Process for outsourcing your denials and appeals.

3 Step Process For Outsourcing Your Denials And Appeals

At most healthcare organizations, the significant revenue cycle expenses are the ones related to human capital. Reducing costs linked with a full-time equivalent (FTE) is a primary goal for outsourcing.

After the review of your FTE budget constraints and training resources, the decision is made. Your healthcare organization is going to outsource denials and appeals. Great, now what? The hard part is done; you can just watch your bottom-line grow. Well, not so fast.

Lori Intravichit, CEO of Sunlit Cove Healthcare, said:

The definition of outsourcing is not to pass the buck; it is a collaborative process that has to fit your organization. Various factors go into making outsourcing decisions, and there is no one-size-fits-all approach. Like in any other relationship, there should be a mutual understanding about what it is that you are trying to accomplish, the scope of the work, and the problems you're trying to solve.

There are three initial steps that have to be completed before the outsourcing process can begin.


Determine what types of accounts will be sent to the vendor.

A. Complete a financial analysis of your denied accounts

B. Identify types of accounts to outsource:

  • Inpatient vs. outpatient
  • Off-site location services
  • Commercial vs. government
  • Dollar balance range

C. Discuss decision with all departments involved:

  • Case management
  • Patient access
  • Medical coding
  • Medical records
  • Billing

Figure out the timing of the accounts that will be referred to the vendor.

  • Will the accounts be referred to the vendor daily, weekly or monthly?
  • After the first denial?
  • After the first appeal is denied?
3. WHO

Define the process for selecting a vendor.

A. Be prepared to:

  • Consider the vendor part of your organization.
  • Create access and processes that will allow vendor staff to be effective.
  • Educate all departments on the need to cooperate.
  • Expect the vendor to be part of the goal to lowering your denial rates.

B. Determine:

  • Denial overturn % rates expected
  • In house denial current rate and future goal

C. Create incentive/at-risk program for the vendor that will:

  • Help reduce your overall denial rate.
  • Create timely follow up.
  • Require vendor team members to be consistent and familiar with your organization’s policies and procedures.
  • Increase your denial overturn rate.

D. Terms:

  • Variable % reimbursement based on overturn rate
  • Variable % reimbursement based on denial rate

E. Require vendor to provide reporting that includes meaningful feedback.

F. Implement contract terms that will create an incentive to help reduce your denial rate and increase your net collections. 

In conclusion, you must do your part and find partners that have the knowledge to meet your needs and treat it as a partnership, not just a service provided. Hold your denial vendor accountable and require meaningful feedback. Create contract terms that will give the incentive to help reduce your denial rate and increase your net revenue.

Sunlit Cove Healthcare team can speed collections, identify revenue opportunities, control denied claims, and add scalability and revenue cycle automation. We look at each process, identify possibilities as opposed to one size fits all strategy. We provide denial management services on a continuous or as-needed basis for a reasonable rate. No need to hire staff as volumes shift with the constantly changing environment. We work on a flat fee basis that will allow your budget not to fluctuate. Contact us or give us a call at (727) 278-3009 to get started.

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Sunlit Cove Healthcare Consultants

We provide management and consulting services to help healthcare businesses run efficiently. Navigating the dynamic and complex revenue cycle management is a challenge for many health plans, health care vendors, and providers. Our consulting services are available to assist with your day-to-day operations and provide expertise in growth and change management. We manage all aspects of your enterprise from the development of the revenue cycle management process to the completion of your business cycle.

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