The HIT Transition Weblog

Denial Engines Still Lack Response from Provider Vendors

It's been almost two years since I published my piece on a new segment of payer software tools that offer a suite of editing tools so sophisticated that it basically allowed payers to tune them to whatever percentage of revenue retention they thought providers would tolerate.  I dubbed the tools Denial Engines and suggested that provider vendors had been seriously outflanked and needed to up their game.

This new category of vendors digs deeper, into the literally millions of edits available.  They employ various ways to improve on the previous technology, such as greater selectivity (applying edits to some providers and not others), longitudinal comparisions (i.e. based on patient history), and pattern matching (i.e. upcoding).  Regardless of the approaches they choose, these vendors make the sale based on the fact that they can recover more money than the payers' existing edits, and they provide the analytics to prove it....The "best" of these denial engines point to independent sources for the edits.  This helpful feature allows providers to learn from their mistakes. Such evidence may also tend to keep providers from pursuing appeals that will ultimately prove unsuccessful.

In my research since then, I've learned a lot more.  Some of these DE tools will go so far as to edit against best practices published in medical journals, and integrate a link to the citation in the automated defense. 

Worse, DE tools are being used by Recovery Audit Contractors (RACs) to do commission-based re-adjudication of old Medicare claims.  They're not just subtracting from what they owe you, they're taking back money you thought you'd earned years ago.

Leaving Money on th--Hey!  Where's My Table!?
I even suggested that there were (software) revenue/market opportunities to had, if provider vendors could just alert their clients that they were having an additional 4% or more of their payables systematically denied, and come up with an effective response mechanism.  I even architected a potential solution and showed it to a few of them.

Providers Fighting RACs

Back when I ran that series warning providers about the new, sophisticated claims analytics tools I dubbed Denial Engines, I turned up some scary evidence about Medicare's demonstration Recovery Audit Contractor (RAC) program (see Medicare No Longer Money in the Bank among other posts listed in the Denial Engines category to the right).

I spent a lot of my free time (in both senses of the word) digging up the dirt on this payer technology (not that it's necessarily dirty -- which is part of the danger)  and the RAC approach, by which Medicare hires auditors to pore over previous years' settlements looking for "overpayments" -- then rewards them with a bounty for every dollar they retroactively deduct from providers current year remittances.

So, did the provider vendors come rushing to me to learn how to foil these tools?  Did provider organizations lavish me with plane tickets and speaker fees to come share the news and help them devise strategies to withstand the threat?  Um, no.  But apparently, they did call their lawyers.

And now it looks like some of those attorneys may be earning their fees (which, by the way, tend to be much higher than my standard hourly rate).

Medicare Pilots Another Denial Engine Project

I missed this when it came out in December, but I found it on Michael Alpolskis' excellent MedicareUpdate Blog: CMS Publishes Notice of Computer Matching Program to Detect Fraud, Waste & Abuse

I've added Michael to my oh-so-exclusive Health IT Blogroll -- he also covered the NPI Contingency.

Very Hot Off the Press

Two days after the WSJ covered the "New Arms Race" of denial management, the NY Times went even further: tracing the logical path from the struggle over denial to the absurdity of US financing healthcare overall.

I found the column re-printed in the Dallas Morning News. 

Medicare No Longer Money in the Bank

How much did you earn from Medicare last year?  Or should I say, how much did you think you had earned?

RAC, Medicare's new cost recovery initiative, is rolling out in Florida, New York and California, with other states almost certain to follow.  RAC stands for "Recovery Audit Contractor" and it refers to a firm that is hired to recover money from providers for claims that have long been settled.  How?  They'll use historical data and more sophisticated editing techniques to find "duplicate" charges, coding errors and procedures of questionable necessity.  That should sound familiar to anyone that's been keeping up with my warnings about Denial Engine technology.  If there was any doubt that these tools would take hold, Medicare has eliminated it by carving out a lucrative market for them in the federal budget.

Denial Engines: 4 Cylinder and V8

Looks like I was right about Denial Engine technology taking off.  Even as I was posting my thoughts about the DE's penetrating the TPA market, Bloodhound was announcing a deal with Acclamation Systems, a company that offers a virtual treasure chest of toys for third party administrators and small-to-mid-size plans.  Several of the other offerings in their list employ DE technology, including Bloodhound's and those of Ingenix.

The ASP model works well for the undertechnical smaller plans, but what about the big guys?  Um, if you're a provider, I've got some bad news....