One of the most common hospital denials—coordination of benefits (COB) denials—puts 1% of net patient revenue at risk each year. Yet up to 65% of denied COB claims are never corrected and resubmitted for reimbursement. For hospitals, it’s a missed opportunity to capture revenue for care and services delivered.
Consider that 70% of COB denials are approved after they are corrected and resubmitted. Yet often when hospitals receive COB denials, revenue cycle staff may attempt to reach the patient by phone and letter, and when that proves to be unsuccessful these balances are identified as “patient responsibility,” and in some cases discounted to self-pay rates. This scenario not only diminishes revenue but also tarnishes the patient experience by putting the brunt of responsibility for payment on the consumer.
The revenue opportunity can be substantial: At one multi-hospital health system in the East, failing to recover insurance dollars by correcting COB claims cost the health system over $1.2 million in lost revenue per month across 255 patients. The impact per year: $15.3 million in missed revenue across 3,000 patients. The financial pressures hospitals face demand a better approach.
Why Breakdowns in COB Denial Management Occur
COB denials began to rise in 2014, when the Affordable Care Act prohibited insurance companies from denying coverage for preexisting conditions or charging higher premiums to those who have them. So did patient involvement denials, which occur when health plans request additional information from patients— such as eligibility information updates or prior medical history forms—before the claim will be processed.
Sometimes, COB denials stem from annual or biannual COB update requests from health plans. Other common causes include:
- Incomplete or inaccurate COB information on file with the payer
- Care may be covered by another payer
- Medicare Common Working File issues
COB denials are confusing for patients, and they can cause enormous turmoil at a time when patients might already feel vulnerable due to their health status. In one highly publicized incident, a couple from Kansas whose infant daughter spent seven days in neonatal intensive care were charged $270,951 for labor and delivery and NICU care. The reason: The parents weren’t aware of the “birthday rule,” which required the daughter’s primary coverage to fall under her father’s insurance plan. Because the mother’s insurance plan was more generous, the parents planned to enroll their daughter only in that plan, not knowing that health plan guidelines require a different approach. The situation took two years to resolve, significantly affecting their healthcare experience.
That’s why it’s crucial that healthcare revenue cycle departments invest in the resources needed to resolve COB and patient involvement claims. Given that these patients have insurance, they expect the majority of their care to be covered by their plan. When denials arise, revenue cycle departments must serve as an advocate for the patient, working with the insurance company to resolve issues that impede payment.
But capturing the information needed from patients after their healthcare encounter is over is more difficult than revenue cycle teams might anticipate. Sometimes, patients are discharged to a location other than their home address. Communication preferences—from text to email to letters sent by mail—vary by patient, and so does the likelihood that patients will respond
Further, even when contact has been established, not all patients will follow up with their insurance company to provide the information necessary to process their claim.
Adopting a More Proactive COB Denial Management Strategy
Given the challenges associated with correcting COB claims, it’s easy to see why revenue cycle employees may be tempted to give up after a couple of attempts to contact the patient. But these accounts shouldn’t simply be designated as self-pay when obstacles occur.
3 Reasons to Re-Think Your Revenue Cycle’s COB Process
As the percentage of COB denials rises, there are three reasons healthcare providers should rethink their process.
1) The potential for revenue recovery is high.
When hospitals attempt to resolve COB and patient involvement denials on their own, their recovery rate typically totals 30%, on average. This figure rises to as high as 75% when organizations invest in outside support, enabling staff to focus on more value-added work while boosting their bottom line.
The challenge lies in putting the missing pieces together. To resolve COB claims, revenue cycle staff must understand the intricacies of COB requirements—including the birthday rule—to determine whether the correct payer was billed as the primary health plan. They must contact patients to confirm coverage. They must also assess whether secondary and/or tertiary coverage exists, in part by reviewing all associated accounts within the billing system. These can be time-consuming tasks. Revenue cycle leaders must consider: “Is my staff’s time best spent on these activities? Or, is there greater return on investment from outsourcing this work?”
2) Efforts to resolve COB denials significantly reduce bad debt.
If your organization isn’t actively correcting COB claims, your chances of mitigating other types of denials plummets. That’s because payers will perceive a lack of action as a sign of complacency, and they will have limited incentive to work with your organization to resolve claim delays or denials.
Every payer contract contains an implied covenant of good faith and fair dealing. When a payer violates this covenant—such as by requesting COB annually or biannually just to delay paying the claim—hospitals need a strategy for recovering revenue for services delivered. The question is, does your organization have the time and expertise to hold payers accountable in scenarios such as these? Further, would the time and effort spent responding to COB denials match the recovery rates and timeframes of a third-party expert?
It’s important to note that a COB denial may need to be reprocessed more than once before an organization receives payment. Effective denial management requires not just persistence, but also careful tracking of which claims were resubmitted, when, and the status of recovery efforts across claims and health plans.
3) Timely engagement is critical to revenue recovery.
COB claim denials are complex, and many cannot be resolved without the patient’s assistance. This puts pressure on staff to engage both the payer and the patient in a timely manner. Revenue staff tasked with contacting patients must possess a strong understanding of how to effectively gain patients’ full involvement.
In our experience, multi-channel communications, such as a strategy that incorporates texts, emails, phone messaging, printed letters––and even home visits under certain circumstances, will produce the best results. Typically, a “once and done” approach to communication is not sufficient. Because so much handholding is involved, hospital revenue cycle teams often find that they need third-party assistance in initiating and managing these conversations if they are to achieve the desired recovery rate.
What You Should Know to Improve Your Revenue Cycle Performance
The challenge of COB denial management in healthcare organizations is undeniable, with potential revenue loss and a poor patient experience at stake. The statistics show that a significant portion of denied COB claims remain uncorrected and unrecovered, highlighting the need for a re-prioritization of strategies. Hospitals can no longer afford to view these denials as mere inconveniences.
The reasons for breakdowns in COB denial management are diverse, stemming from evolving regulations, incomplete information, to complex payer dynamics. As healthcare providers, it is imperative to adopt a more proactive approach that acknowledges the high potential for revenue recovery, a substantial reduction in bad debt, and the critical importance of timely engagement. This entails strategic investments in the right resources and expertise to navigate the intricacies of COB requirements and patient communication.
By collaborating with third-party experts, healthcare organizations can optimize their revenue cycle processes while achieving a greater return on investment. Timely engagement with patients and payers, facilitated by multi-channel communication strategies, further enhances the likelihood of successful resolution.
In essence, the time has come for hospitals to embrace a more strategic model that prioritizes the prevention and response to COB denials. This shift not only safeguards revenue streams but also ensures that patients receive the financial advocacy they deserve during their healthcare journeys.