DENIALS MGT. QUICK HINTS
1. UNDERSTAND THE DISTINCTION BETWEEN INITIAL DENIALS AND WRITEOFFS
Initial denials are a payer response (paper remittance or electronic 835 file) indicating no payment or only partial payment for services.
Writeoffs are transactions to adjust balances off active AR and record the lost revenue on the general ledger.
Initial denials do not necessarily mean lost revenue – with some labor expense, many can be collected – while writeoffs are generally truly lost collections.
2. EFFECTIVE DENIALS MANAGEMENT “MUSTS”
Compare your denials to
benchmarksto identify problem areas.
root causesfor those problems.
Engineerand test solutions at the source.
Implement correctionsusing effective change management techniques.
Technology and analytic tools can make each of these steps easier and more effective.
3. DENIALS DATA IS COMPLEX AND CAN BE DIFFICULT TO USE
Effective analysis requires data from multiple sources (835s, transactions, etc.) that must be tied together.
As a result, very few providers have the ability to accurately measure the metrics making up their performance rates.
Payers use denials codes inconsistently – “standard” codes have different meanings between payers, and sometimes even between different products offered by the same payer!
Deep understanding of the data and associated definitions is key to truly understanding performance.
4. UTILIZE TECHNOLOGY
Supplementing your staff with analytical tools allows each to focus on what they do best. Use technology to provide quantitative analysis in a detailed, contextual way.
Use staff time to review specific examples for the purpose of developing solutions.
Revenue Cycle leaders should prioritize their staffs’ time – less on collecting, organizing and analyzing of the data and more on engineering and implementing the solutions.
5. DON’T FOOL YOURSELF WITH BENCHMARKS
Typical benchmarks suggest 10% initial denial and 1% writeoff rates.
However, many providers apply inconsistent definitions and therefore overstate performance.
Typical providers are at 15%-20% initial denials and 2-3% writeoffs, even if their internal reporting shows something different.