Winning Against Claims Denials in Medical Billing

“Denials management” conjures up several ideas: a software we should be using, a term we espouse in meetings, something to put on our resume, and something we’re supposed to be managing. But are you doing denial management effectively? How do you define “effective?” And how can you reduce claims denials in any meaningful way?

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What is Denial Management?

The term “denials management” came into favor as billing systems garnered more horsepower—we suddenly had the benefit of real-time views of our billing offices with the ability to see denials now—rather than a month after we posted them. We suddenly had useful information at our fingertips but at times, have struggled with what to do with this information.

As an industry, we have had a somewhat difficult time in defining benchmarks for what is an acceptable denial rate. Comparing a primary care office with a radiology practice holds little value—a primary care practice should have fewer denials since they control the information from the time the patient enters the practice. Hospital-based specialties, on the other hand, are at the mercy of whomever sends them the information which can run the gamut of “not bad” to “did you actually see this patient?!”

The trick in defining the problem has gotten much easier, thanks to sophisticated billing software. But the solution still lies in managing the people and the processes. When pinning down a manager with their denial management program, it’s not unusual to hear about their appeal letters. That is indeed part of the solution, but you can (and should) do much more.

How to Improve Denial Management

When setting goals for how to improve denial management, strive to achieve these goals:

  • Reduce denials
    • There is much that has assisted this effort with both billing software and the use of value-added clearinghouses. They both trigger alerts that your claim is stuck for a needed piece of information. This has greatly reduced the back-end denials seen in A/R follow-up and payment posting.
    • Root cause correction -- forming a task force with the hospital, for instance, to reduce prior authorization denials or create a team with your billing office and imaging center employees to modify processes to reduce eligibility denials.
  • Improve follow-up processes
    • Employ purpose follow-up
    • Work for efficiency gains
  • Identify compliance risks
  • Improve profitability

List of Denial Codes in Medical Billing

The above goals have the mission-critical task of defining the problem. But when you run your denials report, you may be met with a list of denial codes in medical billing referred to as “ANSI codes.” These codes refer to many the same thing using different terms. While it’s nice to have the specific reason straight from the horse’s mouth, it’s not the best for managing the process. Specific? Yes. Efficient? No. More on that in a minute… If you comb through ANSI codes, you can find these fun ways to define a “duplicate” denial:
  • 18: Duplicate claim/service
  • 23: Payment adjusted because charges have been paid by another payer (may not look like a duplicate denial, but it is.)
  • 57: Payment denied/reduced because the payer deems the information submitted does not support this level of service may have been provided in a previous payment
  • B13: Previously paid. Payment for this claim/service may have been provided in a previous payment

...and duplicates are an easy one. just wait until you see all of the ways to decipher coding denials.

Medicare Claim Denial Reasons

To get a handle on Medicare claim denials reasons, think of your denials as falling into two general classifications: compliance or administrative, followed by your “grouping” categories. If you are an Imagine user, you can map your ANSI codes to either one of these categories, where you can begin to actually “manage” your denials.

    Compliance denials are those that put the practice at risk, either for direct compliance problems or as claims submissions that could be perceived as compliance problems by Medicare—and in that case, perception is reality. Compliance denials include the following categories:

  • Coding (including bundling/unbundling)
  • Medical necessity
  • Duplicate claims (Medicare considers “excessive” duplicates as a compliance trigger. While they have unhelpfully not defined “excessive”, use caution when auto-rebilling claims. It would be best to turn off that feature for Medicare patients.)

  • Administrative denials are where you can really make a difference for your practice—these are usually due to process errors or omissions and are theoretically preventable, although hospital-based practices must do extra leg work in partnership with their hospitals to truly prevent these.

  • Eligibility
  • Missing/incorrect information
  • Prior authorization
  • Timely filing
  • Non-covered service
  • Denied-no reason given

What Are Some Possible Solutions to a Denied Claim?

Using the grouping feature makes denials truly easier to manage. For instance, you can turn your coder loose in the denials tickler by filtering all the coding denials and working through them without other denials getting in the way. It can also help with manual payment posting for the EOBs that do not specifically list the ANSI code and just give a generic denial—they do not have to search for an applicable ANSI code to post the payment.

Now once you have a handle on your denials, it is easier to begin the work of managing them. Root cause identification can lead you to physician dictation issues, a problem of referring physician not giving complete orders, an ineffective coder and hang-ups in the system getting claims out the door, to name a few. Use of Business Intelligence software can also help to drill down your coding category or timely filing—is one facility creating timely filing violations?

The process of managing your denials is doable and necessary. Effective denials management include smart system set-up, defining the problem, addressing root causes and yes…sending out appeal letters. There are nuances to each denial category and many more pages that could be written about the actual processes involved in successful appeals, but once you have defined the problem, you are halfway there.


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