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Revenue Cycle Principles Series (3)   The Fundamentals Of Clean Claims   Reducing Denials
Revenue Cycle Principles Series (3)   The Fundamentals Of Clean Claims   Reducing Denials
Revenue Cycle Principles Series (3)   The Fundamentals Of Clean Claims   Reducing Denials
Revenue Cycle Principles Series (3)   The Fundamentals Of Clean Claims   Reducing Denials
Revenue Cycle Principles Series (3)   The Fundamentals Of Clean Claims   Reducing Denials
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Revenue Cycle Principles Series (3) The Fundamentals Of Clean Claims Reducing Denials

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Please see Part 3 of our series on providing educational resources on the Revenue Cycle process. This goes along with our long practice of providing real world educational resources to our clients to …

Please see Part 3 of our series on providing educational resources on the Revenue Cycle process. This goes along with our long practice of providing real world educational resources to our clients to improve their revenue cycle operations.

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  • 1. Revenue CyCle PRinCiPles seRiesPart ThreeThe Fundamentals of Producing Cleanand Complete ClaimsA more focused approach to reducing denialsDerek Morkel, President & CEO, HealthTech
  • 2. Revenue Cycle Principles SeriesPart Three: The Fundamentals of Producing Clean and Complete Claims — A More Focused Approach to Reducing DenialsPart One RecapThe message of part one was simple — our work is to collect cash in the most efficient manner possible.As complicated as it all is, revenue cycle work can be segmented in two focus areas on a daily basis: 1. Collect more cash 2. Collect cash more efficientlyThe two basic principles can then be broken down into three main areas of focus: 1. Clean claims 2. Bill efficiently 3. Collector productivityPart Two RecapPart two focused on matching your facility’s resources — both people and time to the key factors thatimprove clean claims and revenue cycle efficiency.Making sure that all business processes are well established and communicated regardless of the process iscritical. Collecting receivables is no different.Billing efficiently and having superior collector productivity will be significantly enhanced if you get the firststep 100% correct on a daily basis.introductionThe first two parts of our series focused on the broader aspects of why it is important to focus on clean andcomplete claims and the resources necessary to ensure success. Part three takes a step further to dig intothe specific components of which processes produce both clean and complete claims. The end result ofgetting this right is not only better collections, but typically better net revenue, higher collections and greaterefficiency.An examination of the most common reasons for claim denials almost always provides some insight intowhat needs to be fixed to correct the errors. Even though the reasons we discuss here come from national orregional analysis of claim denials, it is always useful to analyze your own hospitals denials (at least monthly) tomake sure that you are addressing the root causes at your own facility. Page 1 w w w. h t- l l c . c o m
  • 3. Most common causes for claim denialsTrailblazer Health Enterprises — one of the largest Fiscal Intermediaries (FI) analyzed claim denials from itsdatabase and published (June 2010) the following listing of principal causes for hospital claims denials. 1. Duplicate claim/service 2. Non-covered service 3. Medicare Advantage plan 4. National Correct Coding Initiative (NCCI) 5. Screening/routine services 6. Patient supplies 7. Beneficiary eligibility 8. Medicare Secondary Payer (MSP) 9. Provider eligibility 10. HospiceAs a comparison, an analysis of several studies of physician claim denials produced the following list of thetop 10 reasons.Top ten reasons for physician claim denials are the following: 1. Incorrect or missing ICD-9 diagnosis 2. Incorrect or missing modifiers 3. Duplicate claim 4. Additional information needed to process the claim 5. Billed amount is correct 6. Incorrect/missing CPT procedure codes 7. Physician’s name and/or NPI number is missing or incorrect 8. Incorrect or missing place of service code 9. Incorrect or missing quantity multiples or services 10. Services are unbundledThere are a number of different studies regarding the cost to rebill and rework a claim denial — most ofthem identify the amount around $25-$35 per account. Whichever number you use, it is clear that it is veryinefficient and expensive to rework a claim. Both of the listings also include a number of categories thatwould cost the provider additional reimbursement even if the claim is paid the first time.A grouping of the reasons by functional area is extremely revealing and proves the point that an intense focuson the front end is critical to efficiency. The physician breakdown is slightly different as significantly morework is done by the billing function to produce a clean claim. Category Hospital Physician Admitting 6 2 Coding 1 3 Billing 1 3 Charge Capture 1 1 Administrative/System Setup 1 1 Page 2 w w w. h t- l l c . c o m
