Some denials can be overturned easily — maybe a piece of clinical documentation is missing. Other denials are a long shot, requiring lots of time and effort to challenge. “We work all denials. Nothing goes untouched,” says Cynthia Fry, PhD, senior vice president of revenue at Philadelphia-based Thomas Jefferson University & Jefferson Health.
To better understand the recovery rate and effect on receivables, the department uses three tiers to categorize denials:
Tier 1. These are complex denials and are the hardest to recover.
Some are medical necessity denials in which clinical documentation was sent already, meaning it is not a simple matter of providing the clinicals. “The payor has already reviewed them, and determined the service wasn’t medically necessary,” Fry says.
Other examples of tough denials are claims that were downgraded from inpatient status to observation status. “We assign a collectability percentage — an overturn rate — based on what tier the denial falls in and how old the denial is,” Fry says.
The older the claim, the harder it is to collect. For Tier 1 denials, the team produces a 20% to 30% recovery rate early. As time passes, that percentage drops even lower. The department still tries to overturn these denials. “But it’s very hard to win an appeal if the documentation does not support medical necessity,” Fry adds.
Tier 2. These denials “are in the middle of the road,” Fry explains.
Most are registration-related, and do require some effort from outside the department. Some involve coordination of benefits, where staff have to engage with the patient to secure a signature on a form.
Other examples of Tier 2 denials are eligibility and noncovered services. “There’s about a 75% success rate early on. But as they age, the percentage drops,” Fry notes.
Tier 3. These include billing-related denials, coding-related denials, and information requests, with a 90% overturn rate.
“These denials are the easiest to overturn, and have high rates of successful appeals,” Fry says.