Denial Management

My Background

• My connection to coding and documentation

• My connection to clinical processes

• My connection to ICD-10

• My connection to YOU

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Disclaimer
The information provided within this presentation is for
educational purposes only and is not intended to be
considered legal advice. Opinions and commentary are
solely the opinion of the speaker. Many variables affect
coding decisions and any response to the limited
information provided in a question is intended to provide
general information only. All coding must be considered on
a case-by-case basis and must be supported by appropriate
documentation, medical necessity, hospital bylaws, state
regulations, etc. The CPT codes that are utilized in coding
are produced and copyrighted by the American Medical
Association (AMA).

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Objectives

• Best approach to resolving denials

• Define complex versus common denial
• Discuss contractual and non-contractual
adjustments
• Best practice for keeping aged accounts
receivable in an acceptable range

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Definition of a Denial

• The refusal of an insurance company to honor a

request to pay a claim for services

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Interesting Facts:
• Denial rates in a medical practice average 5-10%
• Among providers, 1 in 5 claims has to be re-worked or
appealed
• Re-working a claim costs $15.00 per claim on average
• Reducing denials by 1-2% can have a positive financial
impact on the practice
• Goal is ≤ 5% claim denial rate to maximize
reimbursement
• AMA says practices spend $15,000 on calls,
investigative work, & appeals associated with re-
working claims

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Polling Question

• Do you calculate your denial percentage?

• Yes
• No

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Managing Denials
• 2/3 of denials are recoverable
• 90% of denials are preventable with better
processes
• Challenges and barriers to denial management
include:
• Inability to track denial statistics
• Too many manual processes; not using technology when
possible
• Continuing to repeat avoidable denials
• Appeals using resource intense processes

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Denial Prevention Steps

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Step #1 – Develop a Denial Culture

• Stress a culture of denial prevention

• Assemble your denial prevention team

• Have each team member assess skill sets of staff –

identify gaps

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Step #2 – Denial Rate Calculation
• Calculate your denial rate
A. Total claims filed to a payor (number of claims and total charge
amount)
B. Get the number and total dollar (charge) of denied line items
C. Calculate your denial percentage by
B divided by A
• Calculate this percentage by:
• Practice as a whole
• By Payor
• By Specialty
• Location if you have more than one office

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Step #3 – Identify Specific Denials
• Identify the reasons for denials and categorize
them into main “buckets”
• Registration errors
• Charge entry errors
• Referrals and pre-authorizations
• Information needed from the patient
• Duplicate claims
• Medical necessity
• Documentation errors
• Bundled/ non-covered services
• Credentialing issues
• Other

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Polling Question

• Are your top denials due to:

• Registration errors
• Medical necessity
• No pre-authorization
• Duplicate claim
• Unsure

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Identifying Denials
• There is a standard list of CARC and RARC codes
that are appended to the remittance that will
define the reason for the denial

• CARC – Claim Adjustment Reason Codes

• RARC – Remittance Advice Remark Codes

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Identifying Denials Resource

• http://www.wpc-edi.com/reference/

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Step #4 – Divide by Category
• Within each category, define Common and Complex
denials and who will be responsible for working each
type.
• Common denials- cannot be corrected
• Timely filing
• Provider not credentialed
• Service not covered by patients’ plan
• Service already adjudicated
• Complex denials- have potential for correction and payment
• Missing information- demographics, modifier, CLIA number, wrong
CPT
• Medical necessity
• Insufficient documentation
• Prior-authorization
• Coding issue

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Step #5 – Root Cause
• Once root cause analysis is complete provide
subsequent education.
• Example: registration errors are occurring at all 3 of
your office locations

Denial Location A Location B Location C

Registration 4% 12% 27%

Errors

• Focus training, education, and corrective action plan to

improve registration errors

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Root Cause Analysis
• Once a claim has been determined to be truly
denied, decide if it can be appealed.

• Ask 3 questions:
1. Does the denied charge need to be written off?
• If yes, use the correct adjustment code
2. Can the denied claim be corrected and re-submitted?
3. Does the charge need to be appealed?
• Practice will need to show proof or build a case for payment

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Step #6 – Resolve the Denial

• Assign appropriate staff and by staff expertise to

denial resolution
• Coders
• Medical records staff or front office
• Providers
• Billers

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Resolving Denials

• Registration Denials - A Common Denial

• Review the patient account for inaccurate information
• Contact the patient
• Bill the patient if all else fails
• Refer to collections
• Write off the balance

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Resolving Denials
• Duplicate Claims
• Sometimes there are special circumstances causing
duplicate claims. Watch for:
• The procedure performed more than once on that
patient on the same date of service.
• The procedure was performed by more than one
physician on the same patient same day with same tax
ID number
• Payor system does not read your modifier in their
adjudication system

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Resolving Denials
• Claim lacks information needed for adjudication
• Could be due to missing information on your claim
• Could be payor is waiting for information from the
patient
• Information requested was not received timely
• Denied due to failure to provide requested information
to another payor
• Attachment received, but still lacks information
• Attachment received was incorrect information

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Resolving Denials
• Lacks Medical Necessity
• Refer to payor policies to help resolve the denial
• Diagnosis inconsistent with the procedure
• Procedure/treatment is deemed experimental by the
payor
• Procedure or treatment has not been proven to be
effective by the payor
• Review the medical record for a different diagnosis
documented
• Discuss the denial with the provider. If they disagree
with the denial, gather information and data to support
an appeal

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Resolving Denials
• Coding related
• Some coding denials are common like global,
modifiers, units, and bundling
• Others are more complex
• Review the medical record – if not coded correctly,
correct and resubmit
• If coding was correct, determine if an appeal is
appropriate

