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We keep running into the question of “What is a denial?” and the definition of precisely what denial is. We’ve had some other podcasts on this subject. There’s a particular element that catches my attention.

Denial definition

When we’re talking about the definition of denial, if we take a step back and rather than be down with the granular of “Is a CO109 a denial or not? Or does it matter if it’s a PI versus a CO with that same adjustment code?”, a 30,000-foot level: Is there anything that affects a payment? Is there anything that reduces an amount? Is there anything that makes it so that you do not get paid or delayed in payment? Contracts do this. Also, they affect the price. But it’s not a denial. Further, CO45 is a good example.

We frequently ask our clients, whether it’s a provider or a billing company or something like that, what their definition is and if they have a written explanation for this. I don’t think I’ve encountered anybody yet who has a written description that they can send over to us, which in itself is pretty fascinating.

How can you determine if it’s a denial?

If a billing department or a billing company doesn’t have a written definition, how do you know it’s a denial? I think this comes back to the “If you don’t have good tools to handle denials in the aggregate, you’re going to work individual denials.” That means any remittance that comes back has to be dealt with. It doesn’t matter whether it’s posting a payment or providing additional documentation back to the payer or whatever it might be. You’re going to work that individual claim. So in some ways, the definition doesn’t matter. But it does.

We’ve tried getting definitions. We’ve asked for them from some clients, in fact, from basically everybody we interact with because we ultimately need to load something to define a denial so that we can calculate what the denial rate is. If we don’t have a client’s definition, we have to load a default. But a default, by definition, is that we’re providing the definition.


If I think back over the course of the last year (and we’ve asked different people, different managers, owners of billing companies, practice managers, billing managers, directors who run billing departments), we’ve gotten wildly different answers. We’ve also seen that it’s sometimes very system-specific where if their system does something funky with denial codes, that becomes a part of their definition, which is weird.

We’ve seen situations where if we ask two different billing managers at two other organizations, we get two different answers on “What is the definition of a denial?” That may not be that surprising. But when we ask two other billing managers in the same billing company and get two different answers, that’s a little more surprising because it’s all one organization. Granted, they have foreign clients, meaning various providers that each one of those billing managers manages. Still, it’s surprising that we get two different answers from two other billing managers in the same billing company.

Various definitions abound

Here’s the one that got my attention. It just popped up the other day. Last year, we’d obtained a definition from a billing manager. Six months later, we had to come back to them and ask the same question, which was, “What’s your definition of a denial?” They provided us with basically a table that said, “These are what we consider to be denials and not denials.”

The amazing thing was, it was different. Six months apart, two different definitions. The same billing manager. The same organization. They didn’t move. They didn’t switch practices or anything like that—the same billing manager.

We didn’t tell them that we’d initially gotten a list from them. They went and did it from scratch. What they did from scratch, they did it differently. They gave us a different list.

Should we standardize?

We’ve gone to the HFMA. In addition, we can’t get an answer on a definition. Also, we’ve gone to billing companies. We’ve even gone to the HBMA, the Healthcare Billing Management Association. We know somebody on the board of directors there on the data science committee. Well, granted, it’s a misnomer calling it data science. Forgetting that it’s the data science committee rather than analytics or even just a data board for the HBMA, the point is that the HBMA doesn’t have a definition of denial. It’s the Billing Management Association. If they don’t have it, who does?

Webster’s dictionary. What is this? What’s the definition of denial? There are a lot of different purposes. Of all those entries, the most relevant one is a “refusal to satisfy a request or desire.” That seems relevant. We have a request or desire to get paid. Then, a payer refuses. That’s denial.

Why isn’t this standardized? Why don’t we see a specific definition of denials that the entire industry has adopted? Is it because nobody’s watching the house like nobody’s staying on top of this and tracking denials? I don’t think that’s it. There are significantly larger organizations, hospitals, hospital systems, and things like that. They have some form of definition of a denial de facto, even if it’s ad hoc or whatever that may be because they’re tracking and quantifying a denial rate.

I think there may be something else. I think there’s a perverse incentive involved in not having a uniform definition of denials. That is, if there’s no universal definition, then there’s wiggle room. We can say, “Ah, no, you can’t compare us to somebody else because they have a different definition of denials than we do,” or “They have some other unique criteria or whatever it is. Somehow, you can’t compare us. We are unique.”

I think the ability for everybody to say “We are unique” robs us of the ability to benchmark and quantify because it isn’t standardized. That means that it’s harder to put people’s feet to the fire or identify ways or targets or goalposts or anything that says, “We must improve, and we must improve by X amount in Y amount of time.” The justification for that is, “We know somebody else is doing it. So if they can do it, we can do it too.” That’s where we have to get. It can happen, and we can do that.

Final thought

The point is that there needs to be a standardized definition. If there isn’t a standardized definition, there needs to be a way to compare without that and still do apples to apples. We have a way to do that.