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RESOURCES
Underpayment Insights
Maximize Your Potential by Minimizing Revenue Loss
5 Down-and-Dirty Denials Prevention Strategies
Oncology Services Underpayment Risks
Maximize Your Potential by Minimizing Revenue Loss
A new year means the opportunity to start with a clean slate. It’s a time to assess growth goals and the workflows that will help you achieve those goals amidst regulatory, consumer and competitive expectation. Reimbursement is repeatedly listed as a top challenge for all providers – from the largest health systems to the most rural practices.
A recent study shows that the average outpatient visit costs nearly $500, and the average inpatient stay in the US was over $22,000.[1] Combined with more payment responsibility on the patients’ shoulders and a deeply complex and varied insurance climate, it’s no surprise that two to three percent of net patient revenue is underpaid.
The ultimate root causes for these underpayments are varied and span end-to-end in the revenue cycle, resulting in denials, aged receivables or ultimately contractual underpayments. Resource constraints, both technology and labor capacity, can often make these underpayments difficult to identify let alone recover.
In 2019, healthcare costs are expected to rise by about 6 percent. Trends such as healthcare industry's consolidation has stymied further progress in lowering costs, says FierceHealthcare.[2] At the same time, consumers are demanding more convenient access to care, and the focus on new sites of care—such as retail clinics and virtual visits—are also increasing costs as utilization rates increase.
As we head into the new year, increase your potential by securing your financial workflow. Consider the following strategies to maximize your practice’s potential by minimizing revenue loss:
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Look for the root causes for underpayments. According to the American Hospital Association, combined underpayments for Medicare and Medicaid in 2017 were $76.8 billion, an increase from the $68.8 billion shortfall in 2016.[3] Understanding the foundational issues can help with both short- and long-term financial strategy.
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When looking at underpayments, don’t silo your efforts to one area. Underpayments vary widely and can compound, so use a comprehensive approach to address the full recovery opportunity. In 2017, a review by the Advisory Board showed that revenue cycle performance has lagged across key areas, now costing more just to achieve flat performance. Cost focus across the healthcare industry shows that the average 350-bed hospital misses $22 million in revenue capture opportunities.[4]
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Assess the technology you’re using to identify underpayments across the revenue cycle. Make sure you’re deploying the right solutions and leveraging the right subject matter experts.
[1] https://revcycleintelligence.com/news/average-healthcare-costs-for-outpatient-visit-nears-500
[3] https://www.healthcarefinancenews.com/news/medicare-medicaid-underpaid-us-hospitals-768-billion-2017-american-hospital-association-says
FDA Novel Drug Approvals [1]
Denials
Denied Charges | Medically Unlikely Edit (MUE)
MUE denials occur when HCPCS units are billed at a quantity higher than CMS’s published guidelines. MUE denials are especially applicable to high cost oncology drug units. These denials can be caused by incorrect unit multipliers but are occasionally triggered when units are billed correctly. In these cases, special circumstances, such as patient’s body mass index, must be cited to justify the elevated number of units billed.
Denied Charges | Coverage Determinations
Oncology drugs have strict National and Local Coverage Determinations (NCD and LCD) guidelines requiring specific diagnosis codes in order for drug charges to be covered and payable. Sometimes a patient’s qualifying diagnosis may be left off the claim or coded as a more general non-covered diagnosis. These issues lead to both significant line item denials and charges being billed as non-covered due to bill edits.
Due to the recurring nature of chemotherapy and infusion treatment, a patient’s qualifying diagnosis code may be present on some, but not all of the patient’s recurring claims. This can occur when clinical documentation is sparse for one of the recurring accounts. Hospitals can review patients’ clinical records from previous stays to determine whether a qualifying diagnosis code is appropriate.
Denials | Authorization
Due to the complex nature of cancer treatment, obtaining the correct referral, authorization and precertification can be difficult as each payer has their own process. Hospitals can prevent these denials by prioritizing registration and authorization processes on the front-end. Proactive follow-up is also effective in resolving authorization denials. Payers often misapply authorization to claims and providers can successfully appeal for medical necessity when extenuating circumstances prevent proper pre-authorization.
Complex Reimbursement
Medicare Reopenings
MUE denials occur when HCPCS units are billed at a quantity higher than CMS’s published guidelines. MUE denials are especially applicable to high cost oncology drug units. These denials can be caused by incorrect unit multipliers but are occasionally triggered when units are billed correctly. In these cases, special circumstances, such as patient’s body mass index, must be cited to justify the elevated number of units billed.
Coordination of Benefits
When a patient has coverage from multiple payers, the secondary payer may be liable for more than just remaining patient liability. These complex reimbursement scenarios are difficult to identify on the front-end as most system calculators do not calculate a contractual allowable for secondary payment. Hospitals can target commercial payers which pay up to their allowable minus primary payment in order to capture lost revenue.
