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Tuesday March 9, 2021  |  Todd Brown, Director of Financial Product Management at MEDHOST

Revenue Cycle Practices – Part three: Best Practices in Resolving Denials

Revenue Cycle Practices – Part three - Best Practices in Resolving Denials EHR

In the last entry of our three-part series on revenue cycle management we will be talking about best practices in resolving denials.

When considering this topic your first thought might be “every facility has different rules regarding denials.” And while contracts, payor mix, case mix, local coverage determinations, and staffing are all factors in determining what types of denials your facility might pursue, we will examine this topic from a higher level “best practices” approach.

Our examination looks at methods that should be practical in most every facility. High performance in appeals processing is important as studies show that 24 percent of denials cannot be recovered. Given that statistic, the value of a sound appeals processes in appealing the remaining 76 percent cannot be understated.[1]

Business Rules

Establishing a clear set of business rules is a critical first step in process definition.

  • What types of claim adjustment reason codes will we always pursue, or in contrast, never pursue?
  • Are these rules specific to payor type or a specific payer?
  • Is there a minimum dollar amount associated with a specific denial/payor/patient status that we will pursue?

Having rules that clearly define what sets of appeals your team will or will not pursue will assist you in bucketing appeals appropriately.

Cost Analysis

Every week that passes with an account in receivable hurts your bottom line. Your best practice may be to age denials for a period in order to settle remit activity, but once this aging is complete and you have elected to pursue an appeal, your goal should be to file the appeal within one week. Knowing when to pull the plug on a costly appeal can prevent further bleeding.

Strive to gather costs related to appeals so that you can make informed decisions on which types of appeals you should be pursuing. Cost analysis should be a key factor driving those previously mentioned business rules.

Performance Monitoring and Staff Optimization

Even smaller staffs should be subject to performance monitoring. The ability to determine which appeals coordinator is most effective at what types of appeals will increase your success rate and help speed the appeals process.

Authoring appeals correspondence is not a simple task, but effective correspondence writing is a learned skill. Ensure your less successful coordinators learn from their more successful counterparts.  And of course, supply any needed supporting documentation such as medical records or images.

Utilization Management (UM) is often an under-used resource in appeals management. According to the healthcare Financial Management Association, “Comprehensive hospital UM are important not just in preventing denials, but in filing successful appeals.”

Recovery Audit Contractors (RAC)

As claim activity has slowed during COVID, both commercial and Medicare audit contractors are scouring encounter data to identify records that may be audited for potential takebacks (where possible) and preventing future improper payments. Look for trends in these “additional development required” (ADR) requests and respond promptly with all documentation needed to meet the requirement.

Since the third quarter of 2020, COVID related audits are being examined by commercial payers. So be aware that these auditors are particularly looking for incomplete documentation on inpatient stays.[2]

Benchmarking and analysis

In addition to appeals coordinator performance, analysis of denials and appeals should help drive maintenance on business rules.

Success rate and the associated administrative burden will reveal rule tweaks or modifications that will evolve your business model over time. These metrics may also help you see where you may have providers that require coding education. Benchmark your performance periodically. That stake in the ground will help you determine if your model is effective.

To learn more about how MEDHOST can help you with operations, denials management, and monitoring, please reach out to us at or call 1.800.383.6278

[1] Change Healthcare 2020 Revenue Cycle Denial Index Report.

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