Self Assessment: Denials
Use the following self-assessment tool to ensure that you have key processes covered ("yes" is the preferred response for each process). Then, check your performance measures against the better-practice target levels in the performance indicator section.
1. Track denials by payer, reason, and financial consequence.
2. Distinguish between technical and clinical denials.
3. Track denials by physician, DRG, and department.
4. Ensure that contractual allowances are increasing slower than gross revenue. (This is a check to make sure that A/R is not being written off to reduce days in A/R.)
5. Have dedicated denials units with payer-specific appeals experience.
6. Respond to clinical documentation requests within 14 days.
7. Use an on-line system to compare expected vs. actual payments.
8. Use on-line payment tracking software.
9. Use on-line contract management software.
10. Maintain a self-developed or purchased denials database.
11. Use an on-line outpatient medical necessity system before service.
12. May sure all denial reason codes are actionable.
13. Track observation and inpatient authorizations separately.
14. Consolidate pre-certification, authorization, and recertification functions into a single department.
15. Share pre-certification requirements with physicians' offices.
16. Provide physicians with regular feedback on clinical denials rates.
17. Hold regular meetings with payers to discuss denials issues.
18. Regularly distribute contract terms to revenue cycle employees.
19. Revenue cycle employees learn of contract changes before the effective date.
20. Exchange structured feedback between the revenue cycle and managed care departments.
21. Schedule non-emergency services 12 hours or more in advance to help prevent both medical and technical denials.
Key Performance Indicators
1. Overall denials rate as a percent of gross revenue
2. Clinical denials rate as a percent of gross revenue
3. Technical denials rate as a percent of gross revenue
4. Rate of additional collection for underpayments
5. Rate of appeals overturned
40 - 60%
6. Electronic eligibility rate
7. Physician pre-certification double-check rate
8. Case managers' time spent securing authorizations rate
9. Percent of high-revenue managed care contracts modeled (80/20 rule)
10. Total denial reason codes
This checklist is based on HFMA's February 2004 audio webcast, "Developing Key Performance Indicators for the Revenue Cycle," by David Hammer, Vice President, Revenue Cycle Management Services, McKesson Information Solutions, and Roland Funsten, Assistant Vice President, Revenue Cycle Operations, St. Vincent Hospital. Questions or comments may be directed to firstname.lastname@example.org or email@example.com.
Publication Date: Saturday, October 23, 2004