Claims Denials & Revenue Leaks: Get to the Root of the Problem

Ready to reduce claims denials in your ASC? Of course you are. But it takes more than just readiness to tackle the problem. To really reduce your costs and lost productivity associated with reworking rejected claims, you need to prevent them in the first place.

And that can be trickier than it seems, according to Maggie Fortin, CPC, CPC-H, CHC, who talked claims denials strategy at the American Academy of Professional Coders’ HealthCon 2017 meeting. To truly cut down your denial rate, she says, you’ve got to sift through all the data you have about those claims denials and perform a root cause analysis. That process includes tracking the data over time, and analyzing it to determine any trends. “It’s not one claim denial you’re looking at,” Fortin said. “It’s many claims denials for a common reason.”

Your outpatient facility should aim for a denial rate of less than five percent of claims submitted, recommends Fortin, citing a Health Care Financial Association (HFMA) benchmark. HFMA finds that for providers and facilities across the board, 11 percent of all billed charges are denied.

It’s especially common for smaller facilities to overlook root cause analysis, Fortin said in her recent interview with Outpatient Coding & Billing Alert. But even smaller facilities can develop systems and processes that help them unearth root causes for denials, impacting the bottom line much more than traditional individual account recovery.

Claims Denials: Spot, Stop, and Solve Them

To uncover the common reasons for your denial troubles, you’ve got to be part Nancy Drew, part number cruncher, and part spreadsheet jockey. If that sounds like a tall order to fill, it is. But it’s worth it. According to the Medical Group Management Association, the average cost to rework a claim is $25. Multiply that by dozens of claims per month, and that adds up to big money.

The bright side? Once you find the root cause problem, you only have to fix it once. But if you continue to rework claims without a root cause analysis, you’ll end up fixing the same problem over and over again. So if you want to earn your ASC more money with less effort, follow this step-by-step process that Fortin recommends:

Step #1

Start by downloading Electronic Remittance Advice files—your “835s”—from your payers. You can translate electronic remittance advice files “into readable formats using software such as Easy Print, PC Print, vendor applications, or home-grown processes,” says Fortin.
Resource: To download Medicare Remit Easy Print (MREP) software for free from CMS, go to: cms.gov/Research-Statistics-Data-and-Systems/CMS-Information-Technology/AccesstoDataApplication/MedicareRemitEasyPrint.html

To download free PC Print software from CMS, go to: edissweb.com/cgp/software/pcprint.html

Step #2

Look for claim adjustment reason codes (CARCs) to understand why the payer didn’t pay your facility as you would have liked.

Resource: For a key to CARCs, go to: www.x12.org/codes/claim-adjustment-reason-codes/

Step #3

Look for remark codes associated with the CARCs. Not all CARCs will have them, but sometimes you’ll see them along with CARCs providing additional information about why the claim was denied.
Resource: The key to all the remark codes (updated tri-annually) and is available at: wpc-edi.com/reference/codelists/healthcare/remittance-advice-remark-codes/.

Step #4

Look for the group code, which describes who has financial responsibility for the charge that’s been denied. According to CMS, CO (Contractual Obligation) assigns responsibility to the provider, PR (Patient Responsibility) means the patient must pay, for example.

Step #5

Compile your data into a denial trend report that lists reason codes, remark codes, and group codes. Sort your report by reason code so that you can quickly spot denial trends at your facility, Fortin suggests.

Step #6

Once you spot denial patterns, you can find the root cause for why they are happening so that you can educate staff or tweak systems. So what’s preventing you from submitting your claims correctly the first time? You’ll find your root causes in one or more of the following areas, says Fortin:

• Patient Access and Registration, including Pre-Authorizations
• Clinical Encounter—Documentation
• Charge Capture/Entry
• HIM: CPT and ICD-10 Coding
• Claims Preparation and Submission
• Account Reconciliation and Posting

Of course, your work’s not done here. Once you’ve uncovered denial trends and root causes in your facility, you can take steps to reverse them. This may involve educating staff and clinicians with improved training programs, beefing up your ABN procedures, redesigning workflows, reviewing NCDs and LCDs, or refining your ICD-10 coding to better express medical necessity, according to Fortin.

Don’t Get Tripped Up by Business Office Blunders

If you aren’t routinely looking for denial patterns and sharing them with the staff who can fix them, your ASC is losing revenue. In some ASCS, no one is working claims denials to identify which claims can be appealed, observes Cristina Bentin, CPPM, CPCO, CCS-P, CMA, who spoke about coding and billing problems at the 2017 Ambulatory Surgery Center Association annual conference. Even if your center doesn’t yet have a root cause analysis process in place, at least verify that someone is actually reading denial codes on the explanations of benefits (EOBs) and remittance advice (RA), Bentin urges.

Good communication within your facility also plays a part. That’s because “denials can generate from actions performed at every point within the revenue cycle,” notes Fortin. When the different parts of the revenue cycle talk to each other, things just work better. Bentin agrees, but finds that of the ASCs she consults with conduct inter-department communication via email. They should be doing more one-on-one communication, she notes. Something as simple as walking down the hall or even picking up the phone “can reduce some of the denials we are seeing because one chapter of the office is not listening or understanding the frustrations of the other,” says Bentin.