Claims denials have increased by 11% nationally since the onset of the pandemic, according to an analysis of 102 million hospital transactions at more than 1,500 hospitals.1 “The data clearly show that patient access is a key area in preventing denials,” says Nick Raup, assistant vice president of product management at Change Healthcare.
Almost half of claims denials are caused by front-end revenue cycle issues.1 These include registration/eligibility, authorization, or service not covered. “Take a closer look at these denials and assess what you can do internally to prevent them,” Raup says.
Registration and eligibility accounted for 27% of all denials. “Implementing a process to check eligibility at multiple points throughout the revenue cycle will go a long way in preventing this common denial from occurring,” Raup says.
Use the CMS database to see if the patient has existing Medicare Advantage coverage. Datamine to identify existing commercial coverage for Medicaid enrollees. Implement technology that gives real-time access to payer benefit information.
Eighty-six percent of denials might be avoidable (about 25% of these are not recoverable). About one-third of the denials are “unequivocally” avoidable (of that group, 48% of the revenue cannot be recovered). “The biggest items in this area are the clinical denials for authorization and medical necessity,” Raup says.
Clinical determination is subjective. Therefore, it is hard to know if the health plan will overturn the denial on appeal.
Overall, the findings point to the need for hospital revenue cycle departments “to become more data-driven,” Raup says. If patient access can find the root cause of a denial, that prevents much more revenue from disappearing later. It is important to identify and categorize the reasons for denials. “This ensures that revenue cycle staff are working on the most appropriate claims,” Raup says.
Some denials are unrecoverable or unlikely to be overturned. Those are not worth wasting time. “An example of this type of denial is where a patient receives behavioral health treatment and their insurance does not cover it,” Raup observes.
Non-covered service denials are common at UChicago Medicine. Health plan reps confirm an authorization is not needed for a scheduled service.
That is good news for the patient — until the claim is denied for a totally different reason. “It turns out that the service was never covered by the plan in the first place,” says Michael Sciarabba, CHAM, MPH, director of patient access services.
First, registrars call the health plan to ask if authorization is required. The health plan rep, correctly, says no. No one realizes that it really does not matter, since the service in question is an excluded benefit. “We are seeing this happening with a lot of high-cost, specialty care,” Sciarabba says.
It happens with capsule endoscopies, cochlear implants, and heart loop monitors. The patient is scheduled, and no one has any idea the service is non-covered.
Sometimes, the health plan rep cannot even give a yes or no answer. The registrar then has to speak to a supervisor just to find out if the service is covered. If not, patients usually do not blame the health plan; they blame the hospital for not telling them sooner. “The payor blames the patient, stating that the patient was given a list of excluded services and should have known their benefits,” Sciarabba says.
After this happened several times, registrars now ask about it specifically. “When they call to check if authorization is required, they also ask: Can you confirm that this is a covered benefit?” Sciarabba adds.
- Change Healthcare 2020 Denials Index. Dec. 21, 2020.