Web Exclusive

Denial Rates Before and After ICD-10 Implementation
By Kevin Lathrop

Do your denial rates appear unchanged by ICD-10? Congratulations! But you still have a problem.

For many health care provider organizations over the past year, a new metric for success seems to be prevailing: If a provider hasn't seen a significant increase in denial rates after the ICD-10 implementation, they must be doing pretty well. In today's shifting health care landscape, it seems we are constantly adopting changes and working to meet requirements that can significantly change the way we operate, and while a neutral impact isn't necessarily a bad thing, it should not be considered a positive win for the practice.

So far, it's looking like ICD-10 was not the harbinger of coding doom many once believed, yet it did create a more complex environment to identify and appeal some of the very same issues that have always made denials management a nightmare for health care organizations. What that means, practically, is that the same revenue providers have always overlooked, failed to appeal, and written off is still being lost, but now, it may be happening in even more complex, less obvious ways.

A Little Here, a Little There
To highlight the complexity of understanding these issues, we recently analyzed data from our own client base, who use our analytics tool to manage their denials. We found diagnosis-related denials remained less than 2% of overall denials. Denials specific to diagnosis errors, such as Remittance Advice Remark Codes (RARCs) MA63 (missing/incomplete/invalid principal diagnosis) and M64 (missing/incomplete/invalid other diagnosis), have continuously decreased in volume since an initial spike observed late 2015. This pattern indicates both provider billing errors and payer system configuration errors have actually improved somewhat since the onset of ICD-10. On the other hand, there was a 200% increase in RARC 167 from January 2016 to January 2017; yet the overall percentage was less than 1% of denials (0.8 higher than January 2016). As a result, this isolated denial rate may not rise to the top of a provider's list of issues to address.

These examples highlight only two areas of denials that were affected by ICD-10. Depending on the revenue tied to these denials, one might consider the impact of these changes to be somewhat neutral. However, these aren't the only two denials practices are finding, and they add up.

In these examples, it only analyzed a time period that could reflect impacts from ICD-10, but what about all those denials occurring before ICD-10? Why give up on trying to better understand the reasons those occurred and why they continue? Denials should be understood, managed, and reduced as part of regular daily workflow. They shouldn't be used exclusively as a measurement of the success or failure of big, industry-changing events.

From Good to Great
In every segment of health care, there are those who try to do things better for the purpose of better serving patients. It's why most got into this industry and why they get out of bed in the morning.

The good news is, technology is now transforming health care organizations in the same ways it has in banking, retail, and other individual consumer/patient-driven industries. We finally have the opportunity to address pervasive challenges in which the organization and presentation of data is prerequisite to the solution. The sophistication and ease of technologies, such as denial and contract management analytics, are helping to make these activities a daily part of provider office workflow and leaving little excuse for providers to continue losing revenue because they might not understand and appeal denied claims.

With these tools, forward-thinking provider organizations are driving their practices to new levels of health care delivery, and placing themselves in stronger positions to respond to the big industry changes still to come. For these providers, "good enough" simply isn't.

— Kevin Lathrop is president of TriZetto Healthcare Products for Cognizant.