3 Experts Weigh in on Denials

Industry experts share advice for revenue cycle leaders on battling denials including closing gaps in the middle revenue cycle and understanding payer criteria.

Health systems have made avoiding and managing denials a top priority, but for many, their best efforts have yet to turn the tide. The quest to get ahead of denials and protect revenue has gained urgency as hospitals continue to cope with the financial impact of the COVID-19 pandemic.

In fact, hospitals and health systems are experiencing some of the worst margins since the beginning of the COVID-19 pandemic, putting 2022 on track to become the worst financial year for the healthcare sector since the crisis first started.

With budget cuts and staffing shortages putting pressure on revenue cycle leaders, denial management solutions can feel out of reach. But with knowledge, data analytics, and an organized strategy, organizations can address issues at their root and reduce denials.

The average rate of denials rose 23% from 2016 to 2020, according to a 2021 Change Healthcare report. Even after the onset of the pandemic, denials continued to rise—particularly in areas hardest hit by the first wave. Yet 86% of denials are avoidable, according to the report.

As previously reported by HealthLeaders, the denials rate has been steadily increasing of the last few years, and for one-third of hospitals, their average denials rate was more than 10%.

At the time of that study, the average national denials rate was between 6% and 13%, but many organizations were nearing what Harmony Healthcare called the denials "danger zone" of 10% of higher.

According to that survey, 33% of hospital executives reported average denial rates of more than 10% and 32% of respondents reported their top concern as coding.

In addition, pandemic-related changes in rules and staffing added fuel to the fire.

The rise in denials isn't surprising given the increasing complexity of reimbursement rules, Monica DuBois, RHIA, vice president of coding solution technology at DeliverHealth in Atlanta told HIMB.

"Everything blew up in 2020," DuBois says. "There were so many changing rules, and now we're just starting to see some of those denials come through."

So, what are some of the biggest denial pain points?

Experts agree that most of the current denial targets feature familiar coding diagnoses: sepsis, malnutrition, acute kidney injury, acute tubular necrosis, and respiratory diagnoses. Most of these diagnoses are based on clinical criteria, and there may be differences in the criteria used by providers, payers, and third-party auditors, Melissa Rodriguez, CCDS, CDIP, CCS, CCS-P, CHRI, CPMA, manager of clinical denial solutions at Enjoin told HIMB.

Payers are taking a harder look at any claim with a respiratory, sepsis, or COVID-19-related diagnosis. More than 25% of audits are related to these diagnoses, according to Dawn Crump, MA, SSBB, CHC, senior consultant for revenue cycle solutions with MRO Solutions in Norristown, Pennsylvania.

Working with your CDI and coding directors to educate staff and provide more education around these diagnoses will only improve an organizations reimbursement rate.

Also, organizations should still be keeping a close eye on COVID-19 denials, particularly from commercial payers.

Commercial payers might have specific coding guidance, for example, that differs from CMS'. If an organization doesn't take that into account and coders aren't trained on these payers' rules, denials will start to rack up, DuBois says.