Claims Denial Détente Through Collaborative Automation

Walt Ellenberger is general manager, payer solutions, of MedeFinance Inc. Contact him at wellenberger
@medefinance.com.

Payers and providers traditionally have been more adversarial than collaborative in the payment of healthcare services. A costly result is denied claims, which can represent up to 3 percent of a provider organization’s total revenues. With the added pressure of increasing healthcare costs and consumerism, we have reached an unacceptable crossroad of planning uncertainty, administrative cost build-up and strained relationships that overshadow any benefits the current claims payment practice has to offer.

Traditionally, managing denials has been a provider’s accounts receivable issue, but increasingly payers are sharing the pain in the form of reserve and price-planning uncertainty that has resulted in revenue restates and public scrutiny over increased premiums and record earnings. These pain points have been a catalyst for payer outreach, which has been focused on gaining transparency into the root cause of claims problems and how to improve the process and smooth provider relations. Executives on both sides of the fence are asking the same question: Is the value of transparency worth the cost of planning uncertainty? The short answer is, it has to be.

Mutual pain does have a tendency to invoke change in customary business practices, as indicated by several collaborative claim improvement initiatives throughout the country charged with improving the working relations between payers and providers. There are several common themes in these initiatives, starting with the shared goal of building a claims payment process that is less costly, more predictable and less conflicted.

The common ideas on what is needed to accomplish this goal are: 1) Standard definitions of terms, such as what is a paid claim, a denial or an adjustment? 2) Baseline education and understanding of existing claims payment process and respective party’s pain points; 3) Transparency and understanding of logic, edits and criteria for clean claims, denials and appeals; 4) Established baseline to identify averages, outliers and trends in rejects and denials; 5) Mutually defined and beneficial performance criteria to identify gaps and measure progress; 6) Centralized mechanism to monitor and reconcile certain nuances in claims inventory that often fall through the cracks, such as claims recorded but not sent by provider, claims recently submitted but not processed by payer, and denials not written off by the provider; 7) Common data set and systematic means to identify and manage overall trends, gaps and root cause for denials that are otherwise not obvious from a transaction perspective.

Components of Success
Some of the common performance metrics being used to measure and monitor the success of a collaborative claims improvement initiative are:

One common challenge these initiatives pose that is critical to their overall success is translating respective data sets and business logic into a collaborative perspective versus a provider- or payer-centric view of the world. This challenge could be effectively addressed by a new breed of collaborative analytics automation.

An automated solution would play the critical role of aggregating and intellectualizing disparate data sources, definitions and business logic into an environment allowing for transparency and credibility that is not readily available today. In essence, automation would play the role of neutral middleman, instilling the trust necessary to establish new collaborative standards and allowing the data to speak for itself in terms of denial problem areas and their root cause reasons.

The Path to Achievement
Analytics automation would help both parties make faster and better fact-based decisions. Staff at all levels would have the information needed to understand, track and analyze the behavior of claims and take the appropriate action on a proactive basis. Performance visibility would extend from key performance indicators to underlying transactions, down to line-item detail on claims. This mutual insight would result in sustainable improvements to the healthcare claims processing infrastructure.

In the world of claims denials, there will always be reasons why two parties agree to disagree; these typically involve issues of medical necessity. However, other denial areas inadvertently may be causing problems that need to be uncovered and managed. Oftentimes these unintentional denial problem areas are a result of minor claims edits for low reimbursement services that add up based on sheer volume.

In addition, many executive decisions regarding claims payment policy and procedure are lost in translation at the front line due to human interpretation or incompetence. Having a common data set and analytical tool to look above the tree line, so to speak, to flag problematic patterns and trends would eliminate a lot of the unintentional angst in the payment process.

Once collaborative automation is implemented to resolve initial claims processing and denial management issues according to mutual goals and performance metrics, it would serve as the business intelligence to monitor, flag, and prevent recurring and new problems.

Collaboration is clearly the only option when two adversarial parties realize that working together can significantly improve communications, improve customer service and streamline business performance. Collaborative automation is the key to the effective execution and ongoing management of initiative decisions. It is, after all, what will lead to achievement of objectives for both sides of the equation.