Pathology Denial Metrics and Implementing a Strategic Appeals Processes

Pathology practices are becoming increasingly inundated with added requirements for prior authorization and medical necessity documentation. Insurance requirements are becoming more onerous, and lines are increasingly blurred around what is required for claims to meet individual payor standards for reimbursement. Failure to meet a single requirement, on even a small percentage of claims, is costing pathology practices a substantial amount in lost revenue. In this blog, we will explore the outcomes of a successful appeals process and how that can have a positive financial impact on your bottom line.

Appeals Study

Over the last two years, XiFin has published several studies on shifts in denial trends within the pathology and laboratory industry as referenced in several links at the bottom of this post. In the XiFin study, 2021 YTD Pathology Appeal Performance Review, we analyzed approximately 550,000 pathology encounters in early 2021. Of these encounters, we reviewed more than 66,000 payor denials or requests for additional information. 10%, or approximately 6,500 accessions, were subsequently appealed.

Leveraging the expertise of Laura Spaulding, XiFin’s Senior Manager of Payor Regulations and Strategy, our internal teams have been meticulously reviewing every denial reason code, corresponding remark codes (where relevant), creating appeal letters for each unique scenario, and implementing an automated compilation process for every type of appeal, based on the criteria we entered into XiFin RPM.

Data-Driven Appeals Strategy

A data-driven appeals strategy combined with automated appeals processes and high visibility is essential to recovering the revenue that is duly earned by your business. The value of this approach will continue to become more impactful as these denial trends continue, and reimbursements continue to put pressure on your bottom line.

To demonstrate XiFin’s automated denial/appeal process, let’s review CO151 reason code, indicating a MUE denial for excessive units, which is an increasing denial type for our pathology billing customers in 2021. This denial cannot always be proactively prevented as it generally represents the amount of work actually performed as compared to the payor’s reimbursement policy limitation on the number of units allowed. Once determined that units billed over the payor policy will be appealed, receiving payment may be as easy as documenting the work performed by supplying a templated appeal and a report for the work performed. Using XiFin’s system automation and document storage technology, logic can be mapped to the payor electronic denial or reason code received and automatically pull the pre-programmed appeal cover letter and pathology report, then deliver the documents to the payor either electronically or by mail. If special circumstances present a more manual approach be taken, an override may be established for someone to work the accession and submit via the payor’s portal when required.

Automating components of the appeal process ensures efficiency and reduces manual and cumbersome responsibilities. Once the appeals logic set-up is completed, the system intuitively knows how to communicate the appropriate relevance and response to the payors in each denial scenario, and XiFin’s talent teams can focus on the pertinent management of the process, such as tracking, follow-up, and analysis of outcomes.

To determine the ongoing effectiveness of these processes, XiFin exports thousands of data elements into its Business Intelligence and Advanced Analytics reporting platforms in real-time. From there, we pull high-level dashboards with capabilities to drill down to accession-level detail to determine success rates by payor, appeal type, letter used, and more. Querying this data across all customers allows XiFin to quickly identify the best policy to help our customers leverage improved success rates.

XiFin Customer Study: Appeal Process Return on Investment

Insightful metrics surrounding the results¹:

• Appeals for denials related to Medical Necessity account for 85% of the appeals that have been filed year-to-date, with more than 24% success rate of receiving payment after the first appeal, 14% after the second appeal, and 15% after the third appeal.
• Prior Authorizations have an overall success rate of 34%, but denials are significantly reduced when clients leverage an integrated Prior Authorization vendor. Furthermore, in the event of a denial, appeal success rates are significantly higher in those circumstances where the Prior Authorization partner is leveraged to acquire an authorization for a retroactive submission. A Prior Authorization vendor is an efficient way of both proactively and retroactively acquiring authorizations, with successful first round Prior Authorization requests from XiFin’s vendors averaging 80%, and second round Prior Authorization requests averaging 98% success rates.
• Maximum Frequency denials are overturned 28% of the time. This includes MUE denials.
• Across all appeal types, we experienced a positive appeal rate of 23% on the first appeal, 13% on the second appeal and 16% on the third appeal. Cumulative success is 20%.
• Averaging 70-80 appeals per day, with the capacity of much higher volumes, revenue generated for each accession averaged $134 on the first appeal, $106 on the second appeal, and $61 on the third appeal.

Unfortunately for most pathology groups, the process of identification and management of related payor denials, and insurer requests for additional information to support the medical necessity of the procedure are not easily handled internally and/or by their outsourced billing companies. Even for service providers with great people, the systems and limited visibility used by most make it cost prohibitive for them to consistently appeal at multiple levels. The average medium sized pathology group now experiences a denial rate of 10%+, with dependence on payor mix, test mix, and in-network status. Therefore, it is imperative to strategically manage resources to capture this portion of their revenue, particularly since they’ve already incurred expenses.