MedFactor Inc.


Denial Management In Healthcare: Strategies & Key Trends

Denial management is a management strategy aimed at uncovering and resolving the problems that lead to medical claims being denied. But that’s not all; The process should also reduce the risk of future denials, ensuring that actions are paid quickly and with a healthy fee.

The rejection management team’s job is to establish a trend between recurring rejection reason codes and rejection reason codes. The goal is to identify challenges in registration, payment, and medical codes by monitoring and correcting trends to prevent future denials. The team also analyzes payment systems for individual payments to see how they effortlessly deviate from the general trend.

How Do You Implement Denial of Management?

A summary of the general operation of denial management was provided in the section above. Identify, Manage, Monitor, and Prevent, or IMMP procedure, is a methodical technique that can help you get the facts straight. Now is the time to delve a little deeper.


Determine the primary cause and rationale for the denial of a claim as the first stage in a successful denial management process. You should be aware that the insurance typically provides an explanation of payment along with the claim when they reject it. More appropriately, these indications should be called claim adjustment reason codes (CARC).

Denial management in medical billing

The process of avoiding, monitoring, investigating, and resolving insurance claim denials is referred to as a denial process. Every year doctors lose a lot of money due to medical claims denials that could have been avoided through effective denial procedures for example, the average cost to revise a case ranges from $25 to $117, according to “The.” Change Healthcare Revenue Cycle Denials Index.” If your firm chooses to appeal 100 decisions per month, the cost will range from $2,500 to $11,700. Healthcare providers can focus on providing high-quality patient care by taking a proactive approach to denials and guaranteeing prompt and accurate reimbursement.

Method of Denial Management

If done properly, the denial management process can yield significant money. To effectively manage denials, the following actions are necessary:

Step 1: Investigate denials from every angle

Examining the locations of denials is the first step provider groups and management services companies should do. It is imperative that you obtain a comprehensive understanding of the most common refusal kinds and the payers who are most likely to refuse specific operations. Compiling information on the facilities, providers, payers, and procedures that lead to the most frequent denials reveals not only the areas where you are making mistakes, but also potential payer fault spots. Identifying the underlying issues encourages employees to fix them.

Step 2: Examine the causes of denials

These claim rejections are the result of coding errors, missing data, late submissions, out-of-network care, lack of previous authorization, and lack of medical necessity on the part of the provider. All of these are covered by strong denial management software.

Denial management

Step 3: Sort denials into categories

Categorizing rejections to create focused strategies for stopping similar denials in the future is the next phase in the denial management process. Denials can be classified according to particular causes, like:

  • Previous authorization: Without it, a claim can be rejected if the services being provided or prescribed call for previous authorization.
  • Coding errors and missing information: An error in coding or missing information may lead to a denial.
  • Delays in submitting claims: Payers are subject to deadlines for filing claims. This deadline must be met or the claim may be rejected.
  • Coverage: A claim may be denied if it is filed for a service for which insurance is not applicable or if the payer finds that there is not sufficient medical necessity.

The following sorts of claim denials should also be taken into account:

  • Soft denials: A brief refusal that doesn’t need to be appealed and could be reimbursed if your healthcare provider fixes the problem.
  • Hard denial: A refusal that necessitates an appeal and costs money
  • A hard denial that could have been prevented, such as a code error or insurance ineligibility
  • Clinical denial: A severe rejection in which the denial of a claim is based on the absence of medical necessity.
  • Administrative denial: A mild rejection in which the payer explains to your company the specific reasons the claim was turned down.

You must designate departments or teams to handle corrective measures after classifying the denials. Teams can identify which rejections are the most urgent by classifying them, as not all denials are created equal. This phase can also assist you in making efficient use of your people and resources, as no team has infinite resources.

Step 4: Marshal evidence of facts, records, and appeal

Once the denial’s causes have been determined and categorized, you can fix any mistakes or deal with the problems that initially led to the denial before resubmitting the claim for payment. This phase is essential to boosting revenue rather than losing money that may be legally owed to your organization because so many denials are reversed.

It is possible to win an appeal. According to the Change research referenced above, although 67 percent of denials are recoverable, 65 percent of claims are never resubmitted. It is obvious that healthcare companies lack the personnel and infrastructure necessary to properly handle denials. Only payers gain when providers are overworked.

