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denial management in healthcare

Efficient Denial Management in Healthcare

What is Denial Management in Healthcare?

Denial management process in healthcare identify and address issues that result in the denial of medical claims. But the approach should also reduce the chance of further denials, ensuring that practices receive payments quickly and have a steady cash flow.

The denial management team is responsible for identifying a pattern between frequently occurring denials.  Trend tracking is used to find and correct registration, billing, and medical coding services problems and prevent further denials. 

The team also examines the payment trends for specific payers to make it easier to spot a deviation from the expected trend. It also involves implementing ideas to raise the percentage of claims paid out initially. The following elements are covered by effective denial management:

  • Providing total visibility to a healthcare practice’s performance through in-depth analytics and reporting
  • Determining the reasons for claim rejection
  • Decreasing the overall number of claim rejections and a rise in the number of paid claims

Significance of Denial Management in Healthcare Organization

Most healthcare organizations are estimated to lose between 6 and 13% of their overall revenue due to claim denials! In the healthcare sector, denial management is crucial since inefficient management can result in significant losses for healthcare service providers.

Any healthcare organization’s financial soundness is significantly impacted by how it handles denials. Managing claim denials well can boost revenue and collection rates for your business while enhancing patient happiness.

Achieving comprehensive, accurate, and processing-capable claims protects your company from potential income loss, which is a success in and of itself. Here are four additional factors that support your decision to use denial management in healthcare practice: 

  • To prevent further denials, the procedure might point out areas needing improvement.
  • Based on case references and state/federal statutes that underpin your entity’s appeal, a denial management plan aids in promptly monitoring, prioritizing, and appealing denials.
  • By compiling and analyzing rejection patterns, the denial management in healthcare team may identify the underlying cause of these patterns and devise a long-term remedy.
  • Denial management enables a healthcare institution to gather more truthful data to back up the appeal, thereby raising the claim amount.  

Effects of Denied Claims on Healthcare Providers

Effects of Denied Claims on Healthcare Providers

Every healthcare professional knows how challenging and confusing claim denials can be. Therefore, healthcare organizations should take precautions to verify that their insurance claims are correct from the start. One of the most frequent obstacles to efficient revenue cycle management is claim denials. It impacts your cash flow and makes processing the claim again more time- and resource-intensive.

The cause of a claim denial’s impact is frequently related to the next course of action for the patient, provider, payor, and any other parties involved.

Significant Reasons for Claim Denials

The Patient is Ineligible

Patient ineligibility is the main reason for denials. The patient is not qualified to receive treatment under the insurance policy. Therefore, if patients’ eligibility is checked before treatment, this problem can be solved.

Missing Information

Missing information is the second most common reason for denials. If you don’t provide the required information, insurance company will not pay.

Recurring Billing

Due to typographical errors or overlap in office tasks, a similar or equal claim is frequently sent that become the cause of denials.  

Incorrect ICD-10 or CPT Codes

A claim may be rejected if the code doesn’t match the diagnosis. Claim scrubbing can ensure that everything matches correctly.

Late Filing

Late filing is also a major cause of claim denial. Therefore, claims should be submitted on time to prevent denials.

The Uncovered Service

Some services are not covered by the insurance company. Physical therapy is a typical example where a patient’s coverage may have ended, or their maximum benefit may have yet to be reached, and their insurance may not pay the cost of the service.

Not in the Network

Many people have insurance policies that limit coverage to providers “in network.”

Obsolete Codes

The payments are based on the codes, which are updated with time. These updates are the responsibility of your practice to submit claims using the latest codes.

Modifier-Related Issues

Several mistakes can happen when invalid modifier combinations are submitted, leading to medical claims rejection for payment. Many improper modifier combinations can be prevented with adequately trained coding people or hiring one of the best medical billing and coding companies.

Effective Claim Denial Process in Healthcare

In the section above, we gave a succinct summary of denial management. The denial management process is a systematic approach that determine the validity. Let’s get into further detail about the denial management process.  


Finding the underlying cause and explanation for the claim denial is the first step in creating a successful denial management strategy. The critical focus is to analyze the insurer’s comments and ascertain the actual cause of the claim denial. Given that some insurers still employ the non-standard, convoluted legacy codes that typically requires expert knowledge and effort. But with committed denial management specialists, your company should determine why a claim wasn’t paid and who made the payment, as it’s an essential step in persuading the insurer to pay your company for the claims.  


It’s time to address the denial, asking your insurer to pay the medical claim when you’ve successfully determined the cause of the denial. The denial management team can carry out the following procedures to achieve that goal:

Directly Routing Denials

The first step entails compiling and expediting the documentation for information connected to denials. That entails directing rejected transactions into work lists using automated techniques. For instance, you could send any denials about coding to your coders so they can respond to each item promptly and effectively.

