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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

Methodology six sigma dmaic
Methodology:Six Sigma DMAIC

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


Jennifer Kroken, Dallas, TX


Healthcare Resource Providers

P.O. Box 90190

Albuquerque, NM 87199