Don't be in Denial about Denials

C. Matheson, RHIA, CCS Medical Coding Leave a Comment

The pace of change, consolidation, and ever-increasing pressure on revenue and financial stability in the healthcare industry is enough to make our heads spin on a daily basis.  Couple that with the onslaught of government and commercial payer audits and denials, it’s no wonder healthcare organizations are in denial about the state their denials.  Feeling overwhelmed and inundated with payer audit requests and denial management?  Feeling like ‘David versus Goliath’ in the battle to keep your facility’s hard earned revenue dollars?  You are not alone.  This article will discuss trends in the healthcare industry with the sky-rocketing focus on audits and denials; and offer tips on how to track, trend, and root-cause your audit and denial data.  And lastly, how to swing the pendulum from denial management to denial prevention.

Data, Data, Data, It’s All about the Data:

Peter Drucker, famous for his books and thoughts on modern business management was known for his quote, “If you can’t measure it, you can’t manage or improve it.”  This logic can be applied to all lines of business and industry.  However, this quote is highly appropriate for today’s healthcare landscape and the increased regulatory pressure and financial scrutiny organizations are under.  Healthcare organizations should have a developed list of Key Performance Indicators (KPIs) that are tracked and monitored on a frequent and regular basis and measured against a defined goal.  Revenue cycle data elements such as overall denial rate, denials by payer, denials by reason code, denials by physician or department, and clean claim rate can really help peel back the layers when working toward root cause research and performance improvement.  Facilities should segment their issues and root cause research into categories: people, process, or technology.  As each of these areas require different and unique actions when applying fixes and correction.  Efficiencies can be gained by categorizing and implementing solutions on common issues.  Clearly structured denial data is beneficial for training and education, as well, as payer contract negotiations.  It is important for organizations to make sure they are tracking and capturing the data that is going to have the most impact, make the most sense, and will allow for actionable results.  Don’t get caught in the trap of measuring too many data elements where actions or improvement measures get stagnant or bogged down.


It’s important to know and understand the types of reviews that payers are conducting.  According to the Medicare Integrity Program Manual there are several types of claim reviews: Automated, Non-Medical Record Reviews, or Complex Medical Record Reviews.  Automated reviews occur the most frequently, since this can be done without requesting the medical record.  These types of reviews commonly lead to denials are done solely based on the claim data from the Medicare Code Editor (MCE) or National Correct Coding Initiative Edits (NCCI).   Automated denials can catch “low hanging fruit” for payers.  Errors like duplicate codes, discharge disposition, unacceptable principal diagnosis, modifier edits, CPT code edits, age/gender edits, or national and local coverage determination denials.  Complex Medical Record Reviews require the patient’s medical record in order for the reviewer to uphold or deny the claim.  These are commonly DRG or Clinical Validation reviews where denials are frequently based on lack of documentation for medical necessity, coding accuracy issues with complying with Official Coding Guidelines or Coding Clinic, or insufficient documentation.   Denials for insufficient documentation can certainly occur if you have a disconnect with your Release of Information staff with not sending enough or the correct information to support the coding.   Healthcare organizations can be successful in reducing denials by having a coder involved in the review of the payer or third party audit request before records are disseminated to the requestor.  Coders can play valuable role in this part of the process.  With their technical background and expertise in reviewing health information, a coder can easily weigh in on audit requests and determine if proper and sufficient documentation is being provided that supports the request.

Swing the Pendulum: Denial Management to Denial Prevention:

There are numerous proactive measures organizations can take to swing the pendulum from reactive denial management to more proactive measures, and these will go a long way in denial prevention.

  • Tracking and trending payer audit data. This is important to know what payers are focusing on how facilities may be at risk.
  • Develop KPIs, analyze, and report your data. Measure what will matter the most and where actionable results can be achieved.
  • Link trends from payer audits and denials with routine and regular coding audits. Problem focused coding audits are beneficial to evaluate if there are coding or documentation issues with high risk cases. Organizations should also regularly review their PEPPER data, OIG work plan, and RAC or MAC websites.  Stay abreast of audit trends and know what payers are looking at and adjust internal coding reviews as necessary.
  • Prebill DRG validation reviews of high risk or high denial areas. Prebill reviews can play a vital role in denial prevention.  For organizations that have trended denial data, this should be incorporated into prebill reviews of those high risk areas to catch and correct any coding or unclear documentation issues before the case is billed.
  • Conduct regular Physician, Coder, and CDI education. Coding clinic guidance is disseminated quarterly, facilities should not wait six months or a year to educate staff on new rules.
  • Strong concurrent and retrospective query process to clarify incomplete, ambiguous, or conflicting documentation.
  • When necessary, have a coder review medical record audit requests before the information is disseminated to the requestor. A review through a technical-lens with a coder’s background and skillset can help ensure the proper information is being supplied to support the coding and billing.
  • Review all denials and determine if the cases are appealable.
  • Know the appeal timeframes and involve pertinent staff on appeals. Utilize a clinical team or physician advisor for clinical denials.  Clinical denials are increasing at a rapid pace and are often difficult to appeal.  Organizations should work with CDI and Medical Staff to ensure strong clinical guidelines are in place for diagnoses that are trended and linked to higher denials.  Guidelines should be supported by clinical evidence and the medical record documentation.
  • Communicate immediately with coders, physicians, and CDI staff on DRG changes from denials. Timely education and feedback will help reduce and eliminate future denials.

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