Oncology Services Underpayment Risks
Clinical Complexity and Compounding Factors Create Costly Underpayments
Oncology providers face a wide variety of claim-level reimbursement hurdles. The high cost drugs utilized during care require detailed and specific coding where small discrepancies can lead to costly billing and coding scenarios. The recurring and specialized nature of these services also leads to underpayments and denials due to coverage determinations, authorization issues and more. Even when claims are billed correctly with no denials, complex coordination of benefits can still lead to lost revenue.
High Cost Drugs
Drug Dosage Discrepancies
Oncology drugs are commonly reimbursed per the specific units billed (e.g. Medicare OPPS guidelines). These drugs are sometimes billed by the vial, injection, or other standardized amount rather than with the correct CMS measurement units. These cases cause fewer units to be represented on the bill, leading to significantly lower reimbursement. When one drug is loaded incorrectly into the CDM, it can lead to widespread underpayments for all accounts with the drug billed. As there are more types of oncology drugs in circulation than any other service area, providers are hard-pressed to keep billing guidelines current.
New Drugs | Billing & Coding Guidelines
On average, the FDA approves 10 novel cancer drugs every year as shown below. CMS is typically unable to assign specific HCPCS for billing purposes before the drug is in circulation and hospitals must follow atypical billing guidelines to receive reimbursement.
These drugs must be carefully billed to strictly adhere with the CMS new drug billing guidelines. These guidelines cover HCPCS C9399, J3490 or J9999 accompanied by dosage, date and National Drug Code (NDC) information in the remarks field.
5 Down-and-Dirty Denials Prevention Strategies
It’s no surprise denials top the list[1] of revenue cycle management challenges for hospitals. One out of every 10 healthcare claims is denied, an Advisory Board report[2] found, with denial write-offs averaging $7 million for the typical 350-bed hospital.
What is surprising is the huge variation in denials rates among payers—from 1 to 45 percent[3] among ACA marketplaces alone. Perhaps worse, 50 to 65 percent[4] of denials are never worked due to lack of time or knowledge.
Denied claims are expensive to rework and time consuming to keep up with. And with more payers relying on automated review to flag claims for lack of medical necessity, coding and billing compliance, and more, denials are increasing at a faster rate than ever. Now more than ever, moving from denials management to denials prevention—stopping denials before they start—is critical.
How can healthcare organizations adopt a denials prevention mindset? Here are five strategies to consider.
Tip No. 1: Look for gaps in your patient registration process. For example, does your organization use an automated tool to verify and correct patient demographic information at the point of registration? Errors in manual data entry or patient-reported information at the time of registration—such as a patient birthdate or street address that is off by a single number—can come back to haunt an organization after service is delivered, when the claim is denied. Technologies that verify patient demographic and eligibility information at the point of registration ensure the organization has the correct information from the start of the care encounter are the first line of defense in denials prevention.
Tip No. 2: Use claim-scrubbing tools to spot missing information before claims are submitted. Claim-scrubbing software boosts clean claim rates by ensuring claims are complete and accurate before they are submitted. Such software also applies payer-specific edits—including edits that have not yet been published—to ensure claims are error-free when they leave your organization.
Tip No. 3: Hire a coder to review claims for specialty care. Sometimes, a patient’s qualifying diagnosis may be left off a claim—and that can lead to automatic denials of claims for specialty care, such as chemotherapy and infusion treatment. Careful review of specialty care claims by coders prior to submission can help ensure a qualifying diagnosis code is both present and appropriate.
Tip No. 4: Re-check eligibility before the claim is submitted. Sometimes, a patient who has coverage with a specific carrier at the time of registration may not have the same coverage when the claim is filed. Taking the time to verify coverage one more time before the claim is submitted can help avoid preventable denials—and improve days in accounts receivable.
Tip No. 5: Proactively follow up on prior authorization denials. For complex treatments like oncology care, each payer has its own process for authorization and precertification—leaving providers vulnerable to denials. In addition, payers often misapply authorization to claims. That’s why it’s critical that providers proactively appeal prior authorization denials. For example, providers can successfully appeal for medical necessity when extenuating circumstances prevent proper preauthorization.
[1] https://www.dimins.com/press-releases/revenue-cycle-management-himss-survey/
[2] https://www.advisory.com/research/revenue-cycle-advancement-center/at-the-margins/2017/12/revenue-cycle-benchmarks
[3] https://www.kff.org/private-insurance/press-release/analysis-marketplace-plans-denied-average-of-nearly-one-in-five-claims-in-2017-with-wide-variations-across-insurers/
[4] https://www.mgma.com/resources/revenue-cycle/you-might-be-losing-thousands-of-dollars-per-month