Turning denials data into strategy

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When I first got involved with our denials program, it was a bit like flying blind. Each coding or clinical validation denial was handled one at a time. We’d write an appeal, send it off, and hope for the best. There was little tracking of the data. If I helped with an appeal, it was tough to even find out if we won.

With some effort, that’s changed. And the results have been powerful.

The Data We Now Capture

Today, every coding and clinical validation denial is logged with:

• Denial letter date

• Payer and the vendor they use

• Original billing DRG and revised DRG

• Specific audited codes

• Denial dollar amount

• Appeal strength: weak, weak-moderate, moderate-strong, strong (and “no appeal” if we don’t pursue it)

• Dates of first, second, third level appeals and the final outcome

• Discharging physician

This level of detail has been game changing.

It’s revealed hidden trends of which we weren’t aware, and given us objective numbers to match our gut instincts (and sometimes to challenge them).

What the Data Revealed

• Denials are climbing: Year over year, we’ve seen a clear increase in clinical validation denials, enough that they’ve now surpassed coding denials.

• Big dollar numbers: Before we tracked them, we had zero idea the total impact of coding and clinical validation denials. Now, we can slice and dice the impact by diagnosis, by payer, or by timeframe. This has not only been eye-opening for me, but also for other stakeholders. Although most physicians probably don’t care much about impacts on hospital billing, showing dollar amounts that start with M is still impactful.

  • We’ve used this data to get buy-in for CDI-focused hospitalist metrics, hiring of additional staff to fight denials, and get better tech solutions.

  • When I attempted to get the proposal of a new sepsis code in front of a board member of the American Hospital Association, the first request was to provide the dollar impact of sepsis denials by MA plans. I produced that data within minutes and with that - the scale of the problem was immediately understood.

• Payer patterns: One payer wanted to discuss clinical definitions (yet again) of sepsis and respiratory failure (with the assumption we should be fully aligned with theirs). However, after looking at the previous year’s data, we realized that that payer had issued ~3 times the number of clinical validation denials than every other payer combined.

  • Additionally, our appeal success rate is 15% with them, whereas our success rate with others is closer to 60%. This data suggested they are the outlier (which helps inform upstream contracting considerations and working toward agreed-upon clinical definitions rather than accepting theirs outright).

  • Plus, we showed them the exact percentage of denials that we did not appeal the year prior (objectively suggesting we are a good-faithed appeals program - that that we do not appeal every denial as I know some programs do). We admit when we’re wrong and only appeal when we feel the chart genuinely supports the documented diagnosis (and that is certainly the case >15% of the time).

But wait, data isn’t everything.

Before I go on, this data and trending is retrospective - and it isn’t everything.

As a physician advisor, there is still value in being involved with the denials themselves. For example, we started seeing denials for encephalopathy in patients with baseline dementia. As soon as I saw a few of those (before the appeals processes had even concluded), I immediately deployed education to our hospitalists to:

1. Document the patient’s baseline mental status.

2. Describe exactly how they’re off baseline (and ideally use GCS).

3. Chart their return to baseline.

4. Separate any hospital-acquired delirium clearly.

When Data Shows the Game Has Changed

We also use our numbers to check our gut instincts.

This year, we felt that our denials were not being given the same good-faith consideration that they had been before. To check that, we looked at the data. In previous years, we had never lost an appeal that we ranked as strong. This year? We had already lost several.

Nothing changed about us - but it suggested the game had changed and we needed to change our strategy.

Focusing on “better appeal letters” clearly wasn’t going to be a winning strategy.
“Better documentation,” while remaining a central strategy, wasn’t the end-all-be-all either. In fact, we’d lost a denial where I used the documentation in that case to highlight an example of near-perfect documentation.

We had to go further upstream.

Upstream beyond Upstream: Contracting

Fighting denials one at a time is exhausting and expensive. The better play is preventing them.

With the help of Richelle Marting, JD, we have a multi-step plan to limit or even eliminate clinical validation denials through contract language (again, getting her on-board only happened after I showed our executive team the cost of these denials).

But our data also shows with which payers to push hard and where to take a softer approach - it’s a delicate dance after all.

We’ve already utilized the power of the CMS provider complaint process (where MA plans were not following CMS guidelines) to eliminate Sepsis-3 denials, and to have previous Sepsis-3 denials repaid, from one MA plan.

That’s the power of good data and upstream strategy.

Investing in the Process

Yes, this level of tracking does take work. We’ve had to utilize a portion of an FTE to assist with data entry. But, we’re working on new technology to streamline tracking and communication. It’s time-intensive, but worth it.

Defining Success

The last I looked, our overall appeal success rate was about 38 percent which was not a thrilling number the first time I saw it. However, after discussing with Dr. Kendall Smith with PayerWatch who informed me that the industry average is about 30-40 percent, I felt a bit better. But honestly, my goal isn’t just to win more appeals.

True success is fewer denials to begin with.

That means continuing to track the data to help influence not only more complete documentation but also better tech, smarter payer conversations, stronger leverage-strategy, and optimized contract language to limit or eliminate denials in the first place.

The takeaway: If you’re only fighting denials one letter at a time, you’re playing defense forever. Track your data, follow the patterns, and move upstream. The best defense is a good offense.

Share your thoughts in the comments, or on Linkedin!

That’s all for now. Cheers,

Robert

Thank you to Laura Samson, RN BSN CCDS for editing this newsletter!

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