breakthrough denials performance: leveraging analytics and ......leveraging analytics and optimizing...

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©2016 THE ADVISORY BOARD COMPANY • ADVISORY.COM

Breakthrough Denials Performance: Leveraging Analytics and Optimizing Upfront Success

HFMA Conference

February 2017

Revenue Cycle Solutions

The best practices are the ones that work for you.


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Road Map for Discussion

Denials Management State of the Union

Traits of a Best in Class Denials Program

Case Studies and Next Steps

Revenue Cycle Solutions at Advisory Board

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©2016 THE ADVISORY BOARD COMPANY • ADVISORY.COM 3

About the Speakers

Ben Beadle-Ryby

Partner

202.266.5323

[email protected]

For more information, contact:

Joy Houk-Raper

Vice President

615-983-4027

[email protected]

For more information, contact:


Optimizing Revenue Cycle Performance

Representative Membership

• CHI St. Luke’s Health, Houston, TX

• The Cleveland Clinic, Cleveland, OH

• Mayo Clinic, Rochester, MN

• Memorial Hermann, Houston, TX

• Mountain States Health Alliance, Johnson City, TN

• Orlando Regional Medical Center, Orlando, FL

• Trinity Health, Livonia, MI

• Universal Health Services, King of Prussia, PA

• SSM Healthcare, St. Louis, MO

• Providence Health & Services, Renton, WA

Deep bench of the industry’s most seasoned experts combining Advisory Board research with real-world know-how to drive lasting gains in revenue cycle performance

Analytics and workflow tools to improve revenue cycle performance; integrated approach delivers results by combining actionable insights with dedicated advising and extensive implementation resources to maximize contract yield, revenue capture and collectionsStrategic guidance, best practices and forecasters to address the most critical concerns facing finance and revenue cycle executives and their teams. Special focus on patient access, documentation and coding, business office effectiveness and contract modeling and management.

Comprehensive & Integrated Capabilities

Research & InsightsFinancial Leadership Council

Consulting

Performance Technology

1,700+

Hospitals participating

Revenue cycle professionals on staff

350+

$3BDocumented revenue enhancement

Extensive Expertise and Results

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Combined Forces Undermining Revenue Cycle Success

Shifting Business ModelsSilos Preventing Cohesion

• Value-based contracting putting downward pressure on reimbursement

• Critical to be highly successful in Fee-for-Service models

• Over $14M annually left on the table for an average 250-bed hospital

• Functional disparities make it impossible to pinpoint payment blockages

• Today’s denials require cross-functional coordination to root cause and resolve or appeal

• The spending gap doubled between high and low quartiles since 2013

Causing InefficiencyReducing Yield$8M -$16M

Incremental cost to collect

2 - 5%

Missed net revenue


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Cracks in the Foundation – Initial Denials Are Spiking

42% 42%

50%

2011 2013 2015

Commercial Denials Spiking

Final Commercial Denials as a Percentage of

Total Final Denials

6% CAGR

70%Best possible appeal success rate against commercial denials in 2015. Even top-performing organizations wrote off 30% of denials.

Denial Recovery is Not Enough

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Components of Strong Denials Infrastructure No Longer Sufficient

Existing Denials Forums

Multiple focus groups have been meeting to review denial detail for

years.

Investment in Enhanced Denials Data

Expansion of Patient Accounting Systems reports to provide better

denials visibility.

Engaged Leadership

Leadership understands the importance of shifting focus from

denials appeals to denials prevention.

Low Write-Offs

Strong appeal overturn rates and historically has kept write-offs to a

minimum.

$


Highlighting Common Challenges for Preventing and Managing Denials

• Multiple denials reporting sources (Initial Denials Spreadsheet, excel reports, EHR reports, vendor reports)

• Inconsistent terminology and denials definitions

• Lack of awareness on denials from front line staff upstream in revenue cycle

• Cross departmental coordination is inefficient or non-existent

• Limited denial reason grouping capabilities

• Inability to quickly develop graphs for specific departments and stakeholders

• Lack of visibility into targets and performance thresholds for specific functions

• Delayed data feeds only allow for monthly visibility into progress against goals

CURRENT CHALLENGES

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Defining Initial Denials and Final Write-offs

Onsite discussions surfaced the need to provide organization-wide education on the definitions and nuances of denials. An immediate step is to align key stakeholders by speaking the same language.

