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Friday, July 2, 2010

Hospital Denials - review

Today, as hospitals face tremendous reimbursement challenges, many facilities are adopting best
practices in denials management. This approach helps to recapture the full value of the services they
provide to patients.

Most hospitals recognize that resubmitting a claim does not solve their claims denial problems and are
seeking to quantify the issue to improve overall claim payments. With this goal in mind, more and more
hospitals are forming denial recovery units, maintaining denials databases for tracking and trending
purposes, automating where possible, and centralizing operations to increase efficiency and decrease
error rates.

The Medicare Hospital Outpatient Prospective Payment System (PPS) created under the Balanced Budget
Act of 1997 has increased pressure on hospitals to bill accurately for outpatient hospital services. Under
PPS, the Medicare payment methodology was changed first from a cost-to-charge ratio structure to a
prospective payment system for services based on historical claims data per Current Procedure
Technology (CPT) or the Healthcare Common Procedure Coding System (HCPCS). This change represents
a dramatic shift in the billing process for hospitals, as the majority of these codes are generated through
the charge description master, rather than through the health information management department. This
transfer in coding responsibility without commensurate training, support, and monitoring of staff
involved is perhaps the greatest cause of service-level denials for outpatient claims today.

In addition, hospitals may be confronted with additional payment cuts, estimated at $21 billion over the
next 5 years, if Congress does not enact legislative changes to correct the existing payment structure.
To remain viable in this challenging environment, hospitals must take a closer look at the claims denial
issues they face internally.

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