Revenue Cycle Blog March 25, 2024

Continuous Quality Improvement: Using the PDSA Cycle to Solve Claims Denials

Successful claims denial strategies rely on Continuous Quality Improvement (CQI) to identify issues, implement changes, monitor their effectiveness, and adjust for better outcomes.

One effective CQI model is the PDSA (Plan-Do-Study-Act), also known as the Deming Cycle. It is a problem-solving approach with four stages that is particularly useful in addressing claims denials. The model involves asking the following questions:

  • What are you trying to accomplish?
  • How will you know that a change is an improvement?
  • What changes can you make that will result in an improvement?

After each complete PDSA cycle, the effectiveness of the change is evaluated, and necessary adjustments are made before repeating the next cycle to ensure the change is successful and sustainable. Discover the four stages of the PDSA cycle and how they support efficiency and success as you integrate CQI into your organization’s claims denials strategy.   

The 4 Stages of The PDSA Cycle

Stage 1: Plan

  • Understand the scope of the problem by comparing your organization’s revenue targets with actual denial-related revenue loss and failed appeal rates in the past 12 months.
  • Evaluate the current claim denials and appeals process.

1. What is being done now? 2. What are the steps in the process? 3. How long does the process currently take? 4. Who is involved and roles do they play? 5. Where are the gaps and inefficiencies? 6. What is done well? 7. What can be done better? 

  • Write a problem statement identifying gaps, process inefficiencies, root causes, and other factors contributing to your organization’s denials problem.
  • Ensure all key organizational stakeholders have a cohesive vision and voice in decision-making, including front-line workers who bring unique perspectives and insights that may differ from leadership. A formal denials task force can help concentrate and streamline efforts.
  • Collaborate with colleagues from other healthcare organizations to gain different perspectives and share best practices on denials and appeals.
  • Define roles and responsibilities, set timelines, create reporting tools, and establish a meeting schedule for the key stakeholders/task force.
  • Develop an aim statement that clearly defines what is to be accomplished.
  • Build a process map.
  • Finalize the action plan, including prioritization of tasks, roles/responsibilities for stakeholders, required resources, and a timeline.

Stage 2: Do

  • Implement the action plan.
  • Collect data throughout this stage to evaluate in Stage 3.
  • Document problems, unexpected effects, and general observations.

Stage 3: Study

Based on the framework established in Stage 1 and the information collected in Stage 2:

  • Determine if your plan resulted in an improvement.
  • Quantify
  • Decide if the outcome was worth the investment.
  • Identify
  • Determine unintended side effects.

Stage 4: Act

Reflect on outcomes:

  • Implement plan if successful and always look for further improvement.
  • Return to Stage 1 if the plan falls short of the desired goal and formulate a new plan based on lessons learned.
  • Communicate accomplishments to stakeholders.
  • Educate on lessons learned and best practices to prevent repetition of mistakes.
  • Preserve your gains and sustain your accomplishments.
  • Plan for additional improvements.
  • Conduct an iterative PDSA cycle for continuous quality improvement.
  • Move to the following priority item.

Implementing practices like PDSA into your CQI strategy will set the standard of proactive problem solving and empower your organization to achieve improved claims denials outcomes. To learn more about CQI and how AMN Healthcare Revenue Cycle Solutions (RCS) can assist your organization with claims denials, please fill out the form below for a free consultation.