What Is Your Denial Rate and What Are You Doing About It?

By: Kyle Crow, Regional VP of Sales

For hospitals large and small, claim reimbursements and the revenue they generate is the lifeblood that keeps the organization ticking. The process of providing care and then requesting payment for that care should be straightforward, though it rarely is. The reimbursement model in healthcare is so convoluted that many obstacles stand between a hospital sending a claim out the door and receiving payment. These ‘obstacles’ present in the form of denials, which are rejections of payment due to inaccurate documentation within the Electronic Medical Record (EMR). In a field of razor-thin profit margins, managing denials can determine the success of a healthcare organization.

Insurance providers, Medicare and Medicaid are the primary sources of compensation for these claims and have very strict rules on what merits payment and what services they consider medically necessary. For the typical large hospital, anywhere from 5 to 15 percent of claims are denied.

The majority of denials stem from the following issues:

  • Incorrect demographics or insurance information captured at registration

  • Incorrect NDCs/HCPCS codes for medications and procedures

  • Time limit exceeded between discharge and claim submission

  • Duplication of claim submissions

The good news is most of these denials can be avoided if the appropriate steps are taken to manage hospital workflows and their EMR.

So, what can your organization do to address these issues?

For registration issues, ensure all required fields are completed. Provide training to registration staff highlighting common front-end mistakes that can result in denied claims.

For incorrect NDCs and HCPCS codes, perform monthly or quarterly formulary audits with a specific focus on expired and expiring NDCs. Update any new medications with accurate HCPCS and QCF factors based on route of administration and volume.

For recent discharges, document payers’ post-discharge reimbursement time limits. Prioritize claims that have been discharged between 30 to 90 days prior but have not yet been submitted due to waiting on coding, held in scrubber or correction required status.

The ability to understand and manage denials is reliant on access to actionable data. Without the knowledge of how many claims are being denied daily and why, it is impossible to know the severity of an organization’s claim denials issue. Without comprehensive formulary data, a hospital pharmacy cannot properly address NDC and HCPCS medication issues. Managing a hospital’s potential claims where patients have been discharged, but not sent out the door cannot be done without reliable data showing the age and status of the claims.

Softek recently released several controls to help clients address these issues. Our Discharged Not Final Billed control gives hospitals instant visibility into balances that have not been billed, including the hold status and age of the bills. Our Aged Trial Balance control lets administrators drill into the raw details of each bill. Our Formulary Compliance control alerts hospital administrators of key issues in the system, such as missing or incorrect HCPCS codes or QCFs. It also proactively identifies expired or expiring drugs so pharmacy departments can ensure that expired NDCs are not in use at their facilities.

What does Softek Solutions, Inc. do?

Softek's mission is to help hospital systems get the most out of their investment in Cerner® Millennium™. We do this by providing innovative software solutions and consulting services that can achieve more together than either can alone.

At Softek, our team of innovators and software developers brings expertise beyond the ordinary to every client. Our experts are involved with Cerner® Millennium™ hospitals throughout the country consulting clients so they can optimize system performance and revenue integrity.

Softek delivers a full suite of consulting services and software solutions to assess and optimize EMR system performance, including revenue cycle integrity and patient accounting.

Let’s talk to see how you can get the most out of your Cerner® Millennium™ system.

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