By Julius Raj Stephen, SVP Operations
Proactive approaches can help address the source of nearly 50 percent of denials: front-end revenue cycle issues.
Staff shortages, gaps in training, and technology non-adoption all contribute to the front-end errors and inefficiencies that lead to denials. In Part 1 of this series, we explored those challenges — and how a front-end fix that incorporates staff empowerment, technology, and collaboration supports not only clean claim rates but improved patient outcomes.
Proactivity is key to preventing denials. But, too often, it isn’t enough. The unfortunate truth is, even with proactive measures in place, denials happen — putting clinical and financial outcomes at risk.
Denials continue on an upward trend.
The inevitability of denials isn’t tied to internal errors alone. Providers know this.
Payer rule complexity, increased prior authorization requirements, automated denials systems, tight submission deadlines — these external challenges are outside providers’ control.
They’re also key contributors to the rise of claim denials.
A 2024 survey from Experian Health found that, of 210 provider revenue cycle leaders surveyed, 73 percent said claim denials are increasing, versus 42 percent in a similar report from 2022. 67 percent said reimbursement times are increasing, and 77 percent said payers are changing their policies more frequently. Each of those responses was notably higher than in 2022.
Results from this survey make it clear: The decline of COVID’s disruption of normal revenue cycle processes has done very little to reduce claim denials or financial pressures on providers. This upward trend is expected to continue — which means providers need to be strategic not just about denial prevention but reaction as well.
Denials management should be a proactive and reactive process.
Combining proactivity with strategic reactivity is essential for a robust denials and appeals management process. But, it can be difficult to know where to start and what to prioritize.
In Part 1, we addressed the “before,” providing four tips for tackling technology and knowledge gaps to ensure claims are clean prior to submission.
Below, we address the “after,” steps providers should take to manage denials effectively and efficiently when they happen — streamlining the appeals process and ensuring accurate reimbursement.
Root cause analyses are essential.
Effective denial management in healthcare begins with a thorough root cause analysis.
This process is both reactive and proactive; it uncovers the underlying issues contributing to denials and helps prevent their recurrence. As part of this process, providers should:
- Categorize denials. Group denials by type to identify trends, support corrective action and education, and prioritize appeals. Denials should be grouped by common causes such as:
- Eligibility Issues: Problems related to verifying patient insurance coverage, such as incorrect or outdated patient eligibility information. 22 percent of preventable denials are caused by registration or eligibility issues.
- Coding Errors: Issues that arise due to incorrect coding, including using the wrong diagnosis codes, CPT codes, or procedure codes.
- Data Entry Errors: Mistakes in billing, such as incorrect patient demographic information or errors during the charge entry process. These could be as simple as a typo or a mismatch between patient information and submitted data.
- Authorization Failures: Denials that occur when a required prior authorization for a service or procedure is either not obtained or mishandled by front-end staff. An AMA survey found that 27 percent of prior authorizations are often or always denied by insurance companies.
- Filing Time Limits: Problems related to filing claims within the time limits set by insurance companies. If claims are not submitted promptly — typically between 90 and 180 days, depending on the payer — they can be automatically denied due to missed deadlines.
- Identify process gaps. Use denial data to pinpoint inefficiencies in patient access, coding, or claims submission workflows.
- Establish feedback loops. Share findings with relevant teams, such as front-end staff or coders, to drive process improvements.
Technology is vital for matching payer processes.
Payers use technology to streamline claim denials processes. Providers should be doing the same to manage them.
In Part 1, we addressed several ways technology could be leveraged to automate eligibility verification, enforce payer-specific requirements, and flag errors before they become problems down the line. That utility extends beyond the front end through every stage of the denials and appeals management process, including:
- Accounts Receivable (AR) Follow-Up: Bot-powered automations can be deployed to prioritize denied claims based on financial impact or complexity, recommend next steps using denial pattern insights, and even assist live calls with real-time summarization tools.
- Appeals and Correspondence: Artificial intelligence can be used to segment appeals by priority or type, ensuring efficient handling of high-value claims. These technologies can also streamline the appeals process by automating the creation and payer-specific appeal packages and submitting them via integrations with payer portals.
- Credit Balance Resolution and Adjustment: Bots can be instrumental in identifying true credit balances and processing adjustments more efficiently, reducing inaccuracies, preventing unnecessary refunds, and ensuring cleaner financial records.
Don’t forget the human element.
Technology and process optimization are essential. But, the human element is the backbone of effective healthcare denial management.
A cohesive strategy depends on shared expertise and collaboration between billing teams, clinical staff, and technology experts to ensure denials are addressed holistically and efficiently. Cooperation via feedback loops accelerates the identification of bottlenecks, supports ongoing education, and enables continuous improvement — for example, insights from billing teams can inform clinical documentation practices, and technology experts can tailor systems based on recurring issues flagged by frontline staff. The result is a more unified approach to healthcare denials management that improves financial outcomes and, ultimately, patient care.
Strategic partnerships can play a pivotal role in fostering this collaboration — as well as technology enablement. These partners bring specialized, innovative tools, data insights, and industry knowledge that complement in-house capabilities, support more effective change management, and empower providers to match payers’ technological sophistication.
3 Best Practices for Effective Appeals Management
Managing denials more effectively means streamlining appeals.
A well-structured appeals process is critical to recovering owed reimbursements, combining technology, team, and targeted efforts to maximize recovery rates while minimizing administrative burdens. As part of a strategic approach to appeals, providers should:
- Act Quickly: Address denials within 48 hours to ensure timely resolution and avoid escalating issues. Reacting within two days can significantly improve cash flow by reducing days in accounts receivable.
- Prioritize High-Impact Denials: Focus efforts on appeals with significant financial impact, such as high-dollar claims or those with the greatest reimbursement potential.
- Follow Payer Guidelines: The top five payer companies make up over 50 percent of the health insurance market. Empower your team with detailed training on payer nuances and tailor appeals to meet payer-specific requirements, ensuring the needed precision is as automatic as possible.
It’s time to take action.
Denials are inevitable — but they’re also actionable.
By combining a proactive approach with a strategic, reactive process, providers can turn denials into opportunities for continuous improvement. This dual approach requires investment in both human expertise and cutting-edge technologies. But, the results are undeniable.
Robust denial management safeguards financial health and supports a more sustainable revenue cycle — helping organizations thrive in the face of rising denials while supporting better clinical outcomes and improved patient trust.
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