Initial Denials: Any initial response from the payer which is not a payment, thus resulting in an appeal or re-work, is an initial denial. This is measured in gross

dollars.

Final Write-offs: if a service is delivered but not paid, despite any appeals

actions taken, then it is considered a final write-off.

Measured in net dollars.


Level Set on Terminology Across Organization

Current initial denial terminology is confusing and difficult to explain to key stakeholders across the organization, making it hard to interpret data.

Recommendation

ABC Current Terminology

Specific verbiage developed across the

organization for current workflow

Soft Denials Hard Denials

“A denial that needs additional information

to be processed”

“Claim that hasn’t been paid”

“Any claim that hasn’t been fully processed

by the insurance company; something

is missing from a billing standpoint”

“More complex and has to do with the contract language”

We’ve never really discussed the terminology, we just understand how each one is defined.

Management Team

Denial definitions must be clear and understood by all stakeholders across the organization

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Cross Departmental Coordination Inefficient

Coordination between departments is inefficient due to the varying data sources, numerous manual processes, and methods of communication.

Clinical denial is identified in RCA by

denials analyst

Analyst emails Clinical denials team with denial information

Clinic al team sorts into Outlook folder and prints email with attachments

Printouts are added to “Appeals Binder” to be

worked in order of due date

Appeal is manually logged in binder and pulled to

work appeal

Clinical team reviews documents, writes appeal letter, prints and

sends to insurer

Appeal letter is scanned and added to Outlook

folder

Clinical team emails denials analyst, adds

notes to RCA and ROC

Denials analysts emails Clinical team with follow up and questions as needed

Appeal approval or denial is mailed back to appropriate denials

department with no follow up to the Clinical team

Clinical Denials Example

Communication Forms

• Emails between analyst and Clinical team, often with no follow up

• Notes added in RCA and ROC, many times not added to RCA routinely

• Phone calls between departments

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Manual Processes

• Printing denials emails and documentation

• Adding hard copies to Appeals Binder

• Hardy copy handoffs

• Scanning appeal letters

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Data Sources

• Emails containing denials information and documentation

• Clinical denials team Appeals Binder

• RCA work queues

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EMR ‘work items’ functionality can eliminate several manual processes and multiple communication forms.


Write Off Policies and Methods of Prioritization Differ

Differing write-off policies and prioritization standards across teams leave room for standardization and clarification.

Denials Management Team

Government Billing & Follow up

Non-Government Billing & Follow up

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Key Takeaways

1. Multiple write-off policies and processes2. No standard work que prioritization process

• Write-off amounts

– Staff: ≤ $5,000

– Manager: $5,000 - $10,000

– Director: ≥ $10,000

• Prioritization: High dollar amount, referrals, or status date


– Staff: ≤ $2,500

– Manager: $2,500 - $5,000

– Director: ≥ $5,000

• Prioritization: Oldest date of service, high dollar amount


– Staff: ≤ $1,000

– Lead: $1,000 – 5,000

– Manager: $5,000 - $10,000

– Director: ≥ $10,000

• Prioritization: Status date over 30 days

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Need to Shift From Diagnosis to Prevention

Diagnose Solve Prevent

Today

Tomorrow

35% 15%

35%

Percent of Time Spent In Each Area

15%

Create a More Nimble Organization

50%

50%


Common Traits of a Best-In-Class Denials Program

TRANSPARENT DATA GIVES VISIBILITY TO STAKEHOLDERS

� Apples-to-apples comparison across all technologies and facilities

� Data is distributed in the right amount of detail to each appropriate level

� Education is delivered to appropriate leaders and staff so that they understand denials terminology

CORE INFRASTRUCTURE SETS THE SCENE FOR SUCCESS

� Policies and procedures are consistent across all facilities

� Physician Advisors and Denials Coordinators have clearly defined roles

� Responsibilities and communication strategies are clearly defined

PROACTIVE, PREVENTATIVE PROCESSES ARE HARD-WIRED

� Monthly Denials Committee brings stakeholders to the table to drive action

� Prescriptive preventative steps have been identified in the event that a denial occurs for a specific reason

