Denials Management versus Denials Avoidance: CDI Can Capitalize

Typical CDI programs are intended to drive reimbursement through diagnosis securement, contributing to improved case mix index.

The COVID-19 pandemic is placing monumental financial stressors upon hospitals, with added costs to treat patients with high acuity and long length of stays, coupled with significant revenue loss associated with postponement of more profitable elective surgeries, like joint replacements and other same-day procedures. The cost of halting major elective surgery during the pandemic is estimated to be $22.3 billion for U.S. hospitals, according to a new study published in the Annals of Surgery. An American Hospital Association (AHA) report released in June 2020 highlighted that the financial strain facing hospitals and health systems due to COVID-19 would continue through at least 2020, with total losses expected to be at least $323 billion that year alone. The report estimated an additional minimum of $120.5 billion in financial losses due in large part to lower patient volumes from July 2020 through December 2020, or an average of $20.1 billion per month.

Adding even more financial duress to hospitals is the fact that payors are steadfastly issuing more provider denials in the name of cost containment and protecting their profits. The average rate of denials increased by 23 percent in 2020, compared to four years ago, according to a recent report by Change Healthcare. Key points highlighted in this report, titled The Change Healthcare 2020 Revenue Cycle Denials Index, include the following:

  • The average denial rate is up 23 percent since 2016, topping 11.1 percent of claims denied upon initial submission through the third quarter of 2020.
  • Since the onset of COVID-19, denials have risen 11 percent nationally.
  • Eighty-six percent of denials are potentially avoidable; nearly a quarter (24 percent) are not recoverable. The conclusion: preventable revenue loss is occurring.

Denials Prevention: A Better Approach to Managing Denials
Most hospitals address payor denials through the denials management process, evaluating and appealing each claim repetitively as it is received, making up a workflow that is reactionary and transactional in nature. This process is highly segmented, costly, and inefficient over time. A more efficient and logical means to managing denials is to develop and implement a more proactive approach that is fundamentally predicated upon avoidance, targeting a majority of the costly, self-inflicted medical necessity and clinical validation denials, as well as DRG and level-of-care downgrades. These categories of denials are often associated with insufficient and/or poor physician documentation, beginning in the emergency room and continuing with the history and physical, the segue to entry into the hospital, where effective and complete physician documentation is paramount to establishment of medical necessity. Time and time again, many a medical necessity denial is caused by poorly executed history and physicals devoid of clinical information that accurately depicts the patient’s true clinical story, closely approximating the patient’s severity of signs and symptoms, medical predictability of an adverse event, and need for inpatient level of care.

I call your attention to the Medicare Fee-For-Service 2019 Supplemental Data Report (Report) that I have referenced in many of my articles and LinkedIn posts, where I have pointed out that nearly 80 percent of improper payments made to acute-care hospitals under the DRG system in 2009 were attributable to either insufficient documentation or lack of medical necessity. A reasonable assertion is that these categories of improper payment are one and the same, rooted in poor physician documentation.  

So, one must ask the question: why is the clinical documentation integrity (CDI) profession not proactively taking a stance in addressing increasing numbers of costly, avoidable medical necessity and clinical validation denials, in addition to DRG and level-of-care downgrades?

Denials Avoidance Gaining Scale and Traction
To answer the question of why CDI is currently not effective in addressing this issue, one needs to examine the underlying purpose of such programs in general. With few exceptions, typical CDI programs are founded upon task-based processes intended to drive reimbursement through diagnosis securement, contributing to improved case mix index (CMI). The primary focus of most of these programs is upon increasing reimbursement as outcome measures of performance. Measures of denials, whether based on clinical validation or medical necessity, are generally not part of the equation when assessing overall performance. Present key performance indicators (KPIs) used to track performance are predicated upon task completion (the number of queries written, for example) in support of CMI and reimbursement.

Absent from the responsibilities of CDI is the crucial role of actually achieving real documentation integrity, facilitated through working with physicians as colleagues and constituents – what I often refer to as “boots on the ground,” fundamental to overall success. “Integrity” implies solidness, completeness, accuracy, and sustainability, which is far from what CDI is currently achieving. Simply put, the profession is not yet equipped to improve the quality of physician documentation, given these issues – and most CDI staffers’ skill sets, core competencies, and knowledge bases.

Gaining traction to alleviate the bulk of costly denials requires wholesale changes in present-day processes, along with commitment to continual learning in all facets of documentation, beyond the minimum standard of earning CEUs for credential maintenance. The profession, both individually and collectively, must reject the status quo, recognizing the real limitations of the query process, which is repetitive, reactionary, and transactional in nature. We must take advantage of the opportunity to make inroads in changing physician behavioral patterns of documentation, for the better. Getting ahead of denials requires viewing traditional KPIs as a major handicap, detracting from advancement in achieving optimal performance. Measuring performance with task-based activities consumes resources and time of CDI staffers that are better devoted to reviewing the record with the intent of identifying and addressing documentation insufficiencies contributing to unnecessary denials.

Let’s work toward attainment of “integrity” of physician documentation by rejecting current methodologies promoted as the standard by consulting companies and the associations that purport to represent the best interests of the profession.

A Call to Action
I am issuing a call to action to all CDI professionals, to recognize the immediate need for transformation in current practices that are not designed to actually improve clinical documentation. CDI software, billed as a panacea for this purpose, must be treated as a tool, not a crutch. It is incumbent upon each and every professional to step up to the plate and acquire the skill sets, knowledge bases, and core competencies to become a driving force to achieve excellence in documentation integrity. Such excellence will certainly enhance reimbursement for current and future years.

As noted, current certifications demonstrate the attainment of the minimum standards for the CDI professional; there is far more to learn to continue career growth. We must have a strong sense of duty to our employers to alleviate the severe financial drain imposed by denials, especially with the significant financial challenges posed by the COVID pandemic. Let’s commit to reducing denials, first and foremost, by embracing a proactive approach to documentation integrity. It should be clear to any objective observer that present-day processes are inadequate to avoid denials in the first place; in many ways, the query process is potentially contributing to denials. That is definitely not a healthy position to be in, no matter how you look at it – for your hospital, for the jobs of you and your colleagues, and for your patients and community.

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