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Denials Management: A Case Study. Patricia Kroken, FACMPE, CRA Jennifer Kroken, MBA Imagine Users Meeting 2010 Charlotte, NC. Hospital-based case study. Radiology Consultants of North Dallas 17 radiologists Primarily hospital-based Also read at numerous imaging centers

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denials management a case study

Denials Management:A Case Study

Patricia Kroken, FACMPE, CRA

Jennifer Kroken, MBA

Imagine Users Meeting 2010

Charlotte, NC

hospital based case study
Hospital-based case study
  • Radiology Consultants of North Dallas
  • 17 radiologists
    • Primarily hospital-based
    • Also read at numerous imaging centers
  • 13.5 billing/collections staff
  • ImagineRadiology installed 2004
  • “Denial” = claim denied for payment on first pass
      • May eventually be paid
  • Very little published data to support development of baseline comparison or benchmark
  • General consensus 15-30% denial rates
    • Not radiology-specific
  • Anecdotal: 15% in radiology “not bad”
denials management
Denials management
  • Goals
    • Reduce first pass denials by identifying and correcting root causes
    • Improve follow-up processes for denied claims
    • Identify compliance risks
  • Denials management does not just involve sending appeal letters
six sigma
Six Sigma
  • Developed by Motorola
    • Measured error rates for manufacturing processes
    • Established framework for breakthrough process improvement
    • Utilizes a series of defined steps that can be continuously repeated until a process is maximized
radiology billing is process driven
Radiology Billing is Process-Driven


Charge Entry

Claims Submission



Radiology Reports

Secondary ins


Patient co-pay

Insurance Follow-up

Self pay

  • Correspondence
  • Denial
  • No activity
  • Payment plan
  • Payment
  • File insurance