  • 4. Focus areas to improve clean claim rates & reduce denialsAdmitting QAThe claims process actually begins with preadmission and then the admission process. Admitting staff notonly need to be trained to make sure the right forms are filled out, but they also need to be able to verifythat the patient’s insurance information is correct, collect any co-payments due and check that any necessarypre-authorization forms from physicians and insurances are on file. 70% of the data required to complete thebilling process comes from admitting. As we can see from the denial analysis, 60% of the denials in a hospitalcan be directly attributed to admitting errors.With each error potentially costing $25-$35 to correct on the back end, it makes sense to have a robust QAfunction for admitting. 100% of all the claims should be checked for the denial reasons listed above and yourown analysis of your facility’s denials. The QA should also be done by someone who is knowledgeable aboutadmitting. Quite often the task is relegated to a lower level employee and/or only done sporadically as anafterthought.Tip: It is sometimes good to rotate this function between your admitting staff so they can see the errors beingmade throughout the department. It is also good to periodically have them sit with the billers to see what theresult of an error is in the billing cycle.On the back end, you need a clear understanding of where your denials are coming from in terms of boththe reason for them and the payer involved. That means creating some type of denial management database.This will ensure that the QA process is always evolving and matching the current needs of your facility.Charge Capture & CodingCorrectly documenting the services and procedures a patient receives during an inpatient stay or even in avisit to the emergency room — i.e. charge capture — is a vitally important step in the process. For example,if a clinician documents a medication the patient receives (by infusion) but forgets to record how themedication was delivered, the insurer won’t pay for the delivery, just the medication. It’s unlikely that themedication miraculously made it into the blood stream; thus, the fact still remains that the provider will notbe paid correctly for the claim.Implant charges are another typical culprit. Not only can missing implant charges cause potential denials,but they can also result in lost reimbursement — up to $40,000 for certain cardiac and neurological/spinalimplants. Potentially a very costly error.Charge capture should be a daily discipline that is the responsibility of many different departments in thehospital. Much like the admitting QA function a review/reconciliation should be part of each department’sresponsibilities. If this is completed each day correctly by every department, then the amount of chargecapture errors should be greatly reduced.TechnologyMuch of what we have discussed so far can be accomplished by improving the originating processes andhaving a review function. However, it is important to note that there are many applications available todaythat can aid in the review and control process and make it even more comprehensive. Almost all of the partsof the revenue cycle discussed within this series are prone to human error — even the review/QA process. Page 3 w w w. h t- l l c . c o m
  • 5. Technology applications like CDM maintenance software, Charge Capture, Medical Necessity, Bill Scrubbers, etc. should be an integral part of the front end of any hospital’s revenue cycle. It is not possible for any human being to remember or review all the line items of a hospital CDM — it can only be done properly by software. The same can be said for Charge Capture and Bill Scrubbing. These applications can scan thousands of claims in seconds looking for potential errors. It is for this reason that these should be integrated into the setup, review and QA functions at the hospital. As complicated as it all is, revenue Eliminating one $40,000 error provides an attractive ROI for all the applications listed above.cycle work can still be segmented into Conclusiontwo focus areas on a On the front end, a variety of seemingly unrelated steps in the process — including daily basis: payer contract negotiations, admitting, charge capture and billing — all contribute to the potential success or failure of getting a claim paid correctly and on time. A process1. Collect more cash that focuses on the components discussed within this document will result in a much higher clean claims rate.2. Collect cash more efficiently • Clean claim focus by all departments — not just admitting • Robust review/QA function — including use of technology applications • Continuous feedback — monitoring of QA results and denials keeps the focus on current issues By promoting a culture of cross-departmental cooperation that attacks the breakdowns in various steps in the claims life cycle, denial rates will begin to fall, collector productivity will increase and CASH will improve. For more information, contact us today at 800-228-0647 or email sales@ht-llc.com HealthTech hopes that the information contained herein will be informative and helpful on industry topics. However, please note that this information is not intended to be definitive. HealthTech and its affiliates expressly disclaim any and all liability, whatsoever, for any such information and for any use made thereof. Recipients of this information should consult original source materials and qualified healthcare regulatory counsel for specific guidance in healthcare reimbursement and regulatory matters. Page 4 w w w. h t- l l c . c o m

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