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Staunching The Tide of Medical Necessity Denials

February 1, 2018





The Importance of CDI Involvement in Denials and Appeals


Denials and appeal is a major challenge for hospitals with the Advisory Board’s biennial revenue cycle survey finding that a median 350-bed hospital would have lost $3.5 million to increased denial write-offs from healthcare payers over the past four years. Hospitals wrote off as uncollectable 90% more denials than six years ago, a difference of $3.5 million for a median 350-bed hospital, according to the report. The Advisory Board found that the median for successful denial appeals for hospitals fell from 56% to 45% for commercial payers over the past two years and from 51% to 41% for Medicaid. (Fierce Healthcare Article- November 15, 2017 Denials Rampant. Medical necessity denials continue to grow exponentially as third-party payers become more aggressive in denying care both in the inpatient and outpatient setting as part of a major business strategy to reduce the medical loss ratio, the amount insurance companies pay out for actual care provided compared to the premiums they collect, in the interest of increasing profits and shareholder and C suite annual payouts.


Hospital’s Approach to Addressing Medical Necessity Denials


A hospital’s typical approach to addressing medical necessity denials, DRG down-codes and clinical validation denials is to throw and devote more resources, staff, and acquire more software