Clinical Appeals and Defense Audits

Clinical Appeals

With the rise in reimbursement denials over the past years, healthcare facilities are increasingly facing clinical denials. These denials are a common occurrence for providers, and while some are justified, others offer opportunities to work with providers and recover lost revenue. Denials can stem from a variety of causes, with most charging errors typically happening in the Emergency Department, Surgery, and Observation stays.

Common Reasons for Denials

• Denials are based on medical necessity, length of stay, or level of care.

• Denial due to non-covered services.

• Documentation that does not support the level of care charged.

• Denials resulting from inappropriate care.

• Appropriate care not sufficiently supported in the medical record.

To prevent and manage future denials, providers must first determine the reasons behind them. Without understanding what is being denied, it is impossible to develop effective prevention strategies.

Effective Denial Management

Successfully managing claim denials is essential for maximizing claims reimbursement revenue and preventing further denials. The way a healthcare organization handles denials plays a significant role in its overall financial stability.

How to Improve Denial Management

1. The need to understand why claims were denied: Identifying the main reasons for denials is the first step toward maximizing revenue collections and preventing future claims from being denied.

2. Complete claim denials within a week: Establishing a strong workflow for denied claims is vital to developing a successful denial strategy. Upon receiving a denial from an insurance company, a timely process should be in place to resolve the denial within a week.

3. Create a tracking & reporting process: Setting up a denial reporting system that tracks claims as they move through the system allows an organization to assess performance over time. This is particularly important since many insurance companies impose time limits on how long a hospital or medical practice has to appeal a denial.

4. Track your progress and appeals: Monitoring appeals and their outcomes is crucial. Identifying the types of denials most common to the organization helps refine the denial management process and improve efficiency.

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Defending Hospital Charges

If a facility or medical practice receives a notice from an insurance company, such as a Letter of Intent (LOI) indicating an upcoming audit of medical and billing records, or a Denial Letter, there are important steps that must be taken to protect the organization’s interests.

The scope of a medical audit involves verifying that charges on the detailed itemized hospital bill are accurate, represent services rendered to the patient, are physician-ordered, and are based on standard hospital practices or nursing protocols and procedures.

Third Party Payer Defense Audit

The audit policy should be limited to confirming that charges for services rendered and supplies provided are accurate.

Providers must conduct a pre-audit before defending them against an external audit. This involves reviewing both overcharges and undercharges. When conducting a clinical audit in defense of hospital charges, the nurse auditor must ensure there is consistency between medical records documentation and billing statements on patient accounts.