Wayne Gretzky was right: You miss 100% of the shots you don’t take

“Insurance companies are playing the odds, patient advocates say. They’re counting on people not having the stamina to challenge every denied claim, even when there’s a valid medical reason for a drug or treatment being covered,” according to the Los Angeles Times.

A critical accusation or statement of fact? But if it is true, who is really to blame?

After all, up to one-quarter of claims are denied, according to a 2011 Government Accountability Office (GAO) study. Meanwhile, the U.S. Department of Labor puts that number at about one claim in seven made under the employer health plans or – about 200 million claims per year.

But the same study by the GAO found that a relatively small percentage of denied claims were ever challenged. And about half of the claims challenged ended up being reversed.

Overwhelmed by the time, resources and money it takes to appeal denials, many health organizations choose to raise the white flag and surrender rather than fight.

But to quote Wayne Gretzky, “You miss 100 percent of the shots you don’t take.”

Delays and denials

Delays and denials are one of the most frustrating aspects of the healthcare system. Patients frequently feel at the mercy of an unspoken conflict between payers and providers. The insurance industry insists that denials result from a rigorous process of evaluating the medical soundness of prescribed drugs or treatments. This is certainly laudable and commendable. Healthcare fraud is an estimated three to 10 percent of total healthcare expenditures, according to the FBI.

In fact, healthcare fraud was between $77 billion and $259 billion according to the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services data for 2010. That’s part of the reason why $262B in healthcare claims were initially denied in 2016.

Understandably, providers are focused on the treatment of their patients, rather than navigating through the byzantine utilization review, claims, and appeals processes.

Is it is a necessary evil? A part of doing business?

There has to be a better way

The same GAO report also said many denials can be traced to billing errors or missing information. Something as simple as a transposed date of birth can trigger a denial.

A comprehensive strategy for dealing with denials can save you both frustration and money. A foundational element for a denial strategy is to start by identifying the most common causes for denials – you can’t prevent avoidable denials if you do not know what to look for.

90 percent of claim denials are preventable

As frustrating as denials are, most are avoidable with some focus and rigor. The Advisory Board reported in 2014 that 90 percent of claim denials are avoidable and the most common claim denial reasons prove that.

Here are a few of the most common denials:

  • Incorrect or missing patient identifier information

A full 30-40 percent of denials are due to registration errors. Even many “automated solutions” still generate over 30-40 percent payment exceptions.

Some of the most common mistakes that can cause a claim to be denied are due to incorrect patient identifier information. Typos as simple as the date of birth 08/11/1963 transposed as 11/08/1963 can result in a delay or a denial.

The most common mistakes that lead to denials are:

  • The subscriber or patient’s name is misspelled
  • The subscriber number is missing from the claim or it is invalid
  • The subscriber or patient’s date of birth on the claim doesn’t match the date of birth in the health insurance plan’s system
  • The subscriber group number is missing or invalid

As I said, frustrating.

  • Prior authorization or precertification

Like filing deadlines, each insurance organization has their own requirements relative to prior authorization. Typically, payers require prior authorization for surgical procedures, inpatient admissions, and radiology services such as ultrasounds, CTs, and MRIs.

Although the responsibility falls on the physician to obtain prior authorizations, it makes no sense to assume they received the approval. Likewise, it makes no sense to assume that a prior authorization is not required. It is equally confusing that in some instances prior authorization for a biopsy is not needed but the excision of a lesion does require it.

Arrggh. Clearly, it is better to obtain any prior authorization that is needed, as well as some that may be needed. The only way you can win at the prior authorization game is to take a belt and suspenders approach and over-authorize.

  • Request for medical records

When an insurance plan requests a copy of the medical record to adjudicate the claim, it is important to send them as much information as they need. Minimally, you should include:

  • Patient medical history
  • Patient physical reports
  • Physician consultation reports
  • Patient discharge summaries
  • Radiology reports
  • Operative reports

You may be asked for additional information, but by making sure you send at least the basics, you may be able to ward off a ping-pong game of additional requests for information.

  • Non-covered or excluded services

Not every service is covered by insurance. The devil is in the details – or the fine print.  Sometimes the location of the service can mean the difference between getting paid and not getting paid. For example, total hip replacements remain on the inpatient-only list. Patients will have to pay 100 percent for these services including other ancillary services provided on the same date of service, such as and ED visit, X-rays, or other diagnostic and therapeutic services.

No one wants to present a bill for $40,000 to a patient for non-covered charges. That is a guaranteed way to make your Press-Ganey score drop.

  • Late filing

There is not a deadline that has been created that I can’t miss. So believe me, I am not criticizing. And it does not help that every insurance company defines their own deadlines and there are state-mandated deadlines as well.

Be aware of timely filing deadlines for each insurance carrier. From as little as 30 days to one year, you have to stay on your toes to file within the allowable window.

Prevention is the best medicine

Managing denials can seem like a frustrating and unrewarding task, but $262 billion dollars is a lot of money to leave on the table. An organized and effective denial management program should not just address resolving denials but also include some preventive steps.

These steps include:

  • Analyzing your denials

Trend your denials over time. Look for patterns of recurring problems. Slice and dice your data to look for patterns among providers, procedures, diagnoses, reasons, sources, and others.

Once you identify an issue, do a deep dive in the data to be sure you truly understand the root cause of your denials. Classify denials by reason, source, cause, and other distinguishing characteristics.

  • Sharing the knowledge

Although a denial may be seen as often initiating from one department, it does not mean that other departments are not experiencing the same problem. Make sure there is a consistent way to communicate the knowledge gained.

Sometimes it may seem easier and faster to simply correct an inappropriate or incomplete entry. But that does not resolve the root problem, so make sure it is communicated to the originating department as well as shared across disciplines.

  • Considering a “Denial Olympiad“

Gamification can serve as a useful motivator when the results pit individual performance against themselves and not against others. Ensure everyone is appropriately challenged and acknowledged.

Acknowledge those who are exceeding their goals and learn their tips and tricks. But also acknowledge those who are demonstrating improvement. Also, make sure to acknowledge anyone who has contributed by identifying a trend or created a more efficient solution.

With an optimized denial management process, you improve your revenue cycle and ensure you are getting reimbursed for all services rendered, decrease the number of billing days, and improve your workplace at the same time.

And that, my friends, is what Wayne Gretsky, aka the Great One, calls a “hat trick.”

Kate Barney

Kate Barney

Kate Barney, RN, is Hyland's marketing portfolio manager for the healthcare industry.

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