Healthcare providers face constant financial pressure, and few challenges drain resources like denied claims. They represent lost revenue, wasted staff time, and unnecessary patient stress. In fact, many organizations don’t realize how much money they leave uncollected because of inefficient healthcare denial management processes.
That’s why denial management in healthcare is becoming a strategic priority. By improving how you track, work, and prevent denied claims, you can capture tens of thousands of dollars in otherwise lost revenue. In this guide, you’ll learn about the scale of the problem, common challenges, and the technology you need to solve them.
Denials in medical billings are a huge problem. Every year, healthcare organizations lose an estimated $262 billion in revenue due to denied claims. To put this in perspective:
Since 2016, the national average denial rate has risen by 24% — and 11% since the COVID-19 pandemic. Hitting the recommended benchmark of less than 5% would require an 83% reduction in current denial rates.
Qualified health plans sold via HealthCare.gov also have abysmal denial rates. Nearly one out of five in-network claims were denied in 2023, and over one-third of out-of-network claims were denied.
And the trend isn’t slowing. Denials are projected to rise by another 8.86% by 2027. For most organizations, this is unsustainable. In any other industry, losing earned revenue at this scale would be unacceptable.
The key barriers to denial management in healthcare include:
Denial management teams often lack the medical expertise necessary to justify services during appeals. Ideally, they would collaborate closely with clinicians, but limited time and inefficient tracking systems make this difficult. As a result, appeals fall through the cracks and claims remain unpaid.
Without robust data tools, many organizations don’t even know how many claims are being denied or why. Manual spreadsheets and EMR add-ons aren’t built for detailed denial analysis. This lack of visibility wastes hours and often results in missed filing deadlines.
A shocking 82 to 90% of denials are preventable. Errors at initial submission are responsible for nearly a quarter of denials. Once denied, 22% of these claims can never be recovered, representing avoidable financial losses.
Your revenue cycle team is already stretched thin. Adding denial prevention and appeals to their workload isn’t realistic. Without enough bandwidth, training and process optimization fall to the bottom of your to-do list.
If your team lacks the tools, staff, or resources they need to work efficiently, denials are going to slip through the cracks. Over time, it can cost you tens of thousands of dollars in lost revenue.
Hiring and retaining qualified staff is a chronic issue. The lack of standardized training means knowledge is often passed informally, creating inconsistencies. Meanwhile, the cost of appealing a single denial ranges from $25 at a clinic to $181 at a hospital. Multiply this by thousands of denials, and the financial strain becomes clear.
When denial management workflows aren’t standardized, backlogs quickly pile up. Teams may spend valuable time on low-value denials while high-value recoverable claims are neglected. Without measured processes and effective SOPs, efficiency is nearly impossible.
Too many providers rely on EMR modules or spreadsheets to manage claims. These tools lack automation and require manual data input. Many organizations avoid new tech out of fear of disruption. But the cost of not evolving is far higher.
Denial recovery is highly time-sensitive. Missing a filing deadline means guaranteed lost revenue. Each claim requires five to seven touches and up to 14 minutes of manual work just to check its status.
Even when you appeal a denial on time, success isn’t guaranteed. Private payer denial appeals succeed only 45% of the time. About 41% of Medicaid appeals succeed.
Your organization can significantly reduce its overall denial rate and increase earned revenue by:
The best way to fight denials is to prevent them. Purpose-built healthcare denial management software integrates with EMRs and reduces manual tasks. By eliminating data silos, your team gains visibility into exactly where and why denials occur.
Denial management automation allows you to build standardized processes for appeals and denials. This reduces training burdens and helps new staff ramp up quickly.
Denials aren’t just a billing problem. They indicate a larger issue. Continually monitoring denial rates and identifying why they are happening keeps your accounts receivable healthy.
Proactive denial prevention systems have demonstrated significant returns on investment. For instance, a medium-sized health system that adopted such a system saw a 6-to-1 ROI, saving approximately $6 million per hospital. Using software platforms that auto-generate reports and analyze trends and outliers allows teams to focus on the most critical denials.
Download an ebook to learn more about denials management in healthcare.
While healthcare billing has historically been slow to adapt, new technologies offer a path to overcome revenue leakage. By adopting automated solutions built for speed and accuracy, your organization can focus on increasing revenue and proactively avoiding denials.
Rivet Health is the tool you’ve been looking for to level up your denials management processes. Sign up for an upcoming live webinar or view an on-demand webinar to learn more.
Modernize the way you approach denial management in healthcare with Rivet Health. As part of our claim resolution service, Rivet helps providers:
On average, Rivet customers achieve a 20% year-over-year reduction in their denial rate. Schedule a demo with Rivet Health to learn more about Rivet Revenue Diagnostics.