Arranging the Tasks

Here, the denial management team uses sophisticated software to organize their task lists according to criteria, including quantity, timing, and justification. Compared to using manual systems, this streamlines and expedites the team’s work. 

Establishing Standard Operations

The third step entails developing a standard response for every type of denial by:

  • Highlighting the clinic’s most typical denial justification
  • Determining the most commonly used code concerning that denial
  • Formulating a tactical action plan to handle similar denials

Making Use of a List

Do you want the most organized, error-free denial management approach possible? A checklist is beneficial! By creating an essential checklist of do’s and don’ts, your team can avoid frequent errors that cause denials to stagnate uncollectible bad debts.  


Maintaining accuracy and timeliness throughout the denial management process is essential to making sure your claim is paid out successfully this time. As a result, you should keep a record of denials by type, receipt date, appeal date, and outcome. Second, sample and assess the rejection management team’s appeals to audit their job. Lastly, ensure the team has access to the tools and technologies it needs to work quickly and effectively.  

Monitoring should also be done with the insurer to give your staff a better understanding of each claim denial, but there are more. With this information, your firm can demand internal communication with the insurer to discuss more effective methods to conduct business and lower the likelihood of future claim denials.  


The next task is to launch a prevention strategy when the rejection management team has gathered all pertinent data regarding claims denial. To find possibilities to retrain your team, modify workflows, and rewrite processes, you must look through the denials again.

It would help if you concentrated on preventing claim denials in coding systems, lack of authorization, and clinical prerequisites.

Tips To Reduce Claim Denials

Eradicate Issues

Understanding the reasons for high denial rates and the initial denial, dollar, and claims rates create new chances to streamline procedures and lessen or completely eradicate issues.

Maintain Process Organization

The organization’s revenue will decrease if it can’t track refused claims, and rising denial rates would cause major administrative issues. To track submitted claims, develop a structured denial management process using HIPAA-accredited tools and technologies.

Recognize Trends

Monitoring, analyzing, noting trends, measuring, and classifying denials focus on data and analytics to help identify and address the problems that led to denials in the first place and ask doctors and payers for help where necessary. You can also use the knowledge of outsourced partners to alleviate denials and dramatically boost compliance.

Move Swiftly

Whenever a set procedure is in place for tracking claims as they enter and exit the system, it’s possible to utilize a verified procedure to go and get denials reversed, preferably within one week.

Make a Group

Determine the available resources across all departments and use their knowledge to implement solutions, monitor progress, and report changes. This will assist in establishing benchmarks, minimizing backlogs, and discovering root problems.

Work with the Payers

A payer-provider partnership can assist address rejection concerns more effectively because payers also stand to gain from doing so, which will hasten the process performance.

Value Quality Over Quantity

Following up on previously resolved claims can assist more quality claims instead of a significant number of lower-quality claims that yield nothing. What is the ideal way to make the most of scarce resources and time?

Monitoring Progress

While enabling analysis and enhancing system effectiveness, progress monitoring will assist in differentiating between areas that are performing well and those that aren’t. Automating denial management procedures could be a good idea because it would give you more time to rework the rejections.

Confirm the Patient Data

Utilize patient portals that regularly update patient data, take the time to confirm that data and the patient’s insurance coverage, and keep the billing team informed of any changes to these policies. Staff education is also encouraged to enhance data quality.

Take Note of Prior Rejections

Utilize data from electronic health records, such as insurance companies and payer ID lists to identify the causes of issues and implement fixes.

Meet Due Dates

Claims filing may face failure to adhere to deadlines set forth by insurance company policies.

Be Familiar with the Clearinghouse

By helping insurance companies and giving thorough justifications for rejections, building a solid relationship with the clearinghouse will streamline procedures and be advantageous to both parties.

Be Aware of Claim Formats

Many healthcare billing businesses utilize EHR programs to submit claims in a standardized manner, making it simpler to spot and fix issues with rejected claims.

Follow up Frequently

Keep track of each claim so that rejections and denials can be managed in time for an appeal, preserving money.

Use a Decision-tree Strategy

A decision tree follows each path to a conclusion while requiring evaluation of every potential result. This strategy aids in educating personnel on how to handle denials more skillfully.


Denials of medical claims can be frustrating. Even mistakes and improperly submitted claims may lead to penalties and fines that might significantly increase costs. However, if you want to outsource your medical billing processes, you can stop them from taking place. You can outsource billing more straightforwardly. Whenever you hire a medical billing company, a group of skilled medical billers will take care of all the billing and claim-sending duties.

By contracting out your medical billing duties, you’ll have more time to focus on giving your patients high-quality care. Additionally, you might save money, and your billing processes are more effective. BMB provides denial management in healthcare solution to increase your reimbursements faster. Contact us for our help and services.

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