1 Denials Management April 2017

2 - Proprietary and Confidential -Presenters Peter Angerhofer Peter is a principal at Colburn Hill Group; he brings experience in operations, strategy and health policy to both daily operations as well as long- term vision. Jeff Means Jeff is a principal with Colburn Hill Group, and works in product development as well as operational consulting. He has designed, supervised the development and launch of several successful technologies. - Proprietary and Confidential -

3 - Proprietary and Confidential -What we will cover Identify the common problems faced by efforts to improve Denials Management Provide Key Metrics and Benchmarks Review Best Practice Denials Management processes - Proprietary and Confidential -

4 - Proprietary and Confidential -Introduction Denials represent the largest category of avoidable financial leakage for most health systems (2% - 6% of NPSR) There are countless tools, vendors, and programs available … yet the problem persists At best, most Denials programs keep lost revenue from increasing when they should be driving steady improvements over time - Proprietary and Confidential -

5 Common Problems with Denials ManagementDenials come in many shapes and sizes The goal posts keep moving Most analytical tools are inadequate Most Denials programs are under-resourced This presentation suggests a structured approach to solving the problem - Proprietary and Confidential -

6 - Proprietary and Confidential -Key Metrics Initial Denials Denials Write Offs Denials in Active Accounts Receivable These metrics need to be considered holistically and in context of one another. Systems to track performance at this level can be costly, but are essential to driving systematic improvements. - Proprietary and Confidential -

7 - Proprietary and Confidential -Initial Denials Definition: Remittances from payers that indicate lack of payment for service(s) – usually in the form of an ERA (835) or paper remittance advice 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐷𝑒𝑛𝑖𝑎𝑙 𝑅𝑎𝑡𝑒 = 𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐𝑙𝑎𝑖𝑚𝑠 𝑟𝑒𝑚𝑖𝑡𝑡𝑒𝑑 𝑤𝑖𝑡ℎ 𝑎𝑡 𝑙𝑒𝑎𝑠𝑡 1 𝑑𝑒𝑛𝑖𝑎𝑙 𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 𝑐𝑙𝑎𝑖𝑚𝑠 𝑟𝑒𝑚𝑖𝑡𝑠 PROs Timely feedback Process focus CONs Difficult to calculate Payer anomalies - Proprietary and Confidential -

8 Initial Denials – Example ScorecardEnsure common definition of denial categories Aggregate enough history to show relevant trends Summarize in a format that enables benchmarking - Proprietary and Confidential -

9 - Proprietary and Confidential -Write Off Adjustments Definition: Amount ($) adjusted to transaction codes mapped to “denials” on the general ledger 𝑊𝑟𝑖𝑡𝑒 𝑂𝑓𝑓 𝑅𝑎𝑡𝑒 = 𝑠𝑢𝑚 𝑜𝑓 𝑎𝑑𝑗𝑢𝑠𝑡𝑚𝑒𝑛𝑡𝑠 ($) 𝑁𝑃𝑆𝑅 ($) PROs Measure of actual loss Financial focus CONs Variable use of codes Significantly lagging indicator - Proprietary and Confidential -

10 Denial Write Offs – Example ScorecardMeasures how current the write offs are Compare the trend in Amount written off and Age for context - Proprietary and Confidential -

11 - Proprietary and Confidential -Active AR with Denials Definition: Amount ($) of Active AR that has been initially denied 𝐴𝑐𝑡𝑖𝑣𝑒 𝐴𝑅 𝑤𝑖𝑡ℎ 𝐷𝑒𝑛𝑖𝑎𝑙𝑠 = 𝐴𝑅 𝑤𝑖𝑡ℎ 𝑎𝑛 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐷𝑒𝑛𝑖𝑎𝑙 𝐴𝑅 PROs Indicator of future risk Financial focus CONs Difficult to measure Requires workflow system - Proprietary and Confidential -

12 Denial Write Offs – Example ScorecardCritical Age Group for Follow Up Most “At Risk” Age Group - Proprietary and Confidential -

13 Key Elements of an Effective ProgramOrganizational Commitment Cross-Functional Team Dual Approach Denials Recovery Denials Prevention Measurement System Disciplined Project Management Process - Proprietary and Confidential -

14 Organizational CommitmentOrganization-wide goals around reducing inefficiencies and leakage from Denials Communication across administrative and clinical chains of command Realistic expectation of time and resources required to make improvements Health system leaders should include regular denials management updates in their organizational updates / financial performance communications - Proprietary and Confidential -

15 Cross-Functional TeamRepresentation Across Revenue Cycle Areas: Patient Access Patient Accounts HIM / Coding Revenue Integrity Case Management / Utilization Review Physician Advisor Clinical Denials Appeals Lead Most persistent and difficult denials issues require teamwork across departments to fully understand and drive sustained changed performance - Proprietary and Confidential -

16 - Proprietary and Confidential -Dual Approach Denials Recovery Denials Prevention Effective Insurance Follow Up Processes in Patient Accounts Dedicated / Skilled Clinical Appeal Team Escalation Process KPIs: Recovery Rate Denials in AR Turn-around Time Process Engineers Dedicated time and resources to perform process improvement initiatives Cross-functional collaboration KPIs: Initial Denials Process Metrics - Proprietary and Confidential -

17 Denials Prevention ProcessBenchmark Root Cause Engineer Implement Systematically measure performance to highlight problem areas Drill-to-detail to understand specific upstream defects Rewrite processes to reduce defects before they happen Implement changes in the organization Measurement & Data Analysis Process Engineering & Change Control Proprietary & Confidential

18 Denial Prevention ExampleProblem: No Auth denials in Radiology due to Authorized Procedure is not the same as the Billed Procedure Root Cause: Radiology technicians read an order differently than financial clearance agents Solution: Develop common understanding of orders Regular reviews between radiology and financial clearance Feedback to most affected physicians - Proprietary and Confidential -

19 Denials Team Meeting AgendaMetrics Review Review of Follow Up Actions from Previous Meeting Updates from Functional Areas Retrospective Case Reviews Summarize New Follow Up Actions

20 - Proprietary and Confidential -Conclusion The problem of Denials is common, across systems of all sizes and specialties, and there are a number of approaches to dealing with Denials. A Denials Management program needs to start by: Quantifying your current performance level; Estimating the value of achieving benchmark performance; and Prioritizing your opportunity areas. - Proprietary and Confidential -

21 For more information on DenialsPlease visit the Business Intelligence (BI) Denials Management Demonstration Portal available for your use at For additional information, feel free contact CHG at - Proprietary and Confidential -