Top 4 Ways to Reduce and Manage Medical Necessity Denials

Posted by Advent Health Partners on Aug 22, 2017 1:30:00 PM

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With more insurance and governmental regulations increasingly tightening claims payouts and other changes faced by hospitals and physician offices, good claims management and reducing the potential for denials is more critical than ever, with the average cost of reworking claims estimated at $25 per claim. Here are four key areas to watch for reducing denials while increasing revenues:

Analyze Denial Reports: Look for Patterns

Data analytics, reports the Healthcare Financial Management Association (HFMA) are a facility’s first line of defense in reducing and managing medical necessity denials: until you understand the causes, you can’t solve the problems. Are coding errors, difficulty in meeting submission deadlines or documentation issues at the root of most medical necessity denials? If so, additional training or improved scheduling and time management may be in order for personnel.

Investing in improved coding technology, hiring additional coders or outsourcing coding altogether can provide workable solutions to staff-related reimbursement problems, including minimizing denied claims.

However, if your analysis shows that outdated technology is at fault, it’s time to upgrade or even replace, as out of date systems leave an organization vulnerable to liability issues of cyber safety, as well as causing delays and glitches in billing or coding. Recent incidents of hacking in older systems make keeping up with the latest security updates as well as well as adhering to HIPAA privacy regulations an absolute must.

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While updates were necessary to keep up with the explosion of advances in technology and treatments that didn’t exist when the previous version was introduced, providers need to be careful to correctly expand and modify a claim for reimbursement. Missing or invalid (diagnostic) ICD-10 or CPT (procedure) codes have always been problematic, but with the implementation of ICD-10 things have become more complex, such as adding multiple combination codes in this example:

  • The Injuries category has been expanded in ICD-10 to include a seventh character to identify the type of encounter, such as: A – The initial encounter; D –Indicates a subsequent encounter for a fracture with routine healing; G- Identifies a subsequent encounter for a fracture with delayed healing, and so on.
  • Providing coding staff with updated training is perhaps the best way to ensure that coding errors don’t cause medical necessity denials. Additionally, billing software that is upgraded to incorporate the new codes is a must. If your coders and billers are still struggling with outdated systems, it’s time for a consultation with your software vendor.

Documentation errors and omissions

Without meticulous documentation to support the diagnosis and treatment, even the most accurate coding won’t see reimbursement. Tip: Having a nurse rather than a non-medical person review supporting documents for accuracy and relevance before submitting for payment can prevent incomplete or irrelevant documents from earning medical necessity denials.

Pre-authorization and Authorization

Failure to obtain an authorization prior to the start of treatment, such as for x-rays or certain types of laboratory work, or allowing an authorization to lapse are two common denials, as are authorizations limited to a specified number of treatments, as is often the case in behavioral health claims or chiropractic modalities.

Communication is key in preventing authorization denials: be sure that the billing department is communicating this information to providers and tracking (using the latest billing technology) to ensure that appointments or treatment limits aren’t exceeded.

The Last Word

A trained, experienced billing department partnered with top-level technology will reduce potential denials by meeting claim submission deadlines, maintaining coding and documentation accuracy, tracking authorizations and analyzing reports to identify potential problems before they become expensive headaches.

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Topics: Healthcare Providers, Claim Denials, Medical Necessity, Claim Denial Management