies the weekend stay.
Other denials may be caused by people or situations, Cesta adds. For instance, it’s not unusual for a patient with a broken hip to be in a bed waiting for several days until the physician who is next on the list is free.
“This is not only a situation where the insurer may carve out those days before surgery and deny them, but it’s also a quality of care issue. The longer the patient waits to go to surgery for a broken hip, the more adverse issues are likely to occur,” she says. Patients who are lying in bed and sedated can lose cognitive function as well as muscle tone, both of which add to the recovery period, she adds.
This is where the case manager’s role as a patient advocate should kick in. “Surgeons don’t necessarily understand the need to get a broken hip replaced or repaired in a timely fashion. Case managers should work with the medical team to determine the maximum number of hours a patient should have to wait,” she says.
Hospitals should have an orthopedic surgery on-call list so someone is available at all times.
“In one hospital, we worked with the medical leadership to develop a process so when one surgeon isn’t available, the next one on the list is called until someone who is willing to come in is identified,” Cesta says.
• Out-of-network denials. When non-emergent patients are transferred from another facility and carry insurance with a company that does not include the receiving hospital in its network, the care is likely to be denied unless a prior authorization is obtained, Davis says.
Davis reports that out-of-network denials occur in many hospitals because the transfer department approves all patient transfers without identifying the payer and receiving authorization from the payer before the transfer. She recommends stationing a case manager in whatever department authorizes transfers to review the non-emergent cases and connect with the payers.
“If case managers review non-emergent patients before they are transferred, they can make sure that the hospital is part of the payer’s network of providers and get authorization from the insurer before the patient is transferred. If a patient is admitted and the hospital is out of network, the whole stay may be denied,” she says.
Hospitals may refuse to take an out-of-network patient as long as it’s not an emergency and the care needed can be provided in a hospital that is in the payer’s network, Davis points out. “Nurse case managers can manage this process,” she adds.
• Downgrades. These occur when the insurer reviews the clinical information and changes the patient status from inpatient to observation.
“Downgrades can fly under the radar screen at hospitals and not trigger the appeals process,” Davis says.
In a typical scenario, the staff in the business or case management office reviews the downgrade, accepts it, and moves on without any discussion with the physicians, Davis says.
“As a result, the hospital gets paid much less than if the hospital appealed and the payer agreed that inpatient status was correct,” she says.
Patient downgrades are technically a denial but because they happen during the stay and sometimes shortly after the patient has gone home, many hospitals don’t collect information on them or appeal them, Davis says.
“Certain payers do this more often than others. By collecting information, you can determine if the payer is using downgrading as a strategy to reduce their payment to you,” Davis says.
Case managers must take a proactive approach to reducing the denial rate — and the best way to do it is to prevent the denial.
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