Developing A Hospital Claim Validation Strategy To Prevent Denials

Health Insurance Claim FormA comprehensive hospital claim validation strategy that prevents denials and improves efficiencies hinges on the right blend of retrospective and pre-bill reviews.

The time to strengthen hospital compliance programs through claim validation is now.

According to healthcare finance and information management leaders surveyed by HIMSS Media, clinical documentation and coding were the revenue cycle processes most vulnerable to errors that could result in lost or decreased revenue.

These issues are leading to an uptick in claim denials and lost revenue. Hospitals are writing off about 90 percent more claim denials compared to nearly a decade ago, and that is leading to millions of dollars being left on the table for the average hospital, the Advisory Board reports.

Improving clinical documentation and coding processes is key to decreasing and even preventing claim denials, as well as recouping lost or inaccurate reimbursement. Identifying opportunities for improvement, educating providers and coders, and correcting workflows to ensure accurate reimbursement are all ways health information management (HIM) and revenue cycle leaders can advance their organization’s clinical documentation and coding processes.

To start the improvement efforts, billing compliance experts will need to engage in robust claim validation.

Retrospective coding validation is a review of claims that have already been submitted and are frequently adjudicated by payers. The lookback is crucial for surveilling an organization’s clinical documentation, coding, and other billing processes, explains Sue Belley, RHIA, manager of clinical content development and outsource services within the consulting services business of 3M Health Information Systems.

“There may be things happening or not happening that you are not aware of,” she says.

The retrospective audit enables providers to explore their internal coding processes to identify underlying issues or high-risk areas based on the organization’s history. The audit is also a key way facilities can track coding accuracy and quality performance.

The audits, for example, have been useful for identifying instances of underdosing of drugs.

ICD-10 has enabled facilities to identify when drug underdosing has occurred as well as why, the American Health Information Management Association (AHIMA) explains. However, coders are not always identifying documentation of this situation, the industry group says, and oversight does not help organizations tell the story of why some readmissions occur (e.g., the patient readmitted in acute congestive heart failure after she stopped taking her prescribed diuretic). Hospitals need to be able to tell this story; perhaps someday it will help mitigate readmission penalties for some cases.

Retrospective validation has helped organizations identify missed coding and/or documentation opportunities, such as the underdosing example. Through the review, organizations have had the opportunity to rebill accurate claims as well as educate coders on opportunities to improve, Belley explains.

Retrospective audits help facilities in several different ways.

First, they are used to determine coding accuracy rates for coding professionals to monitor performance and identify those opportunities mentioned above for education as well as skill-building.

Second, random retrospective audits often surface those “nuggets you might not otherwise have known about,” says Belley.

Third, retrospective audits are used to take a look when you identify a possible problem.  Retrospective audits do have downsides.

For example, if compliance audit staff find opportunities for improvement during a retrospective audit, then they have to provide education to the coding staff that might not be quite as impactful as when the coding actually occurred.   It is labor-intensive to rebill claims. And a rebilled claim may be scrutinized by the payor in other areas such as those of medical necessity, which exposes the facility to additional risk, Belley states.

Pre-billing validation provides a solution for these billing challenges.

Pre-billing Claim Validation

While retrospective validation deals with the past, pre-billing validation is focused on the here and now. Compliance staff engages with pre-billing audits once coders have completed their initial coding and before the claim goes out the door for reimbursement.

The major benefit of pre-billing versus retrospective auditing is immediate coder feedback, explains Julie Tyson, CCS, RHIA, coding services consultant at 3M.

During pre-bill audits, she explains, compliance staff can identify clinical documentation and coding problems that will result in claim denials, rejections, or other issues due to non-compliance and notify coders immediately of changes to submit a clean claim to payers.

“The pre-bill audits prevent rework as well because if you’re getting claims out right the first time. That prevents rework on the backend and denials from coming in,” Tyson stresses.

The auditing process works well for high-dollar claims in which the organization would stand to lose revenue from if the claim was denied or delayed.

However, a noticeable drawback of performing pre-bill audits is an increase in days in accounts receivable, Belley warns.

“Aggressive CFOs are looking to drop a hospital bill two and three days post-discharge; it’s hard to turn a bill around that fast if you’re adding pre-bill auditing. It’s going to take you longer,” she says. Organizations can only do so much pre-bill auditing with the time they have before they must send a claim to payers and the staff they have in-house to perform auditing activities.

For this reason, organizations should be marrying retrospective and pre-bill auditing to develop a comprehensive compliance program.

The Right Blend of Retrospective, Pre-bill Validation

Professionals face a constant challenge to get it done fast and accurately. Hospital leaders are no different. Their job is to get as many clean claims out the door to prevent claim denials and to ensure a quick turnaround for timely reimbursement.

Employing both retrospective and pre-bill validation can help compliance experts realize the best of both worlds, says Audrey Howard, RHIA, senior inpatient consultant in outsource services at 3M.

According to Howard, pre-billing audits should occur for cases that have a higher potential for error and should be going out right the first time. For example, she advises hospitals to focus pre-bill auditing on claims that have a single complication or comorbidity (CC) or major complication/comorbidity (MCC) or neither of those classifications. Hospitals should also use pre-bill audits to ensure the accuracy of claims with an MCC and a short length of stay, she recommends.

On a retrospective basis, hospitals should be conducting regular random audits, Howard says. Hospitals should make time to pull random records completed by their coding professionals every quarter to identify persistent clinical documentation and coding issues, as well as to confirm that improvements made during pre-bill and previous retrospective auditing are being incorporated into workflows to prevent claims denials.

“While you can identify and audit high-risk cases prebill, you want to make sure to take a look at some random claims to see how everybody’s doing and identify if there are any other issues,” she states. “That is a nice complement between the two types of audits.”

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