Denial Management

In the context of medical billing, a denial occurs when a health insurance provider declines to pay for goods or services that it had previously agreed to cover. There are numerous reasons why a claim or bill could be denied, but the most frequent one is incorrectly filled out paperwork. When a health insurance provider rejects a claim, the provider is still liable for paying the entire price of the rendered services.

Types Denials

All the denials result in revenue loss. Denials fall into 5 categories.

1. Soft Denial: A brief or preliminary denial that might be acknowledged if the practitioner makes the necessary corrections; no appeal is required.


2. Hard Denial: A denial that is resistant to reform and improvement. It must be written off, which will result in lost revenue.


3. Preventable Denial: A sort of hard denial that can be avoided by a practice, usually due to incorrect registration information, erroneous codes, and insurance eligibility issues.


4. Clinical Denial: Although this hard refusal results from failure to pay for a necessary medical procedure, an appeal is still required.


5. Administrative Denial: A type of soft denial in which the payer informs.

Top Denial Reasons

• Missing or incorrect data
• Duplicate or late submissions
• Improper or outdated CPT or ICD-10 codes
• Lack of documentation or prior authorization
• Out-of-network care
• Lack of medical necessity
• Procedure coding errors
• Lack of prior authorization

Denial Rate

• The average denial rate across the healthcare industry ranges from 5% to 10%
• Commercial and public payers deny one claim in every 10 submitted claims
• Gross charges denied by payers vary from 15% to 20%
• 90% of denials are preventable
• Up to 65% of denials are never resubmitted
• An estimated two-thirds of denied claims are recoverable.

Denial Management

Denial management in healthcare is the practice of determining why medical claims are denied and developing the most suitable strategies for decreasing the number of denials. It also includes practically applying strategies that can increase the percentage of claims reimbursed first. As denials increase the time of the billing process so it is necessary to resolve the denials on time to reduce the denial number.

While navigating the world of insurance claim forms, ICD-10 codes, and payer-specific requirements can be tedious, it can nevertheless be done. Handling and reducing the number of insurance claim denials received at your practice can be achieved if you follow these helpful tips that will keep your revenue stream flowing.

Effective denial management covers the following aspects

• In-depth analytics and reporting that offers complete visibility to a healthcare practice’s performance. 
• Identification of root cause of denial. 
• Taking appropriate action to resolve the denial.
• Developing a standardized workflow for each claim denial type
• Monitoring the denial record.

To make denial management effective, you can follow some of the best industry practices:

Create a team

In order to establish benchmarks, minimize backlogs, and aid in the identification of underlying causes, it is necessary to identify the resources that are available from all departments and to make use of their knowledge to implement solutions, track, and report developments.

Structure the process: The practice’s revenue would suffer if it loses track of denied claims, and rising denial rates will result in significant administrative issues. Implement a structured denial management strategy as a result.

Recognize trends: Quantify and classify denials by observing, assessing, and documenting the trends. Concentrate on the facts and contact payers for support with recently discovered denials.

Go swiftly

When a set protocol is in place to track claims as they enter and leave the system, it is possible to achieve the goal of having denials reversed as soon as possible—preferably within a week.

Work together with payers

Since payers also stand to gain from fixing denial concerns, a payer-provider partnership can help to do so more quickly while also addressing issues more effectively.

Follow up on the claims

It is better to follow up on claims that have previously been answered in order to facilitate more quality claims as opposed to a greater number of lower-quality claims that produce nothing in order to make the most of limited time and resources.

Progress monitoring

Tracking progress will enable analysis and better system performance while assisting in identifying areas that are performing well and those that aren’t. This enables your business to identify the areas that are working well and those that require development. Automating denial management procedures could be a good idea because it would give you more time to rework the rejections.

Conduct performance audits

These should include audits of remittance advice reviews, write-off adjustments, zero payment claims, registration, and insurance verification quality.

Effective denial management in medical billing ensures the financial sustainability of any healthcare practice. Practices can consider supplementing their internal medical billing and coding operations with outsourced services. Through outsourced services, organizations can quickly gain access to a team of highly trained and skilled professionals who dedicate their time to interacting with insurance companies and understanding the reasons behind rejections and denials. Investing in the support of outsourced services can also allow internal teams more time to concentrate on other aspects of maintenance and patient experience.

MedsIT Nexus is a leading revenue cycle company providing complete medical billing services. Our medical specialty-wise RCM experts ensure all the denied claims are addressed properly to receive accurate insurance collections.

Outsourcing is the best decision for Denial Reduction

• It can be evident and challenging to meet the denials with the trained staff when compared to medical billing and coding experts.
• It’s often most cost-effective to outsource medical billing and coding services to healthcare billing companies and rely on the services of claim denials experts.
• Healthcare billing companies will maintain perfect denial management services with professionals who dedicate to learning to interact with insurance companies and understand the reason behind the rejections and denials.
• Outsourcing provides a high level of customer satisfaction and takes responsibility. As a result, healthcare professionals will have more time to concentrate on other aspects of maintenance and better patient care.