Recognizing that every institution is unique, what metrics do CFOs consider important to support decision-making with respect to their denials management programs and health plan contracting?
Answer 1: There are three metrics that I look at in evaluating denials management programs.
- Denials as a percentage of gross or net revenues and benchmark the results to other organizations and my own facility’s trends.
- Denials by payer to determine if there were any issues with particular payers or anything that needs to be addressed during the contract negotiation process.
- Denials by denial code to determine what the root cause was for the denials and what process improvement would need to be done to reduce the denials.
This question was answered by: Curtis H. Bernstein, CHFP, CPA/ABV, ASA, CVA, a principal, Pinnacle Healthcare Consulting, and a member of HFMA’s Colorado Chapter.
Answer 2: I’m not a CFO, but as a revenue cycle leader, I would say you want to monitor the clean claim rate for each large payer—percentage of claims paid on the first pass—and review the biggest denial categories. The important issues will stand out, so when you meet with payers, whether you are negotiating rates or holding regular meetings, you can review the data together. Showing certain payers how far they lag behind others sometimes helps.
If reasons for denials are present across payers and are related to medical necessity, eligibility, or authorizations for certain services, you can make the necessary internal improvements. The results of those efforts will show in your organization’s clean claim rate.
Perhaps the above answer is more denials prevention than denials management. Performance on swift and effective resolution of denials can be made evident at a more granular receivable level by measuring the size and age of the denied receivable and measuring by a breakdown of the type and volume of total dollars written off.
This question was answered by: Ruth Landé, vice president, patient revenues, Memorial Sloan-Kettering Cancer Center, and a member of HFMA’s New York Metropolitan Chapter.
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