The issue of denials is a classic one in the healthcare industry, with about 9% of hospital claims denied, averaging $262 billion per year. But loss of revenue due to the pandemic has made it even more important for healthcare organizations to improve their denial rates, says Chuck Alsdurf, HFMA’s director, professional practice and executive relationships. A new task force is looking to improve the data and KPIs needed to further reduce denials. HFMA recently released a whitepaper detailing the work of the task force in an effort to “create and define claim resolution standards and metrics for measurement and benchmarking.”
The task force includes 18 industry leaders, including representatives from Cloudmed, Revecore and TruBridge, who sponsored and contributed to the report.
The report details common metrics every provider organization should be reviewing to identify where and how denials happen as well as the types of denials being experienced, Alsdurf said. The objective was to go beyond standard revenue cycle metrics, including HFMA’s MAP Key Performance Indicators.3 The task force identified six metrics for healthcare providers to use, detailed in the report:
- Initial denial rate (as a percentage of volume and dollars)
- Primary denial rate
- Denial write-offs as a percentage of net patient service revenue (HFMA MAP Key AR-6)
- Time from initial denial to appeal
- Time from initial denial to claim resolution
- Percentage of initial denials overturned (with reference to charges, volume and inpatient denials that converted to observation)
“We feel like these metrics are the most helpful and accurate way to measure for a benchmarking purpose,” Alsdurf said. “These aren’t the only metrics you need, but they provide a starting point to begin understanding performance and opportunities for intervention.”
Using the above-mentioned metrics will allow healthcare organizations to measure their performance against that of their peers, Alsdurf said.
“We know that providers use metrics today, though we found that the lack of standard KPIs and definitions make it nearly impossible to compare results. This work should support further efforts in developing best practices for denials management, reduction and prevention,” Alsdurf said.
HFMA plans to continue the conversation around denials in a new Community group and the “Industry Insights Into Denials Management: Tips & Tools for Improving Claims Integrity" workshop on March 22. For more information on the workshop, visit hfma.org, click on the Education and Events tab and then the revenue cycle and price transparency workshop.