Three Ways to Outsmart Denials in 2023


Denial rates serve as a barometer for the financial well-being of healthcare organizations. An increase in denials can have wide-ranging negative implications for an organization — impacting everything from accounts receivable to the patient experience.

By preventing denials upfront, providers can realize revenue faster, boost staff efficiency and satisfaction, and reduce patient anxiety related to the healthcare financial experience.

Here are three best practices that can help providers receive reimbursement after an initial claim:

  1. Focus on what matters most: Categorize and Prioritize Denials Accurately

Analytics, reporting, and data are critical tools for gaining better visibility into denials. Claim Adjustment Reason Codes (CARCs), which appear on electronic remittance advice documents and patient EOBs, convey detailed information about why a claim or service line was paid differently than it was billed.

It’s important to understand how practice management systems post CARCs from EOBs. If denial reports are obtained from an external organization, revenue cycle teams must confirm whether those reports include all the CARCs or whether only certain ones are pulled out for each claim. Having access to complete information is essential for analyzing denials.

Categorizing CARCs by type of denial or stage in the claims process can generate insights about where the majority of denials occur. Different medical specialties may generate certain types of denials more often than others. For example, the services delivered at ASCs tend to require prior authorizations. As a result, ASCs may decide to focus more attention on denials related to prior authorizations, which tends to be very labor intensive.

To uncover how and where denials are occurring, Revenue cycle management teams can also categorize denials by the department. Some problems may stem from claims processes that occur at the front desk, while others may be related to charge entry coding, claim submission, or payment posting that occurs after patient services have been rendered. However, categorizing denials can be burdensome for RCM teams. Integrating an automated denial and appeal management technology solution can streamline these efforts.

  1. Respond Efficiently: Identify the root cause of Denials

Determining the root cause of denials is critical to the financial health of provider organizations. Yet, inaccurate root cause analysis is the biggest mistake that most healthcare organizations make when it comes to denials. Identifying the wrong root cause can result in unproductive changes to specific departments or processes, which results in wasted time, resource depletion, and delayed revenue capture.

Teams often take denial codes at face value. However, these codes are only as good as how the payer assigns them. In addition, there may be more than one root cause associated with a single denial. Claims can be complex, and it’s important to understand their lifecycle from end to end. Identify the processes that feed into a claim and consider how those could be contributing to denials.

With a commitment to process improvement and the right RCM technology system in place, providers achieve big results without adding more staff.

  1. Prevent future denials: Address problems proactively

The best way to prevent future denials is to create a denial management process.  A proactive strategy should be one of the top priorities for revenue cycle leaders. Denial management teams must include all departments involved in the revenue cycle — the actions of one person in the process affect everyone.

Organizations should consider whether they’re getting the most out of their team who are assigned to key areas of the claim process by supporting tedious tasks and freeing up time to support higher impact areas. Research has found that roughly 50 percent of denials stem from issues at the front end of the patient engagement journey. Investing in the right tools and processes on the front end of the revenue cycle can help staff work more efficiently and prevent denials before they happen.

Appeals are another part of the denial prevention process that can’t be overlooked. Appealing a denial multiple times is very expensive and time consuming for staff. One key to success is knowing what to say and what not to say. Give payers a reason why denials should be reversed and then be diligent about tracking.  Be sure your team follows up in three to four days to confirm that the payer received the appeal. Automating appeal creation and follow-up prompts to payers can help ensure no valuable information falls through the cracks.


By focusing on these three key areas, a once daunting, complex process can become a simple, efficient part of your operation to yield powerful results.  Most organizations find that by investing upfront in smarter technology and processes, denials decrease, revenue flows faster, and patients have a better experience

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