Are you tracking your denials using these financial performance metrics?
The HFMA created a task force from across the industry to standardize metrics for denials that can be used across the industry.
These are the KPI’s they suggested:
1. INITIAL DENIALS AS A PERCENTAGE OF VOLUME AND CHARGES - CLAIM LEVEL<br />
Purpose. Trending indicator of total population of initial
denials at the claim level. The KPIs introduced in this report
provide the foundation for standardization and benchmarking.
The task force also recognizes that the best practice for
reporting and analyzing the initial denials metric would be
at the claim line level. This next level of detail is defined in
appendix 2.
Value. Provides overall trend on rates of occurrence for both
volume and dollars, highlighting potential process, system or
data issues.
FORMULAS
INITIAL DENIAL RATE AS A PERCENTAGE OF CLAIM VOLUME
Total initial denial claims / Total claims submitted*
INITIAL DENIAL RATE AS A PERCENTAGE OF CLAIM DOLLARS
Total initial denial claims gross charges/ Total claims submitted gross charges*
*Average of the 3-month period prior to
the start of the reporting month
2. PRIMARY DENIALS
Purpose. Trending indicator of denials related specifically to patient’s primary health plan[s].
Value. Provides a specific, detailed rate of denials for primary claims highlighting potential process, system
or data issues.
Total number of zero remits posted in past 4 weeks / Total number of remits* for primary payers only** in past 4 weeks.
*Payments and zero paid **Excluding duplicates
3. DENIAL WRITE-OFFS AS A PERCENTAGE OF NET PATIENT SERVICE REVENUE (HFMA MAP KEY AR-6)
Purpose. Trending indicator of final disposition of lost reimbursement where all efforts of appeal have been exhausted or provider chooses to write off expected payment amount.
Value. Indicates provider’s ability to comply with payer requirements and payer’s ability to accurately pay the claim.
Net dollars written off as denials / Average monthly net patient service revenue
Patient financial system income statement
Notes. For “net dollars written off as denials,” use total
dollars written off as a denial in the reporting month, net of recoveries.
4. TIME FROM INITIAL DENIAL TO APPEAL
Purpose. Measure timeliness of denial appeal process.
Value. Understand internal process efficiency for trending and comparison.
Count the number of days from date of initial denial remittance until appeal submission date.
5. TIME FROM INITIAL DENIAL TO CLAIM RESOLUTION
Purpose. Measure timeliness of claim resolution process.
Value. Understand internal process efficiency for trending, comparison and health plan compliance with contracted
appeal turnaround time(s).
Count the number of days from date of initial denial remittance until claim resolution*.
*Zero balance with or without payment
6. PERCENTAGE OF INITIAL DENIALS OVERTURNED
Purpose. Performance and trending indicator of denial appeal success.
Value. Understand denial appeal efficiency and effectiveness as well as potential issues with specific plans or types of denials
(i.e., inpatient overturned and converted to observation).
Note. Numerator and denominator should be calculated for
the same period to ensure appropriate output.
GROSS CHARGES
Initial denials overturned and paid (gross charges for overturned and paid claims) /
Total initial denial dollars paid and adjusted (gross charges)
CLAIM VOLUME
Initial denials overturned and paid (claim volume) /
Total initial denials paid and adjusted (claim volume)
CONVERTED TO OBSERVATION
Total inpatient denials overturned and paid converted to observation /
Total inpatient denials overturned, paid and adjusted