Denial Management Metrics for RCM Performance
Medical claim denials significantly impact a healthcare provider’s revenue, often resulting in losses and a negative customer experience. While medical denials are on the rise, many are preventable with suitable systems and procedures in place. Keeping track of specific denial management metrics can help you identify problem areas and improve your revenue cycle management (RCM) performance.
What Is a Medical Claim Denial?
A medical denial occurs when a payer refuses to accept a submitted claim, leading the medical practice to suffer a financial loss. It differs from a rejection, which results from a claim submitted with missing or inaccurate information.
Medical denials come in multiple forms, including:
- Soft denial: This temporary denial requires the healthcare provider to take specific steps to receive payment.
- Hard denial: A healthcare provider must submit an appeal to retrieve lost or written-off revenue when they receive a hard denial from the payer.
- Preventable denial: Healthcare providers may receive a hard denial that would have been preventable with the correct information or eligibility requirements.
- Clinical denial: Insurance payers may issue a claim denial due to clinical reasons, such as a medical necessity, which the healthcare provider must appeal.
- Administrative denial: In this instance, the payer informs the healthcare provider of a soft denial, pending the provider’s appeal.
Key Denial Management Metrics to Optimize RCM
Healthcare professionals and providers can reduce the rate of medical denials by implementing structured revenue cycle processes to monitor and manage these denials. The Healthcare Financial Management Association (HFMA) has provided detailed information on the metrics healthcare providers should record and assess to reduce denial rates, lost revenue and customer dissatisfaction.
Percentage of Volume and Value of Initial Denials at Claim Level
Pinpoint possible data, system or process problems by calculating and recording how often initial medical claim denials occur in relation to the total dollar value and volume of claims.
Primary Health Plan Claim Denials
Another essential metric for evaluating potential processing issues is the rate of medical denials related to primary healthcare plan claims.
Percentage of Patient Service Revenue Denial Write-Offs
Monitoring the rate of patient service revenue written off after failed appeals allows you to keep track of your compliance with payer requirements and the payer’s ability to pay.
Initial Denial to Appeal Period
Determine the efficiency of your internal administrative processes by measuring how long it takes to submit an appeal after you receive a medical denial.
Denial to Claim Resolution Period
Monitor appeal lead times and health plan compliance by recording the time it takes to resolve a claim from when you receive the medical denial.
Denial Appeal Success Rate
Determine the effectiveness of the appeal process and possible problems related to specific health plans or denial types when calculating and recording the percentage of denials overturned after an appeal.
The Benefits of a Denial Management Service
Employing a professional denial management service can help minimize medical denials, improve appeal success rates and benefit your healthcare operation in the following ways:
- Reduced revenue loss: Ensure you receive payment for services rendered and recover revenue lost through effective medical denial management.
- Optimized operations: Denial management services take burdensome tasks off your plate, streamlining operations and saving you time.
- Minimized denials: Identify and correct issues in claim processing procedures to reduce the risk of denials and financial loss.
- Stabilized cash flow: Avoid claim reimbursement delays and maintain a stable cash flow with dedicated denial management.
Improve RCM Through Expert Denial Management
Determining and consistently monitoring data benchmarks is essential to improving your claim integrity and success rate. Partnering with an experienced denial management service can help.
DME Service Solutions provides industry-leading healthcare BPO, including top-tier end-to-end denial management services for peak recovery and prevention support. Contact our team today to learn how we can help you lower medical denial rates and the associated losses.
