Friday, February 25, 2011

Planning denial management

Denial mangement is not a one-time event. It should be iterative and continuous.

Revenue collection at both the patient encounter and aggregate level should be established as key performance indicators for the entire organization, as opposed to individual departments only. After all, the modern health care cycle must be managed start to finish and include all administrative and clinical functions that lead to the presentation of claims for payment if revenue collection goals are to be met.

Plan, Do, Measure, and Adjust Steps of Denial Management

Aligning actual revenue collection with predicted revenue cannot be a one-time event. It needs to be an iterative and continuous process with the ultimate goal of guiding the provider's clinical and business course in the desired direction to support its mission.
It is safe to say that all providers are already involved in revenue prediction through the selection of revenue write-off percentages for specific accounting periods. But this is a clear case of passive management; it does little to explain variances and tends to "institutionalize" average historical write-off percentages.

Denial management technology introduces active management into the process of predicting revenue collection in several ways. Predicting revenues should be a continuous process, and this paper looks at effective steps to implement a focused denial management initiative.

Planning begins with the analysis of denial history using a range of denial cause factors (denial code, payer, physician, procedure, and service). Payers communicate denials through electronic remittance advice (ERAs), or they may be taken off paper remittance advises and entered into the denial management application. Either way, the provider must build planning on the thorough understanding of the denial causes experienced.

The "plan" step addresses both proactive and reactive procedures. Reactive activities focus on appeal tracking, and are set in motion when a denial occurs. Proactive activities are implemented through business rules that combine monitoring of known denial causes and appropriate prevention workflows or actions that avoid denials in the first place.

It is important to work with solution providers that have experience integrating the full range of health care data sources so that automated data gathering can be used wherever possible. The health care landscape is constantly changing and providers should look for adaptive denial management applications that quickly react to payer creativity resulting in new types of denials.

The whole point of denial management is to execute activities that increase the provider's ability to predict revenue collection. These efforts should focus on improving two operational metrics: overturn rate and denial rate.

Overturn rate improvement is realized through better reactive processes that define and monitor milestones and due dates, as well as enable more efficient interdepartmental collaboration to generate information needed to respond to both clinical and technical denials. This is accomplished by automating manual work to reduce delays, errors, and oversights and by not letting appeal tasks fall through the cracks. Providers should seek out solutions that deliver prioritized task lists with highly flexible prioritization, distribution, and security features.

Denial rate improvement comes from proactive processes that detect patient encounter problems during pre-certification, concurrent reviews, coding, and so on. The denial management system needs to accurately detect the condition and apply predetermined rules in a timely manner to correct it. The measurement step (see below) is critical to the timeliness of proactive management. Health care providers should select solutions built on the latest Web-based architecture in order to benefit from rapid detection, collaboration, and prevention activities that affect denial rate in a positive manner.

Measure refers to "in-process" measurements that capture, compare, and document the characteristics of a specific patient encounter (including payment) against known "at-risk" revenue cycle conditions. These characteristics trigger and execute workflows to provide unique management attention or extraordinary processing.

Measurement effectiveness depends not only on detecting conditions of interest, but also on delivering analytic functionality that is targeted at specific business needs via key performance indicators, snapshots, dynamic reporting, and real-time analytics. Providers should make sure to engage solution vendors that use current information technologies so that automation can be used, when appropriate, and collaboration functionality can be fully leveraged.

Adjustments should be thought of as fine-tuning the plan, and not the execution of predetermined workflows. Adjustments to the plan should be based on performance against established metrics, and the provider's evolving understanding of controllable factors that drive predicted revenue collection.

In order to perform the Plan, Do, Measure, and Adjust steps efficiently and realize maximum benefit from an active denial management program, providers should look for the following solution features from their denial management software provider:

o    Business intelligence that includes decision support, query and reporting, OLAP, statistical analysis, forecasting, and data mining.
o    Workflow and milestone configuration ease through icon-driven graphic user interfaces, full language statements, and automatic condition recognition.
o    Rules libraries that help the user create rules once for multiple deployments that prevent, cause, or suggest things to happen.

Measuring actual health care revenue collection against actively managed revenue prediction is a powerful metric that stands to help providers achieve necessary margins to sustain their critical health care missions. Fundamental to useful revenue collection prediction is thorough understanding and management of reimbursement contracts, payer procedures, and claim denials.

Denial management is the last mile in the health care revenue cycle where end-to-end patient encounters include all administrative and clinical functions that lead up to capture and presentation of claims for payment. Denials represent the state of highest financial exposure, since all costs have been incurred and payment is still outstanding.

Providers should actively introduce both reactive and proactive processes to improve the overturn and denial rates, respectively, and meet predicted revenue collection. Providers can achieve the highest active management capability by selecting a denial management application built on the latest technologies, allowing them to adapt to payer denial strategies in increasingly shorter time frames and to gauge their performance using powerful predicted revenue collection metrics.

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