Denials Management: Challenges and Opportunities for Improvement

Managing denials is a critical aspect of the revenue cycle for healthcare organizations, yet it often feels like navigating a maze full of obstacles. The challenges in denials management can include complex coding errors, lack of proper documentation, and insufficient understanding of payer requirements. These challenges not only affect revenue but can also increase administrative burdens on your staff, leading to frustration.

The trend is not new -- in a pre-pandemic survey, the American Hospital Association found that 89% of respondents indicated their facilities had seen an increase in claims denials from 2016-2019, with 51% of those characterizing the increase as “significant.” Many respondents indicated the significant costs in dealing with denials management, including one 17-hospital system that spent $11 million annually just to ensure they met requirements for prior authorizations, a main cause of denials¹. To improve denials management, it’s essential to adopt a proactive approach. Here are a few basic steps to jump-start a new implementation plan:

• Start by implementing comprehensive training programs for your billing and coding staff to enhance their knowledge of payer policies and coding accuracy.
• Regular audits and data analysis can help you identify patterns in denials, allowing your team to address the root causes effectively.
• Fostering open communication channels between departments—such as clinical, billing, and administration—ensures everyone is on the same page and working together towards minimizing denials.

Remember, improving denials management is not just about process; it’s about empowering your team and creating an environment where they feel supported to succeed. By identifying and addressing the root causes of denials, you can not only prevent future denials but also enhance overall revenue cycle management. Furthermore, implementing denial prevention strategies, such as upfront eligibility verification and pre-authorization processes, can significantly reduce potential denials. And with advancements in technology, there are now tools available that streamline the claims process and identify areas for improvement.

However, with all the tools available to assist in claims denial management, a well-trained staff is an integral part of the solution. Providing ongoing training on payer requirements and claims submission, as well as best practices to leverage the data from today’s technologies, can minimize dollars lost to denials.

While managing denials may seem like an overwhelming task, it's important to remember there are many opportunities for improvement within this process. By taking a proactive approach, providing necessary resources and support to your team, and constantly evaluating and adapting to changes, you can improve denials management and see positive impacts on revenue and operational efficiency.

Learn more about HealthStream’s Revenue Cycle Education offerings.

¹American Hospital Assocation. Advancing commercial health plan abuses to ensure fair coverage for patients and providers. Online report. AHA; December 2020. Accessed September 2024. https://www.aha.org/system/files/media/file/2020/12/addressing-commercial-health-plan-abuses-ensure-fair-coverage-patients-providers.pdf