If you’ve ever visited Yellowstone National Park, you know the ground around geysers is fragile — beautiful on the surface, but underneath, a pressurized system is ready to blow. That complexity and rising pressure mirrors what providers face with denial management: a system full of hidden challenges, where even small cracks can lead to big financial consequences.
Providers work tirelessly to treat patients and keep care moving, but the behind-the-scenes story often looks much different. The financial side of healthcare is deeply complex and under rising pressures from nearly every side – just like those geysers in Yellowstone. There are thousands of moving parts to make sure the provider can treat the patient, get the claim approved and be paid on time.
So What is Denial Management?
Denial management refers to the systematic process of identifying, analyzing, resolving and ultimately preventing denied medical claims. These denials occur when a payer determines a claim will not be paid, or will be partially paid, for various reasons — like payer guidelines, policy coverage or medical necessity.
Because of the many burdens in the healthcare systems, including compliance issues, the sheer volume of claims and outdated technology, providers are often only able to address denials after they occur. This leads to inefficiencies, lost revenue and increased administrative burden.
All these things directly impact a provider’s revenue by delaying or preventing payments. Not to mention the time and money it takes to resolve claims. By shifting to a more proactive approach, providers can improve operational efficiency, fix systemic issues within the claims process and improve financial health.
Addressing the Problems with Denial Management
Yet understanding how to accomplish that is challenging — especially when most providers are operating with little insight into what’s causing the problems. Or, more accurately, what’s holding up the system.
Claim denials arise frequently and most of the time providers struggle to know why they happen. Even worse, they have a big impact on financial health. The average cost of a denial is $43.84 per claim, with providers spending $19.7 billion a year to process them.
By the looks of it, this problem isn’t going away anytime soon. Medical claim denials are on the rise – with some providers seeing denial rates as high as 10% to 15%.
That’s why denial management in healthcare is such an important issue. Many providers lack the insight into claim denials and accounts receivable (AR) trends to address the problem effectively. And, as a result, providers are stuck reacting to the problem instead of fixing it.
Providers must find a more strategic and modern approach to understanding claim denials. The solution lies in arming providers with more information — more insight — into claim denials and trends.
There are countless places to pull data from — clearinghouses and electronic health records (EHRs), for example, to try and get a more accurate financial picture. But these solutions are often not the source of truth for payments data.
Furthermore, reconciling all that data takes precious hours and manual work. Most providers don’t have the time to do the necessary work to investigate trends in AR performance, sources of underpayments and denials and how their payers perform.
It’s time for a smarter, more strategic approach to denial management.
Steps to Build a Proactive Denial Management Strategy
Follow these steps to build a proactive denial management strategy:
Access Critical Business Analytics
Insight into the most important metrics to your financial health is crucial for recognizing and resolving problems. Without it, you are limited in how well you can prevent claim denials.
A claim analytics tool – one that offers quick visibility into the sources of denials and underpayments, payer mix, AR performance trends and revenue recovery rates – should be a priority. It’s an important step to shifting from a reactive denial management strategy to a proactive one.
Simplify and Digitize Your Payments Process
Consolidate fragmented solutions. Instead, opt for a single payments solution that can show you payment trends, AR performance and revenue cycle insights. This is huge for efficiency. This more modern approach will also make it easier to understand the analytics and eliminate the need for manual work.
Identify Problem Areas Fast
Once you have the right claims analytics in place, you’ll be able to know the most common reasons for your denials quickly.
For example, with access to root causes of denials, claims insights help revenue cycle teams know where to focus their process improvement efforts to prevent denials in the future.
Using Claim Analytics to Reduce Claim Denials
The takeaway? Claim analytics are essential. The right claim analytics solution can help bring more insight into the root of your claim denials, fueling a better approach to compliance and financial health.
Armed with trends and reasons for denied claims, providers can easily uncover where in the revenue cycle to focus on process improvements.
What specifically can claim analytics do? Some of the biggest benefits come from identifying common claim denials. Understanding the most common denials helps accelerate acceptance rates and resolve denied claims.
Claim analytics also reveal why claims stay in AR longer. This knowledge helps revenue cycle teams streamline billing processes and reduce the time it takes to get paid.
These benefits alone put revenue cycle management in a position for success. Instead of being stuck constantly reacting to decisions, you can see where the bottlenecks are happening and formulate a plan to fix them.
One last note: Investing in a tool that simplifies these insights is worth it. Sorting through data can be really tedious but leveraging a claim analytics tool that helps you both get and understand the data faster can help. For example, look for flexible dashboards that make understanding revenue trends easy and efficient.
Only by gaining more insights can you truly address denial management the right way. And hopefully, as a result, that will help improve your cash flow, reduce inefficiencies and have more time to spend on patients.
Zelis recently announced an enhancement to Zelis Payment Network that includes claim insights. This new capability gives providers the insights they need to take control of denials. Want to see it in action? Let’s talk.
