Blog: Preparing for ICD-10-Related Denial Rates

September 21, 2015

by Luke Wagner.

The ICD-10 transition presents challenges to all fronts of a practice, but denial rates might be the biggest issue for your bottom line. According to the Healthcare Financial Management Association (HFMA), denial rates could increase by 100 to 200 percent. Essentially, the ability to receive reimbursement from payers will dramatically decrease.

The first step in preparing for the increased of denials is to establish a baseline by examining the following questions:

  • What is your denial rate per month?
  • Do certain physicians in your practice have more denials than others?
  • What diagnoses have the highest denial rate?
  • How many denials can one FTE handle?

Identifying deficiencies now and establishing a baseline will help to gain an understanding of how ICD-10 will impact denial rates.

Beginning on October 1, 2015 the ability to control the consistency of denials across payers will be diminished. Having an established baseline provides for the ability to determine the impacts on work flow needs. For example, if one full-time employee (FTE) is able to handle 50 denials per day then an increase in 100 denials per day would require the hiring of two additional appeals team members. A denials baseline also helps to determine infrastructure needs to accommodate the increased rates.  For example, would dual computer screens reduce time spent on denials?

Finally, a back-up plan should be considered. The simplest solution would be to add more FTEs to accommodate the increased denial rates, but this may not solve everything. Resources could be allocated to handling denials and coding could be outsourced. However it gets addressed, it is imperative to plan for denials and to obtain reimbursement.

Luke Wagner is EMP’s Director of Financial Management and Analytics. 

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