� Leaders are held accountable for denials stemming from their areas

� Prioritize quick wins, high-dollar trends, and high-frequency issues

UNDERPAYMENTS ARE SCRUTINIZED AND APPEALED

� Key opportunities are identified and evaluated according to priority

� Batch appeals are used if/when there is a large trend or payer error

� Improper use of payments and contracts are sent back for re-processing

TECHNOLOGY DRIVES WORKFLOWS AND ANALYTICS

� Unified Data Source: Unite PAS, claims, other data to provide single source for denials and payment variances

� Flexible Collections Workflow: Workflow to manage accounts with automated work lists and batch processing

� Extensive custom reporting: Reports to monitor best opportunities and identify payment error trends

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Customized Denials Categorization is Possible and Necessary within Tech

Enhanced technologies enable organizations to group denial reason codes into customized categories to drive accountability and denial data understanding across the organization

Impetus for Reason Code Categorization Updates

• Government mandates such as the transition from ICD-9 to ICD-10 has impacted trends for certain reason codes

• Payer guidelines continually change, and ABC denial categorizations must meet updated payer requirements

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Reason Code

Timely Filing & Follow up

Coding

DocumentationBilling edit needed

Wrong Payer

Medical Necessity

Authorization

Solution-State Technology-Enabled Denial Categorization through ERA Manager

Example of Current Need:

Requested transfer of Code 50 (non-covered services) from ‘Non-Covered’ category to ‘Medical Necessity’ category under current model

Eligibility


Educating Staff and Creating Facility Level Ownership

It is not expected that leaders across an entire organization understand the nuances of denials. The first step is to align key stakeholders by speaking the same language. From there, it is essential key staff are educated at different levels of detail in order to create awareness, accountability and sustainability.

• Formalize definitions for denials by category and department for all reason codes:o Patient access, mid-cycle, business

office and diagnostic imaging, outpatient surgery, etc.

o Technical versus clinicalo Initial versus Finalo Gross dollars versus Net

• Provide and define benchmarks for initial denials by area

Denials Terminology and Benchmarking 101

• Break down the denials categories to begin delegating responsibility

• Provide in depth denials education to key constituents responsible for upfront revenue cycle and clinical processes resulting in specific downstream denials

Diving Into Denials Details

• Establish preventative actions for every denials cause, and educate upfront revenue cycle and clinical staff on prevention tactics

• Create manager, director, and senior leadership reports/dashboards to monitor initial denials and appeals success performance

• Roll out the Advisory Board’s accountability tool to help bridge the gap between infrastructure and actions to be taken

Hardwiring Culture of Accountability and Denials Prevention

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Useful Strategies for Optimizing Denials Analytics and Creating Accountability

Key Steps for Leveraging Analytics and Fostering Accountability

Develop charts to be housed for all revenue cycle functions in one, central system

Define the metrics necessary for each level of the organization

Identify targets benchmarks to give perspective on performance

Develop action plans for upward communication to leadership

Risk Thresholds and Performance Targets to be Built in ERA Manager

Sample Graph Built in ERA Manager1

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Executive-Level Metrics Filter Through Enterprise

Successful denials management will be tracked through two primary metrics, which must filter down through each department.

ABC Initial Denials as a % of ABC Gross Revenue ABC Final Denials as a % of ABC Net Revenue

ABC Pre-access denials as % of ABC Gross Revenue

ABC Back-end denials as a % of ABC Gross Revenue

Chief Financial Officer

ABC Mid-cycle denials as a % of ABC Gross Revenue

Patient Access Leaders Mid-Cycle Leaders PFS Leaders

Access Management Team

Denial Code Set A

Denial Code Set B

Denial Code Set C

Supervisors

Denials aligning to job responsibilities as a % of ABC Gross Revenue

Mid-Cycle Management Team

Denial Code Set D

Denial Code Set E

Denial Code Set F

Supervisors


PFS Management Team

Denial Code Set G

Denial Code Set H

Denial Code Set I

Supervisors


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Proper Action Plans Essential to Performance

It is imperative that there are prescriptive action plans for each type of denial experienced across the organization. High performing organizations have developed action plans for each denial.

Denial Cause Preventative Strategy

Denial causes properly align with the denials category based on ABC-specific processes.

Prescribed strategy to prevent specific denials will allow staff to effectively manage next steps toward denial resolution.

