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How to Manage Clinical Validation Denials

In the past several years, hospitals have continued to feel the impact on revenue from Clinical Validation Denials (CVD). The need for a robust CDI team to capture support for clinical indicators while the patient is still in house is more imperative than ever. The other overwhelming piece for revenue cycle teams to manage is how to fight those clinical validation denials post discharge. The goal is clinical relevance of a diagnosis in line with evidence-based definitions.

CVDs can consume more resources than straight DRG validation or medical necessity denials because both clinical and coding review resources are needed. More importantly, as we will highlight in a moment, the provider should also be involved in the process of appealing the denials. These denials generate a great deal of frustration, not to mention revenue reduction.

What is a Clinical Validation Denial?

Clinical validation denial is a separate process from DRG validation and involves a clinical review of a case to see whether the patient truly possesses the conditions documented. When a clinical validation denial is made, the auditor claims that the diagnosis or condition is not valid for clinical reasons.

Who is Sending the Denial?

The insurance companies hire a third party to perform clinical validation audits on their behalf. The insurance companies are an advocate for their customers, the patient, and are validating if the quality of care through appropriate diagnosing is validated based on the clinical documentation within the record. We have found where in some cases the insurance company is correct, and their recoupment of payment is warranted based on lack of clinical support for the diagnosis reported.

The Key Stakeholders

CDI (Clinical documentation integrity) team should establish themselves as a key stakeholder and work with PFS (Patient financial services) and others to establish a denials management process across departments. It is a team effort, but CDI must establish themselves as subject matter experts for clinical validation denials. The core basis of CDI is clinical reviews using standard evidence-based clinical definitions that payers are also using to perform these denials.

Do We Have to Use the Same Clinical Criteria as the Payers? 

While payers are permitted to perform a claims review utilizing specific criteria, a provider is NOT bound to these criteria. Diagnosing a patient’s condition is solely the responsibility of the provider. Only the physician, or other qualified healthcare practitioners legally accountable for establishing the patient’s diagnosis, can ‘diagnose’ the patient.

It is important to point out AHA Coding Clinic for ICD, 1Q 2020, page 4. This Coding Clinic states that it is “outside the scope of Coding Clinic to determine, endorse or approve diagnostic criteria for any condition. While providers may use a particular clinical definition or set of clinical criteria to establish a diagnosis, code assignment is based on the provider’s documentation, not on a particular clinical definition or criterion.” As it is not defined in any provider agreements, physicians and other providers may consider any appropriate criteria to diagnose a patient in their care.

One of the Most Commonly Denied Diagnoses is the Sepsis Clinical Validation Denial

While payers may have valid issues regarding documentation in their denial (e.g., whether the provider is employing Sepsis 2 or Sepsis 3 for documentation purpose), to appeal these cases successfully it is imperative to involve the provider(s) of care for these cases. Remember, without a fight, the payers will continue to focus on these areas.

Ultimately, the Sepsis-3 definition structure does not clearly identify patients in the early stages of sepsis where rapid resuscitation provides the greatest patient benefit and improves survival. As CMS is the largest payer of healthcare services in the country, the CMS guidelines can be used to establish “generally accepted medical practices.”

Sepsis-3 definitions are inconsistent with ICD-10-CM Official Guidelines for Coding and Reporting (OCG). OCG clearly distinguishes between sepsis with organ dysfunction and sepsis without organ dysfunction. If hospitals begin reporting only cases of sepsis with organ dysfunction and no cases of sepsis without organ dysfunction, it will disrupt all processes related to coding, reimbursement, and oversight on sepsis.

Lastly, it is a payer’s right to audit your charts and ensure you are providing quality care and doing the right thing. However, keep in mind that everything is centered around documentation. Work with your providers to create high-quality documentation that reflects their medical decision-making as the treating provider. By doing this you can avoid the initial clinical validation denial.

Contact Blue about your Organization’s Clinical Documentation Integrity Team

If Blue & Co., LLC can be of assistance with training staff on clinical documentation improvement within your facility, or denials management mitigation please reach out to your local Blue & Co Advisor or contact one of our experts listed below.

Monica Genzman, RHIT, CDIP, Senior Consultant

Nicole Cameron, MBA, RHIA, CDIP, CCS, Senior Consultant


American Health Information Management Association Journal, How CDI Professionals Can Lead the Clinical Validation Denials Process, March 14, 2022

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