Skip to Content

Recover more revenue with denials prevention, resolution, and automation

August 25, 2020 Article 7 min read
Chris Moshier Duane J. Fitch
A robust denials management strategy is critical to stop revenue from leaking out of your healthcare revenue cycle. Do you have the people, processes, and data analytics to efficiently and systematically prevent and resolve denials? Consider these ideas to get started.
An empty doctors office room

It’s understandable when organizations react to a crisis of (literally) pandemic proportions by hunkering down. But cutting expenses too deeply can hurt the organization in the long run, making it even harder to ramp up when the crisis has passed.

By keeping your sights on long-term revenue recovery by making sustainable changes to operational processes, you position yourself as the financial steward your organization needs during a difficult time.

Priority No. 1 should be to make sure your organization is being fairly reimbursed for the services you’ve already provided by improving denials prevention and resolution.

A revenue-cycle triple threat

Denials represent a triple-threat to the revenue cycle. They:

  1. Reduce revenue: On average, healthcare organizations lose between 1–5% of net patient revenue to denials. For a $500 million organization, improving the final denial write-off rate by just 0.5% would generate $2.5 million in new revenue capture per year.
  2. Delay cash collections: Initial denials have risen to an alarming 7–15% of gross revenue, although denial rates vary dramatically according to the insurer and the state.
  3. Increase billing effort: Your organization is likely paying at least $25 to resolve and rebill each denied claim. If payers are kicking back about one out of every six claims, those costs can add up quickly. For example, an organization with 500,000 claims per year can reduce costs by $0.75 million by reducing their initial denial rate from 12 to 7%.

Plug revenue cycle leaks

An effective denials management strategy with the right balance of resources, technology optimization, and automation can stop a revenue leak and improve margins — relieving pressure that otherwise might lead to further furloughs or layoffs.

Consider prioritizing investing in process improvement to understand the causes of denials.

As complex and challenging as it can be to recover revenue from insurance payers, investing in denials management is a better bet than pursuing an aggressive patient collection strategy, especially in today’s economy with record-high unemployment and increasing levels of patient responsibility. Now is the time to implement a two-pronged denials prevention and resolution strategy enabled by automation.


An ounce of prevention is worth a pound of cure. Consider prioritizing investing in process improvement to understand the causes of denials, rather than waiting to resolve them on the back end.

Preventable errors commonly originate in front-end areas of the revenue cycle, such as registration data entry, authorization, medical necessity, eligibility, and benefits checking.

Authorization denials are among the most complex and time-consuming denials to resolve, making them a rich target for prevention efforts. Following are a few practical tips on how to prevent authorization denials:

  • Organize teams based on service type and payer. Since each payer has a different authorization requirement for each service type, create specialized “authorization units” to help front-end team members become more acclimated to payer-specific rules. Such collaboration will help increase accuracy and productivity, as well as strengthen relationships between departments and with the payers.
  • Use data to actively monitor scheduled accounts. Utilize reports to identify accounts with missing authorizations and create a clear communication policy with departments to get authorizations for add-on services.
  • Optimize technology to reflect authorization status on patient accounts. Create stop-bill edits based on authorization status assigned to accounts to review information before sending a claim to the payer.
  • Form a front-end denials committee and create a feedback loop with departments to provide feedback on missing and inaccurate authorizations due to lack of documentation.

How much revenue is your organization losing to timely filing denials? Organizations often take a big revenue hit due to the lack of clear processes when following up with payers after denials, leading to missed deadlines. A few suggestions for preventing timely filing denials include:

  • Analyzing discharged not final coded (DNFC) and discharged not final billed (DNFB) claims so that your team can identify risk areas that may lead to missing appeals deadlines.
  • Creating a policy that includes clear expectations regarding the specific number of days within which departments should follow up with the billing office with additional information requested by payers.
  • Creating a process for billing staff to provide feedback to departments regarding performance on providing information and optimize technology to set reminders for follow up.
  • Optimizing work queues and incorporate timely filing rules to allow staff and managers to review and prioritize high-risk accounts.
  • Providing documentation to clinical denials appeals staff to keep track of timely filing limits.


