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What’s a denial? Everyone talks about it, but no one seems to define it. It’s just taken for granted that everybody knows what denial is and agrees on it. We frequently talk about KPIs and metrics. We see a lot of articles, consultants, and we see presentations. We see publications, webinars, and all kinds of things that talk about KPIs and set up a denials KPI program or denials management program.

Discuss denials management

How can you manage something if you don’t even know what it is? It seems absurd. We see so many people talking about the need to track denials, to analyze denials, but track what? If you ask somebody (and I’ve done this a few times recently) for a definition, watch them sweat. It is fascinating because it doesn’t even occur to anybody like, “Oh, what do you think about denials? We’ve got to get fewer denials. We’ve got to overturn the denials. We’ve got to get them paid.” Nobody stops to define what exactly it is. That’s crazy.

Is this one of those things that are so hard to define? Then, we’re getting into these bizarre situations like the 1964 U.S. Supreme Court case Jacobellis versus Ohio, where Supreme Court Justice, Potter Stewart, delivered what’s become the most famous line related to pornography, one of the famous, “I know it when I see it.” I know linking the Supreme Court, pornography, and denials sound wackadoodle, but that’s kind of where we are. 

You know it when you see it. I don’t know. I mean, no one can define it, but everybody thinks they know it when they see it. Yeah, I think that’s kind of where we are. But that creates crazy amounts of problems, insane amounts of issues. You can’t go off of the unknown or see it. Everybody’s different.

What about providers?

What if one provider sees it differently than another provider organization? How can they share information across organizations? How can we benchmark? If you’re looking at denials rates across providers, where some might be average, and some are top performers. Some are bottom performers. If everyone uses a different definition, poor performers can look outstanding and inadequate and get fired. That doesn’t work. We have a fuzzy target where nobody can figure out what they should be shooting for.

How do you figure out what your target should be, what kind of progress you could make? You’re like, “Okay, we’re at an X denials percentage rate.” And these can be radical differences based on these percentages. What you include and what you don’t have makes a massive difference in percentage. It can be not even doubling but like orders of magnitude. I’ll get to that. It’s crazy, but you have no insight to set targets or track performance.

Track differently

It’s not for one provider organization, but what if one billing company tracks it differently? Let’s say the same hospital has a new billing company that takes over or something like that, who’s outsourcing something. They have a different definition, and they suddenly make themselves look better because their intention is easier on themselves.

What if one billing manager sees it differently than another billing manager within the same organization or the same billing company? We ran into this with two different billing managers within the same billing company. What if the definition changes over time? It might make you look worse or better, like, “Oh, hey, we’re suddenly doing a lot better on denials because we were at 16% before, and now we’re at 11%. Wow! Great job, everybody. What did you guys do? Well, we changed the definition.” Nobody would say that, but can you imagine it? That’s insane.

We’ve just highlighted the problem, but we still haven’t got a definition. 

Explain away

All we’ve talked about is why we need an explanation. Now that we’ve highlighted the problem. So going back to organizations we could go to, organizations like HFMA… By the way, I have a lot of respect for HFMA (it’s the Healthcare Financial Management Association). They have an excellent write-up about standardizing denial metrics. They have a team that went away and thought through a lot of this kind of stuff and came up with many KPIs and definitions for those related to denials. 

Some of them are very, very close to what we have independently developed as well. We don’t like them just because they’re like ours. You can tell that they put thought into them, make sense, and have a real benefit. But in that document and all the other things, they keep referring to denials without ever defining it.

What’s a denial? Further, what are you going to do? Additionally, what are you going to include? If you’re going to quantify something, you have to decide. Somebody somewhere made a decision, even if you don’t know about it. If somebody gives you a denial rate of 5% or 17%. By the way, if they say 5%, you might want to question if they’re giving your real numbers because that would be a real outlier. If they give you a number, somebody, by definition, somewhere decides what to include or what not to include. That’s what you want to get to. It is, “Who decided it? And what is it? And does it make sense? And does it help you accomplish your goals?”

Final thought

We’ll come back to all this. We’re going to do another one because otherwise, this will get way too long. That’s the first part of this. In addition, we’ll do more about definitions. Also, we have some suggestions. We’re going to even really dive into some real nitty-gritty like some specific denial codes in an upcoming podcast to see like, “Is this a denial code? Should this be a denial? Should this be?” even though technically it’s a remit code, but we say denials. So again, we’re kind of stuck in this mindset. So listen up. Listen in for the next one. We’ll dive in even more profoundly.