Implementing Denial Prevention

Fact: Every medical organization has experienced those pesky claim denials.

Medical claim denials are a hassle and can often lead to financial difficulties. The good news is, many medical denials can be prevented and can be easily avoided. Approximately 90% of denials within any healthcare organization are preventable. The bad news is, there will always be some denials, but by reducing them by even a fraction of a percent a substantial impact can be made on an organization’s bottom line. Denial prevention requires visibility and knowledge of where and why denial problems originate. Effective strategies and processes need to be introduced to prevent the denials from reoccurring.

Before you tackle your denials, you must identify your denial rate. To calculate your denial rate:

The average denial rate can cost medical practices between 5-10%, according to MGMA (Medical Group Management Association. Better performing organizations have approximately 4% denial rate. By using this equation, it’s easy to figure out where and how corrective opportunities appear and by focusing within the individual practice. This data visibility then allows for the medical practice to recoup the most money or at the least, determine where to eliminate problem trends.

Denial Cause

Evaluating your medical practice is the first step in knowing why claims are being denied. Claims are denied for various reasons, below is a list from most to least likely to occur:

  • Incorrect Patient Identifier
  • Insurance coverage terminated
  • Lack of referral or preauthorization
  • Services Excluded or Non-covered
  • Request of Medical Documentation
  • Coordination of Benefits
  • Bill Liability Carrier
  • Missing or Invalid CPT/HCPS code
  • Timely Filing
  • No Referral on File

Over the last five years, insurance payers have created more intricate barriers for claim processing. It is in the best interest of the insurance payer to deny a claim. Denial codes can be very vague and labor intensive. Payers are expecting that only a small percentage of medical organizations will follow up on the claim denial, resubmit, or appeal the claim with the appropriate corrections. It is their job to find the errors and denying claims saves the insurance payer money.

For denial prevention to be most effective for a medical organization, the root cause of majority of claim denials must be determined. One of the most common denials, for example, is due to lack of referral of preauthorization. Many services considered as non-emergency may require prior authorization. Certain surgical procedures and inpatient admissions may also require prior authorizations. Services that are provided to a patient that require prior authorization will be denied unless considered as a medical emergency. Denial Management continues to be a challenge due to the fact it is time consuming, costly, and prone to error. The cost to rework those denials is average of $25 per individual claim on average.


Processes need and must be changed for healthcare organizations to be successful.

Getting in front of the problem will eliminate issues after the visit. Receive up to date patient insurance information before the date of service must be a priority. Verifying insurance benefits prior to service being rendered, and verifying authorizations are just a few strategies that are key to improving the healthcare organizations bottom line.

A denial prevention program eliminates frustration, time and enhances cash flow.

Here are 6 strategies to utilize when preventing claim denials:

  1. analyze the reason claims are being rejected, and address the problem areas
  2. knowledge of the insurance payers and contracts within the organization
  3. track claim progress
  4. find any trends to address
  5. evaluate and monitor claim submissions
  6. educate and communicate with all staff members

Every dollar counts in today’s healthcare, so why are denials not being addressed more often. One of the most significant challenges is the ability to navigate consistent change policy from CMS. This is in addition to commercial payers or third-party payer auditors that perform negative post-payment reviews on medical record documentation. All staff must understand payer requirements, contract knowledge, and participation agreements for effective change in denials. Constant communication with office staff from clinical to revenue cycle can be challenging but is imperative in today’s healthcare. Taking a proactive approach towards denials and the processes within your organization enables staff to identify trends, correct issues from re-occurring, and captures revenue to which it is entitled.

Global Health Management Services have a Denial Prevention Program which would eliminate frustration for the clinical staff, revenue staff, and speed up cash flow. Our expert team will implement improvements, strategies, and processes involving all departments within your organization. Our goal is to proactively protect the revenue, prevent costly errors from occurring and re-occurring, and secure the bottom line. By looking ahead, your organization and staff can begin to find trends, correct issues from re-occurring, and allow for the organization(s) to capture all the revenue it is entitled. Use Global Health Management’s proven 3 step process to reduce denials, collect lost revenue and move your practice towards denial prevention. If every dollar counts in today’s healthcare, then denials are the top issue to be addressed. Contact Global Health Management Services now to learn the proven strategies to implement into your practice today.


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