The Growing Denials Crisis and What Healthcare Leaders Can Do [PODCAST]

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The Growing Denials Crisis and What Healthcare Leaders Can Do

In this episode, Noah Breslow, CEO of Revecore, discusses the growing denials crisis and what healthcare leaders can do.

Highlights of this episode include:

• Why denials are becoming such a significant challenge for health systems
• What the financial implications are on health systems
• Why so many organizations struggle to prevent denials before they happen
• What the biggest reasons denials continue to slip through the cracks
• How health systems can shift from reacting to denials to preventing them
• How AI and automation can help identify and address denial risks earlier
• What roles dedicated denial prevention processes play in improving outcomes
• What revenue cycle leaders should do now to strengthen their denial strategy

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Noah Breslow. As CEO of Revecore, Noah brings more than 20 years of executive leadership experience with a focus on driving growth, innovation, and transformation in complex, highly regulated industries. Most recently, Noah was a partner at Bain Capital Ventures, or BCV, where he led their portfolio support team, built out data-driven investment tooling, and helped incubate two startups at the forefront of applying AI in the insurance claims processing and wealth management industries. Prior to BCV, Noah served as chairman and CEO of OnDeck, a pioneering online small business lender where he built the business from its earliest stages, took it public, and ultimately facilitated its acquisition. Earlier in his career, Noah held leadership roles in product, engineering, and marketing.

He holds a Bachelor of Science in Computer Science and Engineering from MIT and an MBA from Harvard Business School.

In this episode, we’re discussing the growing denials crisis and what healthcare leaders can do. Welcome, and thank you for joining us, Noah.

Noah Breslow: Thanks so much, Kelly. It’s really great to be here.

Kelly: It’s great to have you. Well, let’s go ahead and jump in. So why are denials becoming such a significant challenge for health systems? And what are the financial implications on health systems?

Noah: Yeah, it’s a trend that’s obviously been there for a long time. But it’s getting worse and worse. So, denials have really moved from a back-office kind of nuisance to a real top-line, front and center margin issue. So, research from McKinsey shows that nearly 3% of net patient revenue is written off due to clinical denials alone. And then if you add in underpayments, the cost of appealing those denials, timely filing issues, you might get another percent or two as well, hitting hospitals. So, I think you have a big financial set of changes going on, and we can get more into that. And then you’ve also got the fact that payers have gotten a lot more sophisticated. So, they’re using AI to do AI-driven claims review, deny claims in a more automated way, in a more nuanced way, maybe than they did before. And we’re seeing just denial trends going up across the board.

Kelly: Yeah, I mean, I know denials are a huge issue with such significant financial implications. So, Noah, why do so many organizations struggle to prevent denials before they happen?

Noah: It’s got a variety of reasons here. I think organizations struggle to prevent denials, not because they don’t intend to stop denials. So, 47% of organizations cite improving clinical denials as a top priority, yet only around 36% have standardized processes to actually do it. So even though they want to make this an issue, actually implementing the process and the infrastructure to better manage denials is more of a challenge. The other thing about denials is you can obviously engage in that firefighting motion, right? You get a claim denied, you appeal the claim, you go back and forth to adjudicate that one claim. That’s a very different thing than fixing that root cause of the denial upstream. And I think most organizations are better positioned to do that firefighting on a claim-by-claim basis than really do that systemic analysis. “Why is this denial happening? What process do I have to fix on patient intake, or on clinical documentation, or on billing and coding to make sure that that denial doesn’t happen again in the future?” And that fragmentation is a huge challenge for hospitals.

Kelly: Yeah, it seems like doing that hard work is key there. So, what are the biggest reasons denials continue to slip through the cracks?

Noah: Yeah, I think it’s a multidisciplinary thing. So, you need kind of that combination of data intelligence, the reporting that says, “Hey, we’ve been submitting claims to this particular payer and these types used to get denied at this rate, but we’re seeing this uptrend in these particular types.” You have to connect that intelligence piece. What’s actually happening, and trend analysis, but then you need really human expertise to go, “Okay, why is this trend happening? What could I change upstream to maybe prevent this denial from happening in the future?” And that’s a very multidisciplinary thing. It could involve changing processes. It could involve retraining staff. It could involve system changes, collecting different pieces of information at different points in the process. So, I think it’s that multidisciplinary way to integrate the data on the back end and the intelligence gathering with the process engineering upfront to prevent those denials from happening in the future.

Kelly: Yeah, I love what you said there about the combination of data intelligence and human expertise. That totally makes sense to me. Probably to others as well. So, you know how can health systems shift from reacting to denials to preventing them?