Collection Agency

Bad debt write-off


Small balance write-off

dmaic for denials project
DMAIC for Denials Project
  • Define
    • Denied claims represent an opportunity to improve profitability
    • Processes surrounding claims submission and follow-up appear to be inefficient
  • Measure
    • Categories of denied claims
dmaic for denials project1
DMAIC for Denials Project
  • Analyze
    • Processes in place for claims preparation, submissions and follow-up
    • Potential risk and/or gains from addressing certain denial categories
    • Root causes of why denials are occurring
  • Improve
    • Implement technology to eliminate manual processes and standardize
    • Train those involved regarding standardized processes
    • Change workflow and transition to paperless environment
dmaic for denials project2
DMAIC for Denials Project
  • Control
    • Verify standardization of denials management processes
    • Continue to measure to ensure replication of results
  • Define—circular process starts again
logic and organization
Logic and Organization
  • Compliance denials
    • Practice potentially placed at risk
    • Could be in violation of regulations
      • Coding (including bundling/unbundling)
      • Medical necessity
      • Duplicate claims
  • Administrative
    • Usually due to process error or omission
    • Theoretically preventable
      • Eligibility
      • Missing/incorrect information
      • Prior authorization
      • Timely filing
      • Non-covered service
      • Denied—no reason given
condense categories
Condense Categories
  • Use general areas identified under compliance and administrative categories
    • Denial categories set up in system maintenance
    • Insurance company variations assigned to categories by payment poster posting denials
      • Note: also found to improve payment posting production when compared to using hundreds of insurance company categories
    • EOBs/denials scanned into system and accessible from workstations
      • Removes objection of having to see insurance denial reason
comments total denials
Comments: Total Denials
  • Baseline in 2004: 10% denials rate
    • Aggressive editing software had already improved the percentage to some degree at the time the project started
    • In some cases improvement in one category might be offset by increases in another
      • Changes in Medicare LCDs or payor edits
      • Payor computer problems (BCBS in early 2009)
  • Consistent improvement annually to 6% 2009
comments coding denials
Comments: Coding Denials
  • Coding denials 2004: 4.26% of all procedures
    • 42.6% of denials
  • Represented a potential compliance risk
    • Financial plus risk management priority
  • From 2006-present: fewer than 1% of all procedures denied for coding issues
    • 2009 denial rate .41% of total or 7% of denied procedures
coding root cause corrections
Coding: Root Cause Corrections
  • Physician dictation
    • Often a cause for inaccurate or under-coding problems
    • Review of dictation patterns identified issues
    • Physician leadership supported educational and “enforcement” efforts
  • Reports compared to objective resource
    • ACR Communications Guidelines
coding root cause corrections1
Coding: Root Cause Corrections
  • Physician education
    • Discussion of coding basics
      • History/reason for exam
      • Number of views
      • Separate paragraphs for complex studies
        • Example: CT of chest, abdomen and pelvis
      • Complete/limited ultrasound dictation elements
    • If it isn’t dictated, it didn’t happen
      • No assumption coding or “protocol”
coding root cause corrections2
Coding: Root Cause Corrections
  • Custom workbooks by physician
    • ACR Communication Guideline
      • How physician’s reports compared to ACR parameters
        • Indication/reason for study
        • Views, contrast, limited/complete study
        • Impression
    • Samples of that physician’s problematic reports
      • Difficult to code
      • Would have to be down-coded
      • Difficult to appeal based on available documentation
    • Samples of “good” reports containing all elements
coding root cause corrections3
Coding: Root Cause Corrections
  • Temporarily: administrative employee at hospital reviewed reports daily
    • Returned those without histories, views, etc. for re-dictation
    • Physician leadership reinforced the program!
  • Ongoing: feedback and/or updates
    • Changes in dictation requirements for complete vs. limited ultrasound studies
    • Problems and/or trends
comments medical necessity denials
Comments: Medical Necessity Denials
  • Consistently less than 1% of total procedures
  • Less improvement year-to-year
    • Changes in LCDs
      • PET
      • Vascular procedures
      • Vertebroplasty/kyphoplasty
  • Improvements in coding documentation supported medical necessity
    • Denied claims did not show deficiency in dictation but still denied
comments eligibility
Comments: Eligibility
  • Administrative denial
    • Usually human error
    • Controllable in imaging center setting, but not hospital-based
  • Solution
    • Use available technology
      • Front-end editing
    • Value-added clearinghouse with automated eligibility checks
comments eligibility1
Comments: Eligibility
  • Industry: 45% of denials due to eligibility
    • Clearinghouse database: 29% of claims denied for eligibility
  • RCND 2004: less than 1% denial rate
  • Eligibility denials rose 2007-2008
  • Value-added clearinghouse added end of 2008
    • Eligibility dropped nearly 50% 2008-2009
    • Checks eligibility for 200+ health plans
comments eligibility2
Comments: Eligibility
  • 2008-2009 dramatic gains in top payors
    • BCBS experienced internal computer issues in early 2009 so improvement less dramatic
  • Substantial gains
    • Medicare
    • Medicaid
    • United Healthcare
comments timely filing
Comments: Timely Filing
  • Timely filing 2004: 2.2% of total claims
    • Impacted by conversion to new software
    • Staff member resistance to changing systems = “former employee”
    • United Healthcare impacted
  • Timely filing 2009: .06% of total claims
    • .01% of total denials
    • Approximately 11 days from DOS to claim release
discussion and conclusions
Discussion and Conclusions
  • Root cause corrections reduce denials
    • Higher number of clean claims = less work on the back end and faster cash flow
  • Hospital-based practices will have a higher rate of administrative denials
    • No control over data gathering processes
      • High-turnover positions
      • Lack of experience/education
  • Imaging centers should theoretically be able to eliminate administrative
prioritizing the program
Prioritizing the Program
  • Medical necessity
    • Frequently high dollar procedures
    • Both financial and compliance risk
  • Coding
    • Physician education/behavior modification efforts pay off quickly
    • Coder education/certification emphasis
  • Eligibility
    • Use available technology!
final thoughts
Final Thoughts
  • Technology is critical and available
    • You can’t manage what you can’t measure
    • Need high volume processing—can’t be done manually
  • Billing and collections activities involve a series of defined processes
    • Determine where problems originate
    • Reduce variability in processes and improve results
  • As one process stabilizes and demonstrates control, move to the next

Pat Kroken, Albuquerque, NM


[email protected]

Jennifer Kroken, Dallas, TX


[email protected]

Healthcare Resource Providers

P.O. Box 90190

Albuquerque, NM 87199