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How To Develop Strong Policies To Manage Denials

The newness of OPPS puts FIs as well as providers at risk of making mistakes. So what should you do when an FI denies payment on an outpatient claim that you feel should have sailed through?
 
"The biggest problem I see is that people are so busy with APCs that they don't really have the time to follow up on their denials. But, they have to find a way to handle this, because they are getting more denials and more claims to work up," says Karen Scott, MEd, RHIA, CPC, associate professor of health information management at the University of Tennessee, Memphis, and owner of Karen Scott Seminars and Consulting.

Appoint a Denials Team
 
Scott emphasizes that managing OPPS denials requires a team effort within the hospital and that everyone involved should take the time to determine why a claim was denied and what should be done about it. "You need to have strong policies and procedures in place," Scott points out. "They should state who will be responsible for checking on denials and getting the FI to reconsider. I think you should appeal just about every denial if you have good policies and procedures in place."
 
However, Scott says, some facilities limit their appeals to claims above a specific dollar amount. Others might appeal only when the claim involves a question of medical necessity. "If you have policies in place saying how you are going to handle medical necessity, you should eliminate a lot of denials on this ground," she says.
 
According to Scott, the initiative for handling denials could come from the hospital's APC committee or from the HIM department. She recommends using two kinds of commercially available software:
 
1. Identification: The first type of software should identify denials, classify them clinically by revenue center, and even code by patient. This enables hospitals to monitor denials, correct problems and identify appropriate cases to appeal.
 
2. Medical Necessity: The second type of software should allow the provider to check medical necessity by entering the codes that will apply before the patient undergoes the procedure. If it finds none, the software prints out an ABN informing the patient that Medicare will not cover the procedure.
 
Medical necessity is one of the big reasons for denials, Scott notes. She attributes this to the many different rules that apply, including federal regulations, APC guidelines and FIs' LMRPs.
 
 
"Before a hospital decides to appeal a denial, you need to have a good understanding of the codes that are used. You also have to feel comfortable that you applied the right codes and that your documentation backs up those codes," Scott says. "You might have to [...]

- Published on 2001-08-01