Getting Paid Faster: 3 Pillars of Denial Management, Part 1
Written by: Cheryl Reifsnyder, PhD
In a recent Stat poll from the Medical Group Management Association (MGMA®), 69% of healthcare leaders said that their organization saw an increase in denials in 2021; another, more recent study reported the rate of denials in 2022 rising nearly 8% from 2021. And as the denials’ rate increases, practices are having to deal with ongoing changes in the regulatory environment and in payers’ reimbursement requirements, creating even more work for the billing team.
Meanwhile, in another MGMA Stat poll, 58% of medical practices reported staffing as their greatest challenge heading into 2023.
Staffing challenges can make it difficult for practices to maintain a dedicated medical billing team. Staffing issues also mean the medical billing team, such as there is, is probably overworked in the environment of increasing denials and never-ending changes in submission requirements. What is the impact of all these factors? According to a 2022 MGMA Stat poll, 56% of medical groups say their claims spent a greater amount of time in A/R in 2022—leading to additional delays in getting paid.
Today we’re going to look at a framework that practices can use to help improve their Denial Management process and help support the medical billing teams responsible for that process—and, ultimately, help reduce the number of denials they’re required to field: a framework known as People, Process, and Technology (PPT).
The PPT framework: what it is and why it’s so impactful
The PPT framework was introduced in the 1960s by Harold Leavitt as a tool to help organizations maintain balance in their efforts to improve their use of technology. The framework identifies People, Process, and Technology as the 3 core elements that need to be addressed when attempting to improve the overall functioning of an organization.
The primary concept of the PPT framework is that it’s critical to address these 3 key elements while simultaneously maintaining balance among them, because doing so can create a strong foundation for digital transformation.
The 3 elements have been described as the legs of a 3-legged stool: If any of the legs is weaker than the others, the stool will be off balance and unable to support itself. Similarly, an organization that wants to adapt to changes in technology and changes in the industry needs to focus on all 3 of these core elements. When you do—when you ensure you’re providing consistent support to your organization’s People and Processes as well as its Technology—you’re able to develop a flexible, adaptable workforce, one that can respond to changes in the industry and changes in the tools and technology available to them.
This is why People, Process, and Technology are the 3 pillars of Denial Management: Together, they create a framework to help you optimize your workforce, your processes, and your technological tools and, ultimately, maximize revenue for your practice.
People
People are arguably the most important piece of the PPT framework. That’s because even the most advanced technologies and the most optimized processes and workflows cannot move an organization forward without people who have the skills and knowledge required to effectively use those Technologies and Processes. The importance of People for maintaining a healthy revenue cycle in your practice is evident from a recent survey of revenue cycle leaders in healthcare organizations, in which nearly 79% said Denial Management required the most specialized knowledge of all revenue cycle tasks.
However, with the persistent staffing challenges faced by medical practices, last year 1 in 4 healthcare finance and revenue cycle leaders reported that staffing shortages had specifically affected their revenue cycle workforce. This makes it difficult to maintain a dedicated medical billing team, much less a team possessing the specialized knowledge and the experience required for successful Denial Management.
Meanwhile, this billing staff—often too small, overworked, and undertrained—is expected to keep up with ongoing changes in the requirements for claim submissions.
For instance, recently, The Cigna Group changed their requirements for claims documentation, requiring submission of office notes with all claims that included certain evaluation and management (E/M) Current Procedural Terminology (CPT®) codes in combination with a modifier indicating that the E/M service was performed on the same day, by the same healthcare provider, as another service/procedure. A group consisting of the American Medical Association and over 100 other provider trade associations wrote to protest the change, which they described as “burdensome for providers.”
If a practice—with a short-staffed, overworked medical billing team—missed The Cigna Group’s announcement, that would potentially increase the number of denials they’d see. The change would impact workflows for the entire practice, not just the billing team—a massive change from only one payer—but it’s still only one change. How can people keep up with changes from all the payers on their list?
Best Practices for Optimizing & Supporting Your PEOPLE
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Identify the stakeholders in your practice—effective Denial Management requires all stakeholders working cohesively.
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Help your billing staff stay on top of changes in regulatory and payer requirements with ongoing, in-depth training.
Process
Process refers to how people perform the steps of their tasks—in this case, Denial Management. Having the right processes in place and the right people performing those processes helps ensure that the right actions are accomplished to achieve the right results.
For instance, practices often overlook the process used to gather patient information and how this process impacts revenue.1 However, the importance of front office processes in Denial Management—including the processes used to collect patient information—can be seen in data from a recent Change Healthcare survey. They found that most denials (86%) are potentially avoidable if practices proactively address front-end issues; they also found that 48% of these potentially avoidable denials are not recoverable. For those denials that are recoverable, each costs about $118 to be reworked.
Looking at it another way, 24% of all denials are not recoverable—and of that 24%, 95% could potentially be avoided.
The same survey found that 3 of the top 4 causes of denials occur at the front end of the revenue cycle. That means that by working to prevent issues at the beginning of the revenue cycle—by updating those processes—practices can potentially prevent lost revenue and save hours of work for billing staff.
Frequently, analyzing the source of your denials will enable you to identify specific areas where they are occurring; in those areas, you will find specific processes that are not working effectively and, as a result, are leading to increased denials. Identifying the specific processes that are ineffective is key to making changes. Changing these processes, together with training and ongoing optimization, can help you to avoid the errors leading to denials.1
You can implement these process changes more effectively by providing the appropriate staff with a checklist or a job aid for reference—tools for letting the people involved know the updated requirements for collecting patient information, checking eligibility, and so on.1
Best Practices for Optimizing Your PROCESSES1
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Use analytics to understand denials and identify their root causes—to prevent future denials from occurring.
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Leverage automation to help improve processes such as:
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Denial work queues;
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Regulatory updates;
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Training and ongoing optimization.
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Re-train business areas where denials originate and implement processes to prevent those denials from occurring in the first place.
Putting it all together
Come back later this month for Part 2 of Getting Paid Faster: 3 Pillars of Denial Management, in which we will discuss the third core element of the PPT framework: Technology. Even more importantly, we will also look at how Veradigm can help you utilize these 3 pillars to improve your practice’s Denial Management—and the outcomes they can help you achieve. Veradigm’s suite of easy-to-use healthcare provider solutions can help streamline your clinical and financial workflows, while our cloud-hosted deployment model with Microsoft Azure provides a more robust and secure IT infrastructure. Microsoft Azure hosting alleviates the burden of having to keep up with the ever-changing cybersecurity landscape. We prioritize cybersecurity and manage it for you, leaving your users free to focus on their top priority: patient care.
References:
- Getting Paid Faster: 3 Pillars of Denial Management. Accessed June 9, 2023. Presentation: Veradigm website.