4 Tips for Managing Denials

Because patients are paying more out of pocket for their healthcare, you might be focusing on improving patient collection processes. While that’s critical, it’s also important not to lose sight of the other side of the revenue equation—the payer. That’s where denial management comes in.

Elizabeth Woodcock, MBA, FACMPE, CPC, an expert on medical practice operations and revenue cycle management, shared her thoughts on how you should approach denials in your organization.

1. Accept that denials are a fact of life.

“The nature of denials is in constant flux,” says Woodcock. “Once you get good at something, the mix changes. This area can’t be mastered from a prevention perspective.”

Denial trends are related to the changing reimbursement landscape, and Woodcock is seeing more related to medical necessity and experimental treatment. Denials correlate to payer reimbursement protocols, which means they change often and usually without warning.

“It would be beautiful to get a list from the payer at the beginning of the year that says if you bill these two combinations, we will deny these services,” says Woodcock. “We don’t get that list. It’s what makes denials so challenging because you’re really in the dark until you get to that transaction.”

2. Create protocols for identifying and managing denials.

But just because denials are a fact of life, doesn’t mean practices should just throw up their hands. Woodcock believes practices could be paying closer attention.

“Identification is where the biggest problem lies,” she says. “We think everything is going well because there’s money in the bank. We don’t think anything is wrong because we’re not digging in and identifying.”

As part of the identification process, you need to establish a closed-loop feedback system with teams upstream in the revenue-cycle process. If a denial is the result of a pre-authorization, you want to make sure the patient access teams know that for a certain procedure payers are now requiring pre-authorization.

Armed with an understanding of why the claims were denied, you then need a standard approach to managing them. Depending on the size of your organization, there may be hundreds of different types of denials. Within each category of denial you should have action steps for the employee to take, including a standard process for coming to a resolution. Whether it’s writing the claim off, taking an adjustment, or submitting a corrected claim.

3. Automate as much as possible.

In the past, managing denials involved a printer, a highlighter, a copier, and sticky notes. Woodcock recalls how practices would print off the remits, highlight the denials, and then make and distribute copies with notes to staff on how to handle. But with hundreds of thousands of transactions processed daily, this approach is no longer feasible.

“Practices need to pivot and focus on every opportunity to automate,” says Woodcock. “Don't pick up the phone unless you have to. Most payers allow processes to happen online.”

4. Create processes, document them, and train employees.

In addition to retiring the highlighter, practices should also stop relying on word-of-mouth employee training. Too often, the process for working a particular denial resides in a few employees’ heads. Develop a program with documented protocol for working denials by sitting down with your employees and recording all of the steps they take to work a claim.

“Ensure you’re holding employees accountable for what you assume is happening,” says Woodcock. “[Develop] an awesome orientation and training manual that can be used for many years, instead of just relying on tribal knowledge.”