An effective denials management process is critical to the success of healthcare revenue cycle management. At its core, the process must be built on actionable denials information and a highly functional, multi-disciplinary denials management team capable of taking the steps necessary to maximize reimbursement. Many organizations still lack one or both of these key components. ICD-10 will only increase the importance of having an effective denials management process in place.
Much of the financial uncertainty revolving around ICD-10 is driven by the questions about how claims will be adjudicated with the new diagnosis and procedure codes. Gaps in existing processes will be quickly exposed as the likely denials and underpayments choke revenue flows after the transition date. WEDI (Workgroup for Electronic Data Interchange ) found CMS expects AR Days to increase substantially, 20 to 40%, as it forecasts denials to increase by 100 to 200%. Those numbers being estimated by the nation’s largest payer is an attention getter.
So where should any organization begin? At minimum, conduct a quick and dirty denials management assessment. Here are some of the questions that should be asked:
- Do we have a denials management process? If so, what is it and is it effective?
- Who is on the denials management committee? Are clinical stakeholders involved as well as financial and revenue cycle stakeholders?
- Does our organization’s information technology effectively capture and report denials information? Often the information is within the system, but it’s difficult to extract or not optimized.
- Will any existing denials management technology be impacted by ICD-10?
- Are under and over-payments monitored and corrected as needed? These types of silent denials can have a big impact on margins.
If your organization is without answers to these questions or lacks confidence in the process, implementing a functioning denials management solution is critical.
An ICD-10 Denials Management Team Subcommitee is a step progressive organizations are planning to take to prepare for ICD-10’s impact on their revenue cycle. The broader team will still face the typical pre-ICD-10 denials, but having a subcommittee squarely focused on ICD-10 based denials will be important during the transition period to root out incorrect payments, improper coding, and insufficient documentation in a timely and proactive manner. The subcommittee should consist of physicians, clinical documentation specialists, coders, and billing stakeholders, as ICD-10 has a more clinical emphasis than traditional ICD-9 coding.
With predictions of impacts of ICD-10 increasing denials to such a great extent, it’s time to investigate your current processes and develop better solutions. Another activity to add to the list of things to do in the next nine months in preparation for 10/1/2014!
Carle Nicklas
Director
Strategic Advisory Services
carlenicklas@santarosaconsulting.com
Matt Wimberley
Senior Consultant
Strategic Advisory Services
mattwimberley@santarosaconsulting.com