When you hear a payer say “we pay out 97% of claims:” or you hear a provider say “our denial rate is 23% from this payer?!”, the denial metric used (initial, final, $ vs #, etc) and the denial definition (which CARCs and RARCs are included/excluded) make a HUGE difference. Both of those numbers can be (and actually are) true.
A payer may EVENTUALLY pay out SOMETHING on 97% of claims…but that is after thousands of hours of rework and administrative costs, and includes partial payments.
Providers claiming 23% denial rates are probably using initial denial rate and including Unbundling and Duplicate Claim denials, which can MASSIVELY swing the rate, but aren't really valid denials (e.g. most unbundling denials are really just contractuals…and duplicate claims are usually informational). One real world example from a client…Initial Denial Rate (using billed amount) of 23.5%. When you exclude Unbundling and Duplicate claims that drops to 9.3%. And if you want to not blame the payer for Eligibility and COB denials, that drops even further to 7.3%. Still a huge number, but not the clickbait numbers you see in every news article.
For rev cycle teams, understanding the real definition of a denial can have big impacts on operations. If you don’t have good visibility into why denials are happening you won’t be able to efficiently route and correct them. And in many cases, the payers are sending shotty reason codes back and you have no way to document and communicate these issues at scale.
In Managed Care, you don’t want to just bang your fist on the table claiming super high denial rates that aren’t valid. You need to have focused, accurate and factual issues to bring to the payer (and in many cases, they may be issues on your side that you want to collaborate with the payer on).
Denials are just one of the MANY hurdles providers have to deal with just to get paid for taking care of patients. In future posts I’ll talk about the impact of deductibles/co-pays, downcoding/downgrading, EDI rejections and more. At Anomaly we have spent an inordinate amount of time with modern tech and people way smarter than me (not that hard) to help healthcare organizations try and make sense of this stuff and we are having a lot of fun doing it.
One other note: "Revenue Cycle" isn't even a thing in other industries or countries...it's called the "Accounts Receivable Department". In US healthcare, it's a $150-$200 BILLION industry. So stupid (and yes, I'm aware that this complexity is what Anomaly is working to fix...still stupid).
