Healthcare Slow to Respond to Denial Engine Threat Says Healthcare IT Transition Group

Health insurance plans and government payers are using new data tools to reduce payments to providers by as much as 5-10%. These processes can be invoked before, during or even long after claims adjudication. New research and analysis from Healthcare IT Transition Group targets the defeat of these “denial engines.”

Physicians, hospitals and other healthcare providers are engaged in an ongoing battle with health plans over the accurate payment of claims. Most healthcare encounters involve multiple conditions or types of treatment, and these need to be represented by complex combinations of diagnostic and procedure codes. Traditionally, payers have compared these codes to guidelines represented by Medicare’s Correct Coding Initiative (CCI) and their own contract terms with the provider to make adjustments. Providers’ software vendors responded by making sure the outbound claims were consistent with CCI guidelines.

Increasingly, payers are using much more sophisticated data mining tools that analysts have dubbed “denial engines.” These put millions of possible rule combinations, known as “edits,” at the payer’s disposal, allowing them to selectively turn edits on or off to achieve particular payment objectives. Some vendors boast they can be set to retain as much as 4% or more of the payments that would get through traditional edits, and that such levels can be maintained by increasing the strictures, even as providers modify their billing practices over time. For instance, Ingenix boasts that “payers can achieve immediate savings up to 2―5 percent of facility claims stream without renegotiating contracts”. Denial engine vendor TC3 shoots even higher, saying their “loss control technologies” can reward payers by “reducing paid claims by 3-10% annually.”

Some health plans have come under legal scrutiny for allegedly exaggerating adjustments for “usual and customary” fees. The denial engine vendor Ingenix has been targeted by New York Attorney General Andrew Cuomo’s investigation.

Vendor offerings in this category include Ingenix Detection Software (iCES), Bloodhound Technologies’ ClaimsGuard™, HLTH Corporation’s (formerly Emdeon) ViPS StarSentinel, McKesson’s ClaimReview and ClaimsXten, HCI’s Claim Insight series and TC3 Health’s Fraud & Abuse Prevention Suite.

Many vendors offer to perform post-hoc reviews of settled claims. Such audits have been the subject of much debate, especially when contractors’ revenues are tied directly to recoveries, as with Medicare’s controversial Recovery Audit Contractor (RAC) program. RACs are private contractors hired to review claims from prior years and deduct contested amounts from current payments to hospitals and physicians.

Healthcare IT Transition Group is hosting an educational webinar entitled “Defeating the Denial Engine: How a New Breed of Software is Bleeding Providers Dry, and How to Build, Buy or Demand Tools and Techniques to Put a Stop to It.”

Topics to be addressed include:
+ Differences between denial engines and traditional claim edits
+ How payer-defined “abuse” has replaced legally-defined “fraud” as a target of inquiry
+ How denial engines are used before, during and long after claims adjudication
+ An accounting of denial engine vendors, their clients and their tools
+ Getting claims paid a denial engine is deiscovered
+ A design schematic for use in developing an anti-Denial Engine system

Webinar dates are February 27 and 28. A video version will be released in March.

Information may be obtained at http://denial.hittransition.com .