Top Two Contractual Issues That Trigger Denials

Contractual Denials

December 11, 2018

Dan Low
Vice President of Operations
Healthcare Financial Resources, LLC

Paying close attention to the fine print is critical in any business agreement, and healthcare is no different. If you want to be sure payers consistently reimburse your organization in a timely and accurate manner, it’s important to comply with all contractual requirements – while making certain the payer does, too.

  1. Underpayments

    Payment delays and denials stemming from contractual issues can involve a wide range of issues. One of the most common entails underpayments for specific services like surgery, emergency department, lab, radiology, therapies and observation.

    Problems may occur when a patient undergoes multiple procedures at the same time or during the same surgical event. Payer contracts stipulate how each procedure is paid and generally, each is classified either by relative value units (RVU) or ambulatory patient classification (APC) designations, from the highest to lowest level. Reimbursement is commensurate and proportional — typically 100% of the allowable for the most significant procedure, 50% for the secondary and 25% for the tertiary service.

    If, however, the procedures all incorrectly classified by staff, reimbursement may be inverted, with the lowest paying service paid at 100%, and the highest-paying, most complex procedure paying just 25%. It is therefore important that the billing staff has ready access to accurate contract management information that will enable them to ensure the appropriate classification for each procedure in real time.

  2. Outdated or inaccurate information

    Contractual denials also can arise over misinterpretations surrounding per diems, bundled payments and carve-outs. Root causes can be as simple as including the wrong plan code (HMO vs. PPO) on the claim, or as complex as a miscalculation of a stop-loss limit.

    The failure to maintain an accurate fee schedule by loading appropriate contract data into the hospital’s contract management application is another frequent cause of denials. Constant maintenance and regular audits are required to ensure the contract management software is up-to-date

    Site liability rejections involve denials stemming from the location where the service was performed. Because of division of financial responsibility agreements, conflicts can arise over whether the payer or site is ultimately responsible for covering the service.

To avoid contractual-related denials, it is critical that hospital staff be cognizant of, and responsive to, the multiple deadlines associated with the filing and appeals process. These time limits can include deadlines for submission of medical records, corrected claims, appeals, and reconsiderations. Creating the capability to automatically track and flag deadlines in real-time therefore is essential.

Comprehensive denial resolution

Healthcare Financial Resources (HFRI), a leader in accounts receivable recovery and resolution has focused exclusively on the challenge of hospital payment delay and denial resolution for nearly 20 years. From this effort, we’ve perfected a powerful approach that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization to streamline and accelerate the resolution process.

Equally important, our root cause analysis enables us to recommend process improvements to help decrease aged and denied claims on the front end of the revenue cycle. For more information about how HFRI can help you, contact us today.

Related Posts

Want to avoid 90% of your hospital denials?
Learn 7 strategies to improve your A/R.