A few months back, we sat down with the rev cycle team from a health system near and dear to our hearts. They were searching for answers to an all-too-familiar scene. Denials had become a drag; a drag on the financial integrity of the organization.
Obviously they aren’t the only ones experiencing the drag. You probably are too. Yep, reimbursement is actually getting harder. ICD10 brought with it at least 124,000 additional codes (source). Wow. Add to that a 10% increase in Self Pay (source), the growing trend of high deductibles, and the increase in value-based contracts. It’s no wonder that hospitals are writing off 90% more claim denials compared to just 6 years ago (source). For a 350 bed hospital, those write-offs cost $3.5 million. That lost revenue doesn’t even account for the $118 per denial rework cost (source).
Ok we need to find some light here! Back to our story. While understandably frustrated, the team was also determined. They understood that, although many market variables contributed to the up-trend in denials, if committed to real change, they could stem the tide and change their future. And changing the future meant seeking prevention, not just improving resolution management.
First, they needed to get real about why (specifically) they were experiencing their own “personal” version of increased denials. If you are curious about how to get real, start by checking out our Denied! post for a roadmap (Step 1 of 3). Anyway, here’s what getting real for them really meant...
- Workflows that didn’t properly account for the aforementioned outside variables, primarily between clinical areas and business areas.
- Visibility to the right insights about the data. Data does not equal insight. Insights are required to affect meaningful change in the priorities of preventative “fixing” and denial resolution activity.
- Teamwork. This one is tough because all the exterior variability often fosters disconnections in groups across the broader team. Without the visibility to insights, it’s difficult for teams to know where to proactively solve for better system results.
Most teams want to fix the problem but are stuck in the day-to-day. As one of my friends in the space used to say, “It’s tough fixing a bicycle while riding it.” Whether you get help or go DIY to achieve your results, there are a handful of resources and tools you’ll need to deploy, with at least some independence from the daily operations...
- Analytics. Achieve visibility. Get insights. Make better decisions. Achieve better results. It’s not all about analytics, but it’s a huge piece. Make sure the analytics you use are specifically designed to drive prevention while improving resolution. You need to get to the root cause to effectively impact both.
- Clinical Team. Denials are not just a rev cycle problem. They are a hospital problem. Effectively leveraging lower cost, but properly qualified clinical business support is of paramount importance. Clinical business resources are uniquely qualified to efficiently and effectively bridge the gap that so often occurs after care and before filing of claims.
- Denials Team. They’re out there. Whether on your payroll, ours, or somewhere else, there are specialists who understand the nuance and changing variability of denials. Including their “in-the-trenches” expertise adds value to identifying root cause, interpreting data, and improving workflows.
- Operational Best Practices. Yeah I know. BP is becoming a four-letter word in many circles. And how can you tap into that if choosing to DIY? Its pretty tough to do. That part will be trial and error unless you get help from people who are already doing it. Whichever path you take, it’s important to start with a framework purpose-designed around the priorities and results you seek. From there, insights from the teams achieved through analytics will help your organization flex and improve the model to achieve your objectives.
- Workflow platform. And achieving those objectives becomes more efficient with a workflow technology specifically built to solve this problem. It’s not in your enterprise system and it’s not something to develop in-house (unless your IT department can code and has free time...didn’t think so).
Carving a path forward would not be easy. Nonetheless, the team committed to make good use of the tools and resources we just peeked into. While not quite a year into their journey, the results are already compelling. They...
- Prevented $52,000,000 in denials
- Achieved a cost reduction impact of $764,000
There’s still much work to be done. But for now, the trend is reversing in favor of the hospital and their community.
For insights on the three steps of an analytics-approach to prevention, check out that post here.
ABOUT THE AUTHOR
With more than 25 years of experience in healthcare accounts receivable management, Mr. Felipe has a proven track record of developing progressive “client-based” solutions and building strong cross-functional teams to implement those solutions and maximize client results. He attended Miami Dade College and is a member of the HFMA and the American Association of Health Administration Management (AAHAM). Mr. Felipe served two terms as president of the Florida Chapter of HFMA and was appointed to HFMA’s National Advisory Council for Revenue Cycle.