Q&A: Creating denial summary reports

Q: What statistics are recommended to include in denial summary reports?

A: There are several key components to monitor and include on both the working and executive statistical denial summary reports. These reports should capture denials by overall type with a breakout of the top reason codes for each. Further breakdown of the reasons can be done by specific DRG, service area, service type, physician, and financial. The more data you capture, the more report options you have. The data gathered for the working reports is used to find root causes of denials and identify the corrective actions that will be necessary to prevent those denials from reoccurring. The report’s executive summary should be a high-level outline of your top denials by payer and service line, the root cause, the original denial amount, and any amount recovered through appeal.

Reportable data for this level of detail would include the physician who ordered the admission or service, the type of service, the diagnosis related-group or HCPCS/CPT procedure code, the responsible payer, the department, and any other data your organization would like to be able to report on. It is important to include the financial consequences for each denial. Many organizations report both the gross and the net financial impact; however, it is recommended that if you report the gross impact you also provide the net, as this is the actual financial impact you are experiencing. For example, let us assume that gross charges for a four-day inpatient hospitalization are $140,000 and the payer denied one day of the stay. The gross charges for that day total $35,000; however, your contract with the payer is a per-diem rate of $3,600 per day. The gross financial impact would be $35,000, but the net impact would be $3,600.

For more information, see The Essential Guide to Healthcare Payer Contracting.