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This is part two of “Denials Definition.” We did a prior podcast that mixed everything from the Supreme Court and the definition of pornography and denials. This will talk a little bit more about diving down into the details and the specifics of what the description of denial is, what you include, and what you do not possess.

Define denials

We’ve now highlighted the problem. The problem that we articulated before was that if you don’t have a good definition of denials, you will have all kinds of issues. One manager is going to define it differently than another manager. So somebody might look good, and somebody else might look bad artificially when in fact, there’s either no difference or the opposite is the case. You may have differences between provider organizations. There’s no ability to benchmark. You can’t tell if you’re getting better or worse over time. All kinds of problems come up.

Now that we’ve talked about the problem and why we need a good definition of denials, let’s get back to what denial is. The HFMA, the Healthcare Financial Management Association, has an excellent write-up. By the way, we have a lot of respect for the HFMA as an organization. 

All about the metrics

The paper they put out has a title that includes something like “Standardizing Denial Metrics.” It’s a good document. It goes through and gives you many things, much good information, many metrics, many quantifications, but they continuously refer to denials without ever defining what denial is. They assume everybody knows what denial is and agrees on the definition of denial or what’s included as denial and what’s not.

We know that there are problems because when we have had conversations with organizations about this, we frequently don’t get a good answer. They certainly don’t have anything written up. There’s not anything defined, and they can’t even articulate it verbally. If you asked somebody or three different people in the same organization, they’d give you other answers. If you asked three different people in three various organizations, they’d give you different answers.

Alternate versions

We have seen consultants and provider organizations say things like, “If you divide actionable denials by the number of claims submitted, that will give you your denial rate.” That’s great. That’s a calculation effectively, but it doesn’t tell you anything. It doesn’t tell you what denial is.

We’ve seen alternate versions of a definition like “denials that can be corrected within the organization.” What does that mean? What are actionable denials versus not actionable denials? We haven’t even defined what denial is, much less an actionable denial or not actionable denial.

This is worse. What’s a correctable denial? We don’t even define a contradiction, but now we’re looking at a fuzzy subset of something that isn’t even defined. So we don’t know what a denial is, and we don’t have a definition of that. We don’t represent the subset of those undefined denials, actionable or correctable denials.

Explaining denials

Admittedly, some say that you can ignore non-covered services, patient financial responsibility, or duplicate claims. So we’ve seen some people try to put in some language that defines what is actionable as a denial, but this still doesn’t tell you what denial is. In addition, this may help explain the subset of denials, which should not be included in denials, but it doesn’t say what should be included. 

We don’t have a list of what should be included. Is it all remittances, so everything that came back from a payer is a denial? Every remit? Any code? Any anything? Or is it just all remits that impact payment? What about only remits resulting in non-payment, like a $0 payment? What if you didn’t expect to get paid anyway? Like a capitation agreement, is that still a denial? I don’t think so. What about a CO45? It’s a contractual allowance. It impacted payment, but most agree that this is not a denial.

Be specific

We need to drill down and get specific. You need to have a detailed list of codes, adjustment codes, remark codes, everything, anything that you’re going to use to define, “This is what a denial is.” That’s what everybody has to have.

We have a list that we use with our clients. They can modify that list to define it themselves. If they want to make some modifications, they have a pre-existing list. We can use that. Also, we have conversations with clients about how to modify that. 

We have high-level discussions, 30,000-foot levels like, “Let’s talk high level! Further, should it include patient responsibility stuff? Should it include this? Should it include that? And then, let’s drill down into the details of what comprises that.” But what we’re finding is, it’s variable. There isn’t a standard set. We don’t see that out there.

To summarize

We’re going to stop there on this podcast. We’ll come back in the next one, where we’ll drive down even more specifically into the details and go through and talk about specific codes.