In today’s world of tight margin compression, quick and efficient resolution of denials is critical. With the raft of new billing codes for telemedicine and COVID-19 testing and treatment, zero-balance account reviews have become a key component to ensure fair reimbursement for services you have already provided.

Many organizations suffer from inefficient processes that can have devastating financial impacts.

In addition, many organizations suffer from inefficient processes that can have devastating financial impacts. Providing an analytics-enabled standard way of sorting work queues can help you focus resources on the highest-risk, highest-dollar accounts. Database and data visualization tools can organize denials by payer, denial reason, account balance, and timely filing.

Armed with information about your organization’s denial trends, be sure to schedule payer meetings to discuss these trends. A few best practices for these meetings include:

  1. Defining objectives prior to the meeting. Provide a problem statement and agenda to the payer ahead of the meeting and a summary table of denied dollars and denied accounts volume.
  2. Coming to the table prepared to show examples of denied accounts, any supporting documentation (including contract terms), and a listing of denied accounts.
  3. Setting expectations with payer representatives regarding a resolution timeline for completion of projects.

Before you leave each meeting, make sure the next scheduled meeting is on the payer representative’s calendar. Initiate each meeting by following up on open items and sharing denial trends on previously discussed issues.


Many organizations rely heavily on manual, human interventions to prevent and resolve denials. By automating high-volume, low-risk denials, you can not only resolve these denials more efficiently but also transition staff away from these routine, time-intensive tasks so that they can focus on high-risk accounts. Additionally, Robotic Process Automation (RPA) is a powerful tool that offers additional automation capabilities for prevention and resolution.

As just one example, when data analytics revealed a pattern of denials by a payer for a certain CPT code, our team members worked with the healthcare organization to write a query in the client’s EHR to automatically write-off about 18,000 accounts annually, saving the client the cost of nearly one full FTE.

As the surge of electives, due to pent up demand, makes its way through your system, your team needs efficient and systematic denials management processes.

Consider the following potential opportunities to automate low-impact, high-volume denials:

  • Close out duplicate denials when the denial and payment is received on the same day.
  • Write off denials for noncovered services according to contract terms.
  • Transfer account balances to the next responsible party.

Using data analytics to dig down to root causes

To identify leaks in your revenue cycle and pinpoint ways to plug those leaks, strong data analytics tools and skills are increasingly more critical. As you’re weighing strategies for reducing and preventing denials, consider how well you’re measuring and tracking the leading indicators to the final denial write-off rate, such as:

  • Days in DNFC/DNFB status
  • Initial denial rate
  • 835 denial rate

But keep in mind, while these are important metrics to monitor, they don’t always provide enough information to understand the reasons for denials. Consider redeploying revenue cycle staff on strategic projects to identify and correct the issues that cause claims to be denied. These existing employees are your best asset when it comes to uncovering the true reasons for denials. They have the years of experience, relationships, and “ears to the ground” you need to diagnose the problems that are at the root of underperformance.

Invest now in denials management

Remember that time is of the essence. Deploying your people and resources to more effectively prevent and resolve denials is an investment with recurring ROI. As the surge of electives, due to pent up demand, makes its way through your system, your team needs efficient and systematic denials management processes to collect the revenue that your organization has earned.

We have expertise to help navigate the complexities of payer denials and guide providers through the development of a robust denials management strategy focused on prevention, resolution, and automation. Let’s start a discussion.

Related Thinking

Doctor wearing facemasks reviewing paperwork.
January 12, 2024

Resolve credit balances to improve compliance and reporting

Article 4 min read
Healthcare worker walking down a hospital hallway
June 20, 2023

Zero-balance account review: Boost revenue integrity and lower cost-to-collect

Article 6 min read
Group of doctors and nurses walking down hospital hallway.
May 25, 2023

2023 Healthcare Regulation & Reimbursement Summit

Webinar 3 hour watch