Managing Denial Letters to Improve Payer Reimbursement

Imagine this all too familiar situation; you provided excellent care for a sick patient who required urgent hospital-level services. After discharge, you later discover a denial letter from the payer based on an “esoteric” set of reasoning:

1. The patient did not meet medical necessity for inpatient.
2. All the care is needed, but it could have been performed in observation.
3. The patient did not stay long enough to surpass a “usual” observation period.
4. As found in the Electronic Medical Record (EMR) extract, the patient did not seem sick enough.

You go to the EMR record and think, “how can this be possible?” The short answer is: it is possible.

Your initial reaction is likely a mix of aversion and confusion. You may think, “I’m trained for patient care, why am I now having to prove my work? Do they really need to see what is happening to the patient in the emergency department, overnight, and the following day?”

Addressing the situation begins with understanding the denial letter.

A denial letter can contain a highly programmed set of words using complex phraseology of legal and medical jargon that essentially states “you,” the patient/hospital, have the right to appeal the decision. For example, the patient could have been cared for in observation – a level of care denial.

A typical denial can be on the grounds of a level of care, such as a status saying “inpatient not met,” a DRG (diagnosis) challenged, and also from a library of administrative denials types. Let’s take a look at some simple steps you can take to improve the outcome when dealing with a denial letter.

Most denials happen because the reviewing team of clinicians on the insurance side doesn’t receive a full copy of the EMR before making the denial decision.

The operational process may seem straightforward, but the data extraction misses key critical elements from the patient story. An insurance provider has to deduce clinical events in the patient’s story from a 200-page extract. It can be challenging for them to determine what care happened and what interventions took as a result.

To navigate this dilemma, consider thinking from a physician advisory perspective and walk through some successful strategies. Suppose you get asked to act as an advisor or dispute a denial letter. In that case, naturally, you may worry about myriad questions and concerns regarding your ability to win a denial. Questions like:

• Do I have the skills to win this appeal?
• Am I just going to wing my clinical knowledge and hope I win?
• Should I answer questions about the “holes” in data as presented in the denial letter?

You can build your confidence by starting at the beginning and gathering some background information about the denial. Gathering information will prepare you for success when fighting a denial.

1. Know where the reasons for denial come from and why
   A denial letter will usually contain generic descriptions reproduced by insurance payers that may have nothing to do with the case or clinical concern in particular to the patient, such as identifier information, dates of services, and other bookkeeping information. However, look for the key statement, “re: approval or denial of the case.” In this mini-section, you’ll find the condition guideline that best matches the patient’s reason for hospitalization and a list of jargon text the patient did not have. The closing statement above this list is where you will find why the payer denied the inpatient stay.

• Develop your game plan on “how” to rebut against that denial.
  After reading the denial letter, write a chronological story of the case from start to finish. Your account is where you get to formulate your strategy for appealing. Think about your story carefully. The story is your main argument to prove your claim. It’s essential to clear the clutter, open up the EMR, and start writing what you see in a chronological story with evidence, dates, times, signs, symptoms, and interventions. Next, review all the guidelines for the existence of inpatient criteria and convey that in the letter. The payer will use this information at all levels of appeal. Here you may want to refer to various commercially available criteria sets, for example, InterQual or MCG. You may want to reference EBM guidelines, evidence based clinical data.

• Understand the nuance of “challenging” vs. letting the case go. Not all denials will be overturned by the payer.
  It’s essential to know the clinical grounds of debate and be mindful of what works and what doesn’t work. While accessible to all, using the guidelines discreetly to show a side of the story can take practice. The quick rule here is – there is no rule. Assuming that you won’t win the cellulitis case is exactly that. It’s an assumption. Attempt to overturn each case and learn from your “wins” and “losses” and the reasons on either side. This strategy will provide invaluable documentation improvement to the frontline. Not all cellulitis cases are the same. Knowing what cellulitis is will improve documentation and reduce future denials.

A denial fought has a much better chance of winning than accepting the denial. Winning 30 of 60 denials brings in more money than winning 9 out of 10. (Do the math!)

Once you determine you are fighting the denial, start formulating your process. Like any other critical service in your hospital, you need a strategy to ensure success.

• Develop a formal process agreed to by the denials team.
• To help minimize variation, a template of the workflow and what you write back in your appeals process will help alleviate additional work in the future.
• The timeliness of rebuttal is essential. You will be doing tons of these, so come prepared and have a well-greased process.
• Access the commercial guidelines and go through them in depth. Anticipate reviewing these regularly as they change all the time.
• Teach, teach, teach – Use your learnings from each denial to teach case-based education to the front line focusing on documentation. This approach will set you up for success and help reduce denials in the future.
  • Remember, if you didn’t’ document it, it didn’t happen.
  • The documentation has to be grounded in “valid” objective patient data and facts.
  • Avoid daily copy and re-pasting of a note.

Remember the adage: “Every Loss is an opportunity to learn…”. Even losing a denial is a chance to improve your preparation and process. 

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” Michael Jordan.

For more information, please email advisory@soundphysicians.com