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In a recent podcast, we discussed the denials reporting a lag problem. A reporting lag problem is basically that it takes a long time to get data. And so you’re looking at data that’s old. Instead of looking at recent data for some structural reason.
Review the dates
In the case of denials, if I look at what I submitted month-to-date, basically nothing will have been denied yet. If I look at August, I look at the most recent month (whatever, the current month is minus one). I want to look and see how many of those have been denied and, let’s say. The overall denial rate is 3% or 4%. For instance, most of the claims submitted on August 25 are still not being denied. Also, not if they’re going to have gotten rejected.
There’s still going to be a ton of them outstanding. Thus, it’s going to take quite a while for those claims to get entirely denied. We’re referring to the ones that are going to get denied. You don’t want to look and see, “Okay, I’ve only gotten 30% or 40% of the denials that I’m going to get.” That gives you a poor indication of where you’re going. So you can’t look at the most recent month.
The problem is, if you don’t look at a recent month, then your option is to wait like six months for the overwhelming majority of claims that are going to get denied to have gotten rejected. The data by that time is ancient. And you don’t know what’s happening anymore because what you did six months ago. Moreover, it isn’t necessarily what your team is doing this week or last week or a month ago or three months ago. Six months ago is a long time to wait.
The problem is, if you want to go up that Pareto so that you’ve essentially collected most of the denials, you’ve got to wait a long time. That makes it kind of an issue. Waiting six months is problematic because if you’re going to be tracking denials, the purpose of this goes back to something else. We’ve talked about this many times. The goal of data and analytics is really to take action, to do something.
What systems are you using?
If you’re going to implement some denials management program, you’re going to analyze some data. You’re going to make some changes. You’re going to implement some process. You’re going to modify something. If you’ve got to wait six months to have any idea if it has had any impact at all, and then some team has got to get together and look at that information that’s now six months old. Thus, that will take a while (days, weeks, months, who knows?)
Also, the team will have to figure it out like, “Okay, now that we have data, what’s going on? Is it good? Is it not good?” And then, if you’re going to make another change based upon that updated information, now it’s been 6, 8, 9 months since the last change. Hence, you respond, “Oh, okay! Well, now we’re going to make another change. You’re going to wait another six to nine months,” and the feedback loop is insanely long to get anything done. I will die an older man before any material changes happen before you see the results. It would help if you had much faster feedback than that. Don’t wait that long.
Get started now
We talked about that problem in one of the podcasts. We’ve seen waiting five months, but it’s still forever because that’s five months for the data, plus some partial month that you’re in currently, plus some period for the people to ingest and utilize that data and figure out what’s going on and come up with a solution or even determine “where we are.” Instead of waiting six months, there’s a better option. There’s a solution. To get more current information, you can use a filter on all of your claims.
By the way, this is worth money, so venture into this one. Put a filter on your claims and only look at those claims that have either been paid or denied, or adjudicated effectively. What that means is that you want to see what’s been resolved or denied. If you look at that subset, even if you look at a period from three weeks ago, a month ago, you will only be looking at that information, though, that has gone through successfully or been denied.
What are your denial rates?
Suppose you were running a 13% denial rate. By the way, the people who think they’re running 2% or 3% denials are kidding themselves. So these are not high numbers when I say 13%. If you were running 13% denials before, when you looked back six months or something like that, you look at the prior month.
And again, only 30-40% of your claims have already been denied or adjudicated by that point, maybe. But of that subset, now you’re running 11% or 10%. Further, it’s not definitive, but it’s giving you an indication of “things are getting better” or “they’re getting worse.” You have closer to real-time information of what is happening.
Take another look
That doesn’t mean you shouldn’t also go back and double-check them. As you get three months later, you get a better number going further back in time. So for the month of August, we now have some information as of September 13 on where we’re at. Maybe 25% of those claims have been adjudicated, but we’re doing a little bit better than we were six months ago. Great! We’re moving in the right direction. There’s not a catastrophic problem.
It doesn’t mean that you’re going to know everything that’s going on. Yet, if you suddenly see a spike from even just a few weeks ago. We’re now on September 13. Suddenly, when we run that subset for August, we see a 25% rate, kick it out, separate analysis: Is there a problem? Is there something new? Is this an anomaly? Or is this something where, “Hey, we’ve got something that’s just popped up recently”?
You don’t want to wait six months to find out you had a problem that’s been going on for six months. This is an early warning indicator that allows you to know, “Hey, are we moving in the right direction, or do we have a sudden new problem that we’ve got to deal with?”
Look at those claims that have effectively either hit a roadblock or have been resolved. So the ones where nothing has happened, the claim hasn’t been submitted, it hasn’t been denied, it hasn’t been paid, ignore those, filter those out. Only look at a subset of the ones that have been discredited or paid. Use adjudication as an alternative.
Still adjudicated or paid or denied, and of that subset, where are you? That’s going to give you virtually real-time information. If you want to get sophisticated, you can even make a month-over-month comparison at a point in time, but we’ll do that another day.