Noah: Yeah. There’s a few different ways I think health systems can go from reactive mode to prevention mode. First is organizational. You have to set up processes and teams inside your revenue cycle organization that are dedicated, that make it someone’s full-time job to making those structural changes to prevent denials from happening in the future. So, organizations with those dedicated processes to prevent denials have a much higher appeal success rate than organizations who don’t have those dedicated teams. And then the other piece of it is around timing. If you imagine you go to the doctor’s office and they hit your knee with a hammer, and it takes you two months to kick, your reflexes are pretty slow, right? And so, two months later, that procedure happened a long time in the past. The patient has already gone home. The documentation may be locked down. And so working on your feedback loop, that rapid cycle from the moment that denied claim comes in to the trend analysis to going upstream and working to make those changes, it’s a governance question as much as it is a technology question, and denial trends should be front and center in revenue cycle leadership meetings, not something you check in on once a quarter.

Kelly: Completely agree. And I love what you said about the reaction mode to prevention mode. That makes a lot of sense in this specific example. So, AI is all the hype. How can AI and automation help identify and address denial risks earlier?

Noah: Yeah. So, AI is a tool that payers frankly have a head start on over providers. I think they’ve been implementing AI at scale now for a few years. Providers are starting to catch up, but it’s a little bit of an arms race, and providers really need to deploy AI, I think, to be the best position to handle increasing types of denials in the coming years. So, AI’s real value is pattern recognition at scale, right? Finding those connections across payers, service lines, procedure types that are driving recurring denials faster than someone could just reviewing claims one by one on their own. And so getting that AI deployed to find those patterns is critical. And the other piece, it is a moving target. So, the claims that are denied this year may not be the ones that are denied next year. There are always new types of denials coming in, and some of them can be addressed very basically, right? They could be administrative denials. They could be missing documentation. Those are more sort of straightforward process issues, but there are a lot more subtle ones in terms of the way procedures are coded and billed, the way procedures are bundled together. And that’s where, again, having that human expertise to complement the AI is so important.

Kelly: Completely agree. And I mean, it does really seem like providers really need to get on the AI trainer in a major way. So, what role do dedicated denial prevention processes play in improving outcomes?

Noah: It’s massive. They have that dedicated team focused on improving outcomes We see it all the time in our client base at Revecore. Some of our customers, maybe the smaller health systems that don’t have those dedicated teams focused on denials, they’re, again, more in that reactive mode, but our larger customers often do have specialized denial teams or executives focused on those. And we’ve seen some of our more sophisticated clients not only have dedicated teams, but have dedicated analytics. So, they’ll know to the analyst level on their team what their overturn rates are by procedure type, by payer, and then they start to actually optimize. So folks on the team who are better at getting certain types of denials overturned will focus there. And then other areas might be gaps that need to be addressed by training or hiring new skill sets. So dedicated team, specific measurement of payer-specific trends, procedure-specific trends, and training and upskilling are all a big part of this.

Kelly: I love what you said about the dedicated team. That really is key here. So, Noah, what should revenue cycle leaders do now to strengthen their denial strategy?

Noah: I think the first step is– forgive the phrase. The first step is admitting you have a problem. And you have to get honest about that infrastructure gap. 64% of organizations lack the infrastructure to prevent denials. You can’t do any of this without these processes, dedicated teams, workflow systems, tracking mechanisms. And so, you have to sort of assess what you really have to fight denials and then start to up-level it if you don’t have all of those pieces in place. I think the next thing is really making denial a frontline activity in your revenue cycle team. So, segmenting by payer, by service line, by root cause, making it a recurring executive topic. One healthcare revenue cycle leader I know has daily stand-ups with their team where they read out on the latest trends of denial. So, it’s not a weekly meeting, it’s not a monthly or quarterly meeting. It’s literally every day they’re talking about this. And then I think really looking at that delay between hitting your knee with the hammer and then having a kick, right? So when you see a new trend, measuring your time as an organization from detecting that trend to making that upstream fix, I think if you can do that and work on shrinking that time down, getting really agile and fast with your processes and with your changes, that is the ultimate weapon because denials are always going to be a moving target. It always impairs economic interest to deny some fraction of claims. And so, you have to be moving to where that puck is going every year, every month, every quarter.

Kelly: Wow. Yeah. I mean, I love what you said about the daily meetings. That is certainly an impressive dedication to this issue. Well, thank you so much, Noah, for sharing your insights with us on the growing denials crisis and what healthcare leaders can do. And if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?

Noah: Yeah, no, thanks, Kelly. It’s been great to be here. And if folks want to learn more about what Revecore does to help health systems manage denials and get them overturned and get hospitals the revenue they deserve, they can visit us at our website, https://www.revecore.com, R-E-V-E-C-O-R-E, dot com. Or they can reach out to me directly. I’m just noah.breslow@revecore.com.

Kelly: Awesome. Thank you for providing that. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…

[music] This concludes today’s episode of The Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.holdings/podcasts. The Hospital Finance Podcast is a production of Besler Holdings.

If you have a topic that you’d like us to discuss on The Hospital Finance Podcast or if you’d like to be a guest, drop us a line at contact@besler.holdings.

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