Get admin claims denials down to near zero

Identify root causes

To reduce administrative claims denials, Virtua Healthcare System in Marlton, NJ, did two Six Sigma projects. "Our major mission for the first project was to identify root causes that resulted in administrative denials at all campuses and all registration types," says Diane E. Mastalski, CHAA, CHAM, director of patient access.

This meant identifying all of the causes for the department receiving an administrative denial, for any kind of patient.

Staff misunderstandings

"In this project, we identified that many of our staff were not using the insurance verification tool," says Mastalski. "If they were, they didn't fully understand the information they were receiving back in the response. Many of our staff would run it and accept the results, but didn't really understand what the data were telling them."

This resulted in incorrect insurance, wrong ID numbers, patients who didn't have covered services, and patients whose insurance had been terminated, she says.

If the registrar submitted the information to the insurance verification tool, and it came back with a response of "patient not eligible," for example, the registrar didn't know what to do and would leave that information in the registration pathway, she says.

Staff didn't take the extra step of asking the patient additional questions, she says. It may have been that there was a newer insurance card with a different ID number, or that the patient recently lost his or her job and now had coverage under COBRA.

To rectify this, managers educated staff on how to process an insurance verification request, what the response meant, and what to do with discrepancies in the data. "We saw an immediate improvement in the denial rates," says Mastalski.

Staff were also having problems understanding the response from the insurance verification tool for patients who had selected a managed care insurance instead of Medicare or Medicaid, she adds. "The registrar was not changing the insurance information. We were receiving denials from Medicare and Medicaid because the patient had truly changed to managed care," says Mastalski. "We taught the staff how to understand the information coming back on the responses."

Claims denials decreased from 11% to 7% in the first phase of the project, and were below 5% by its completion.

The department also began using a denial management tool that gave better information about the types of denials, such as coordination of benefits, missing authorization, missing referrals, or ineligible patients. "We could begin to identify areas where we could educate and do a better job," says Mastalski. "We found that one of the greatest error areas was for authorizations on outpatient testing."

For this reason, the second Six Sigma project focused on outpatient services. Staff use a standardized process to obtain pre-certification prior to services being rendered. "This project, along with the rigor of the first project, helped us to further reduce our denials to our current rate of below 2.5%," says Mastalski. "Working together with patient accounting and identifying areas where we could prevent denials was beneficial to all."

Patient access departments aren't always closely aligned with patient accounting departments. In this case, "patient access may not know that there are denials," says Mastalski. "Even if they are aligned, if the patient access department does not understand the errors causing the denials, improvement would be difficult."

To get these two departments to work together more closely, the patient accounting staff went out to the registration areas and watched the process firsthand. "This helped the accounting staff better understand the 'front end,'" says Mastalski. Likewise, the registration staff observed the steps taken to correct errors, giving them a better understanding of the "back end."

Each patient access manager reviews administrative denial reports on the errors for their area, then shares the information with staff. If the managers note any trends, additional education is given as necessary.

Recently, Mastalski identified a problem area involving coordination of benefits. The patient access training team put together a PowerPoint presentation on choosing the correct insurance payer order.

The trainers also covered what to do when the insurance verification tool's response comes back as "patient not identified" or "patient not eligible." "As trends are identified based on the results of the monthly administrative denial report, additional education will be performed," says Mastalski.

[For more information, contact:

Diane E. Mastalski, CHAA, CHAM, Director of Patient Access, Virtua Healthcare System, Marlton, NJ. Phone: (856) 355-2155. E-mail:]