Patient Access

Category 1

Category 2

Category 3

Mid-Cycle

Category 4

Category 5

Category 6

BusinessOffice

Category 7

Category 8

Category 9

Denial Category Alignment by Function Custom Prevention Strategy

Every department in the organization will have comprehensive list of denials for which they are responsible as well as a preventative strategy for resolution.

Sample Preventative Action Lists


Collaboration is Key to Denials Mitigation

Denials management is not a business office problem; it’s a revenue cycle priority that takes collaboration across all revenue cycle functions to be successful.

Access

• Works with clinics to financially clear a patient

• Works with Mid-Cycle to validate clinical documentation

• Supplies business office with documentation to support appeals efforts

Mid-Cycle

• Works with Clinics to ensure appropriate documentation to support codes for authorization

• Works with Pre-Access to supply clinical support for authorization

• Works with business office to ensure accurate coding on claim prior to claim submission

Business Office

• Works with Mid-Cycle to ensure accurate coding on claim prior to claim submission

• Works with Pre-Access to update patient data and demographics as needed

• Coordinates with coding and clinical appeals team to appeal denials in a timely fashion

Denials Prevention

2Different Types of Denials to work, appeal and/or write-off

3Different Facilities with which to coordinate

4Separate teams with which to effectively communicate

ENABLE

ABC Physician Clinics

• Works with Pre-Access department to appropriately verify insurance and secure authorizations

• Works with Business Office to supply additional documentation to support procedure codes

1Mission under which all staff at ABC Health System operate

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Case Studies: Kalispell and Cancer Treatment Centers of America

Impact Highlights

Recoveries on underpayments/denials Q1-Q3 2015

$5.42M

Increase in recoveries over 2015 v. 2013 after creation of underpayment/denials recovery position

$1.51M

3 daysReduction in A/R days 2015 v. 2013

Kalispell Regional Medical Center

273 beds, Kalispell, MT

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Jan Feb Mar Apr May Jun Jul Aug Sep

2013 2015*

Dollars Recovered on Payer Payments After Appeal

1 LEVERAGINGHUMAN CAPITAL

2CUSTOMIZINGTHE TECHNOLOGY

2HARDWIRINGPROCESS SUCCESS

Cancer Treatment Centers of America

Five Facilities located across US Impact Highlights

Dollars recovered from August 2015 through mid-April 2016

$77.62M

Number of months during which $77.62M was recovered, averaging $9.13M per month across five facilities

8.5

5,759Number of accounts with recoveries during that time period

Denial Dollars Recovered, Aug 1, 2015 to April 19, 2016

Sorting Accounts

Prioritizing Accounts

Allocating Resources

Assigning Activities


Staff Ownership, Permanent Results

Our Philosophy

Optimal revenue cycle

performance requires innovative

solutions tied directly to business

outcomes. We pair state-of-the-

art technologies with consulting

services and collaborative peer

networks to drive transformative

change at member organizations.

By relying on hospital staff as

team leaders who select and

execute best practices, Advisory

Board consultants leave behind

hospital staff better prepared to

tackle additional operational

problems on their own and to

sustain hard-won successes.

”

Grounded in FLC Research• We install best management practices

proven in daily practice• Hundreds of best practices are

surfaced every year in our Financial Leadership Council research program

Deep Bench of Experience• Roster of talented professionals with

deep expertise across revenue cycle, IT, and physician initiatives

• Collectively, our team has 750+ years of hospital operator experience

Pillars of Our Work

Cohort-Driven Improvement• Our experts leverage experience

working with over 500 hospitals• Cohort members share ideas and best

practices, and include a wide range of organizations; AMCs, regional medical centers, small hospitals, for-profits

Accelerated Results • Best-in-Class business intelligence

solutions diagnose problems quickly• All activities push toward a quantifiable

result: financial performance, efficiency and productivity gains, patient financial experience

• Ongoing support ensures sustained results and continual progress

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©2016 THE ADVISORY BOARD COMPANY • ADVISORY.COM©2011 THE ADVISORY BOARD COMPANY • ADVISORY.COM

2445 M Street NW I Washington DC 20037

P 202.266.5600 I F 202.266.5700advisory.com

Benjamin Beadle-RybyPartner, Consulting and Management

[email protected]

Your Presentation Team

Please do not hesitate to reach out to us with any questions

Joy Houk-RaperVice President

[email protected]

breakthrough denials performance: leveraging analytics and ......leveraging analytics and optimizing...

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