Big Data Denial Review

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Big data is often pointed to as the future of business. Said to be poised to change life as we know it, we all contribute to the body of data collectively recognized as “Big Data”, and healthcare is no exception to that. With virtually every healthcare entity creating and storing volumes of usable information, big data stands to impact the industry unlike anything else to date, especially in the areas of meaningful use, quality outcomes, and population health. Of equal or greater value is the potential for big data to boost revenue cycle performance and cash flow of hospitals, health systems, and physician practices. 

But what exactly is “Big Data”? Information is said to be part of and contribute to big data if it has five specific characteristics—volume, variety, velocity,

veracity, and value.

• Volume – The sheer quantity of data generated is important in that it must be significant in order to sufficiently expose the larger trends and commonalities and facilitate action  categorically. The “Big” term in the name ‘Big Data’ is itself indicative of size as a necessary characteristic.
• Variety – Modern healthcare information, the majority of which is either unstructured or not of a common format, is derived from a myriad of sources. Because of this, much of the available data goes unused or, at best, is used in a singular dimension. Yet, the very usefulness of big data is in the disparity of the information of which it’s comprised.
• Velocity – Data is generated and assimilated in different ways and at differing speeds. Yet, its value in the big data body is in the timeliness of its availability and usage. 
• Veracity – In order to be useful, information must be true and reliable. Quality of the information used directly impacts the reliability and actionability of the results derived from the data.
• Value – Information typically has a dollar value attached thereto, whether because the data itself can be bought and sold or because it can be put to use to yield cost savings, improvement in business processes and results, etc.

In the revenue cycle management process, the focus of this paper, the value of the data and

resulting opportunity is actually increased realized income, as opposed to just cost savings and waste reduction, which is typically where the majority of value is seen in healthcare information.

The Size of the Problem

“The reimbursement challenges ahead to get paid may require several new RCM applications, and the blunt realities that Black Book warned of from the 2014 surveys are showing signs of occurring…

failing RCM systems will close marginally performing hospitals for good and will get CFOs fired,” warns Doug Brown, Managing Partner of Black Book. 

Seemingly contrary to that warning, denial rates have declined in recent years, largely due to automation and advancements in revenue cycle technologies. Yet, the best performing organizations are still reported to have denial rates slightly below 5%. More average performers accept denial rates in the 5-10% range, and poorer performing healthcare organizations’ denial rates exceed 10%. According to a report published by the IRS, the average total revenue for hospitals in the U.S. in 2012 was $179 million, which means that even the best performing organizations average nearly $9 million in denials annually. The dollar value attached to denials for more marginal performers could be double that figure or greater. 

With millions of dollars at stake, especially in the face of shrinking margins and declining reimbursement, recouping as much of that amount as possible is important although, that, too, comes at a cost. The commonly-accepted dollar metric for denial rework is $15 per denial, which further compounds the denial management challenge and leads many organizations to abandon the pursuit of denials altogether. The greater opportunity here is reducing or eliminating denials permanently at their cause.