Step 5: Monitor outcomes

Creating a tracking system to keep tabs on the status of claims that are resubmitted is the fourth phase in the denial management process. Payers are unable to refuse payments for missing deadlines when you monitor and adhere to timetables. You can also remind them of the penalties they face if they fail to submit your appeal by reminding them that they have deadlines to meet.

Step 6: Build a preventative mechanism

Create a list of the most common reasons for denials after gaining a thorough understanding of the mistakes made by administrators and clinicians that lead to denials as well as payment problems. Together with your team, put procedures in place to stop these typical denials from happening.

medical billing accuracy

tracking prospective claims prior to filing

Using revenue cycle management software with a predictive analytics tool has helped some revenue cycle managers reduce their denials rate. Preventing a denial should be the first step, as it can cost your company anything from $25 to $117 to appeal a claim.

The claims that are most likely to be denied are identified via predictive functionality. In the end, it helps healthcare organizations’ bottom lines. Before a claim is submitted, these technologies use data analytics, machine learning algorithms, and historical data to identify patterns and trends that will help them appropriately estimate the chance of a denial.

Based on the high-risk claims that have been recognized, you can develop a workflow that incorporates all the elements that have previously resulted in the approval of claims that are similar. Proactive approaches tackle the typical billing and coding problems related to the treatment, the doctor, or the insurance company.

The best methods and techniques for handling denials

Teams must play a major role in efficient denial management due to the intricacy of healthcare reimbursement and coding standards. Software is becoming more and more popular among teams.

Utilize software for denial of service.

A lack of people and knowledge in the healthcare industry has forced many physician groups and management services firms to turn to software in order to handle appeals and denials.

At DOCS Dermatology, Valerie DeCaro serves as the vice president for revenue cycle management. Over 150 providers are housed in dozens of locations, and DOCS makes a lot of effort to streamline and standardize their revenue cycle. DeCaro bemoans how slowly the healthcare industry has embraced technology.

Overcoming reluctance, resilient providers are making investments in revenue cycle technologies. In fact, from 2023 to 2030, the industry is expected to increase at a compound annual growth rate of 10.3%.

Healthcare executives should relax knowing that third-party solution partners have worked hard to guarantee flawless integration with your current EMR, billing, and other systems, despite worries about capacity, time, and money. Partners strive to make the experience as “touchless” as possible for healthcare leaders, acknowledging the limited resources and time of healthcare organizations. Your current systems handle data interchangeably, and the partner provides thorough onboarding and step-by-step support.

Furthermore, studies show that employees quickly accept the automation that new technology brings, despite their initial resistance. After completing full onboarding, 92% of senior executives who used automation technologies reported higher employee satisfaction, according to the Forbes “2019 Kofax Intelligent Automation Benchmark Study”.


You shouldn’t try to manage denials as a one-person operation. Putting together a multidisciplinary team with important personnel from several departments, including nursing, patient financial services, registration, health information management, and information technology, will enable you to monitor progress, implement changes, and remove process bottlenecks in order to find the source of these denials. Working together with payers to settle denied claims can also guarantee a more effective procedure.

Staff training is another essential collaborative effort. Encouraging employees to stay up to date on best practices will assist guarantee that denials are being mitigated as much as feasible.

billing services

Ways to handle denials when your workforce is limited

Managers of healthcare revenue cycles and management service providers would be thrilled to implement all of the aforementioned fixes. But when it’s difficult to even get patients scheduled and admitted, denials take on less importance.

Denial management software

Healthcare practitioners can navigate and resolve claim denials from insurance companies and other payers with the help of denial management software. This program detects, monitors, and in certain situations even files an appeal against these claim denials in an effort to enhance revenue cycles and optimize reimbursement. These software programs provide data analytics, process customization, real-time denial tracking, and interface with current EHR systems.

The claims procedure involves the employment of different code systems, which increases the possibility of errors. A single misspelling may be the reason a claim is rejected. When a claim is rejected, denial management software helps you interpret the denial code and code your claims correctly.

When you are short-staffed, denial management software plays a crucial role in proactively preventing many mishaps. Your team works more efficiently when it uses technology to automate denial management process duties.

services for managing denials that are outsourced

Outsourcing denial management responsibilities to outside suppliers is another denial management method that might be useful if you don’t have enough staff members. This is a common approach taken by healthcare companies because, in the absence of an internal team, you may leverage the resources and knowledge of the outsourced party to promptly detect and resolve problems.

Leave a Comment

Your email address will not be published. Required fields are marked *