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Resolving Denials

• Coordination of benefits
• The birthday rule
• Active employment
• Dependent
• Injury

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Resolving Denials
• Referrals and authorizations
• Make sure the practice is up to date on all payors
requirements for referrals and pre-authorizations.
• Check to see if referral or auth was done
• If yes, ensure it is correct and in the right field on the
claim form
• If not, verify with referral coordinator if done or not. If
yes, re-submit claim
• See if a retro-active auth or referral is acceptable
• If none applies, the service must be written off

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Resolving Denials

• Credentialing
• Review the status of the application with the payor
• Figure out how to bill for a provider while waiting
credentialing status

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Tips

• Know your payors reimbursement policies

• Develop “experts” among your denial

management/billing staff

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Tips
• Optimize claim management using claims management
software
• Ensure front end eligibility and verification of benefits –
batch method
• Write rules to catch potential claim edits prior to submission
to ensure clean claim submission – claim scrubber
• Program flags to alert billers of potential denials forcing staff
to review the claim prior to submission
• Customize rules in the system by payor according to specific
payor rules to avoid denials
• Have your software solution automatically update codes and
requirements
• Create work queues to send specific denials to appropriate
staff to resolve

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Tips
• Educate payment posters about appropriate write-
offs
• The tendency may be to write off a denial without
investigating
• All zero pay denials need to be assessed before writing
off
• Payment posters need to understand the difference of:
• Contractual adjustments
• Non-contractual adjustments
• Write offs should be assigned an adjustment code for
that write off. Assign specific reason codes for zero pay
adjustments so they can be monitored and addressed

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Tips

• When all else fails: APPEAL the claims

• Each third party payor has their own process for
appealing claims
• Urgent review
• Level 1 appeal
• Level 2 appeal
• Level 3

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Tips
• Appeal Process – there is a right way and a wrong
way to appeal
• Wrong way –
• Re-submit claims without explaining why it should be
reconsidered for payment
• Right way –
• Send a formal letter of appeal.
• Attach specific documentation to support your reasons why the
claim should be paid. Be succinct and clear in stating your case
• Use the specific wording from the payors written or electronic
publications to support your argument

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Tips
• When to escalate denials or other payor issues
• Sometimes payors appeals process is not effective
• Elevate conversation with Claims office of the contracted
payor
• Systematically move up the chain to:
• Provider relations
• Contract office
• Nurse manager
• Medical Director
• State Insurance Commissioner
• State Attorney General/ State senators and
representatives

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 Tips
Schedule Schedule routine meetings with top
payors.

Arrange Become familiar with payor websites and

policies. Attend educational sessions,
listen to webinar, get on list serve, etc.

Raise Raise issues that are problematic with the

payor.

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Managing Aged Accounts Receivable
• Following up on aged accounts should also be
incorporated into the denial process
• Unpaid claims over 45 days should be investigated.
Most states have prompt pay legislation to pay
clean claims in 30 days.
• Claims paid incorrectly- payor might adjudicate but
not the contracted fee.
• Denied claims will appear as unpaid on this report
• Claims unpaid and residing in limbo

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General Benchmarks for A/R
Days in A/R Percentage in A/R

0-30 56.32%

31-60 11.01%

61-90 7.43%

91-120 4.96%

120+ 17.52%

Adjusted FFS charges A/R 2.0 months

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Cost of Re-Work
• The cost of a denial is based on the nature of the
denial.
• Rework costs include:
• Employee time
• Supplies
• Lost interest
• Overhead
• It is estimated to be approximately $15.00 per claim
• Multiply number of denials X $15.00 per denial = Total
Re-work cost
• Typically 75% of denials are eventually paid: 25% are
written off

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Polling Question

• Will you take what you have learned today and

begin managing denials in a more systematic way?
• Yes
• No
• Not sure

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Coding & Compliance Initiatives,
39
Inc.
Contact
• Shellie Sulzberger, LPN, CPC, ICDCT-CM

• 913-768-1212

• ssulzberger@ccipro.net

• www.ccipro.net

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About CCI

• CCI assists our clients improve their documentation

quality, coding and billing accuracy, and compliance
with health care regulations www.ccipro.net

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41
Inc.
 Shellie Sulzberger, LPN, CPC, ICDCT-CM
Ms. Sulzberger is a Licensed Practical Nurse, Certified Professional
Coder and ICD-10 Trainer. She received her Bachelors of Science
degree in Business Administration from Mid America Nazarene
University. Ms. Sulzberger received her nursing license in 1994 and
was a practicing clinician at Saint Luke’s Health System for several
years before transferring to the internal compliance/audit area. She
became credentialed as a Certified Professional Coder in 1996 and
assisted the Saint Luke’s Health System with performing medical
record chart audits to verify the accuracy of the internal coding and
claims processing.

Ms. Sulzberger spent approximately six years as a coding/billing

consultant with National accounting and consulting firms (BKD, Grant
Contact Info: Thornton) before becoming the President of Coding & Compliance
Tel: 913-768-1212 Initiatives, Inc. (CCI) in April 2003. Ms. Sulzberger assists her clients
with improving their operational performance in a variety of critical
Or email outcome areas, including coding/billing, corporate compliance,
ssulzberger@ccipro.net charge capture processes, etc. Ms. Sulzberger works with a variety of
www.ccipro.com health care providers including hospitals, physician practices, and
rural health clinics in their daily compliance and operational activities.

Ms. Sulzberger presents locally and nationally on coding topics as well

as developing specialized training programs to meet the needs of her
clients. Shellie recently was credentialed through American Institute
of Healthcare Compliance as a Certified ICD-10 Trainer.
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