Data is the lifeblood of modern healthcare business. Interpreting that data requires a expert with the experience to know what to ask for how to use data to prove your arguments at the negotiation table.
Hospital and clinic executives and managers know the reimbursement rates and volumes necessary to keep the lights on and the staff paid.
Clients call on us to help them analyze contract language to eliminate loopholes and reduce claim denials that erodes margin. They also outsource appeals of denied claims for higher recoveries.
A 2011 GAO report on denials looked at 2010 data and found denial rates between 6 and 40 percent depending on state and payer. AthenaHealth releases denial statistics in their annual health payer report card and they also look at remittance advice transparency and first pass rate for claims on a carrier-by-carrier basis (very helpful). We also pull data from RemitData.com for specialty-specific and state-specific denial rates. Each offers different perspectives as a result of how they calculate, so we cross check and verify data from multiple sources.
Denials and contract loopholes are two of the major problems in contracting with third-party payers to provide health care to insurance and health plan participants. At the very least, 35% of the expense is directly related to how providers of care are paid, all passed on in the cost to receive and deliver the care. Data interpretation is necessary in order analyze each contract in terms of costs associated with each unique contract. The tactic of simply reading the rate sheet and calculating payments as a percentage of Medicare reimbursement overlooks the hard costs, the capital costs, the lost revenue from denials and uncollected money (effective discounts) from patients and insurers as a result. In 2016, these costs totaled over 900 billion dollars.
In the same analysis by Change Healthcare from data collected in 2016, they found that the main reasons for denials are 1) registration/eligibility as the leading cause (23.9%) followed by "missing or invalid claim data "( 14.6%). . ....additionally this data was generated from 3.3 billion hospital transactions valued at $1.8 trillion, 724 hospitals' inpatient and outpatient claims from 5,683 US hospitals and is obviously quite credible.
Assuming the numbers from Change Healthcare are correct - complete this exercise to analyze the financial impact of these avoidable problems:
For each contract in your portfolio, create a chart to analyze the following:
- Gross dollars billed last year - Contractual discount applied = net potential revenue
- Actual dollars lost to the reasons below
- Investment to remediate
- Cash recovery potential
Contracted Payer Name:
Front End Problems:
|Registration and Eligibility 23.9%|
|Appropriateness of Care 3.4%|
Back End Problems:
|Missing or Invalid Claim Data 14.6%|
|Late Filed Claims 3.7%|
Mid Revenue Cycle Problems:
|Authorization or Pre-Certification Missing 12.4%|
|Non-covered Services 10.1%|
|Medical Documentation Requested 10.8%|
|Coding problems 5.8%|
|Medical Necessity Denials 5.8%|
Contract Language Ambiguity Problems:
|Bundled Service Inclusions (not measured)|
|Medical Necessity Deemed by Payer (not measured)|
|All payer language that holds patients harmless (not measured)|
|Mandated write offs for non-covered services (not measured)|
|Inappropriate Coordination of Benefits rules (not measured)|
|Claims Unpaid Due to Plan Bankruptcies (not measured)|
|Medical Records Copy Fees Unpaid (not measured)|
|Requirements to Obtain and Maintain ABNs on Non Covered Services (not measured)|
|Opportunities lost to Exclusive Deals with Other Providers (not measured)|