Leveraging denial tracking to root out systemic issues

Debra Stall: ©AGS Health

Denials are rising for physician practices, with 73% of respondents to Experian’s 2024 State of Claims survey reporting that claims are being denied more frequently, up 10% over 2022. It’s bad news for practices that are already struggling to get paid, with nearly 50% of respondents reporting denial rates of 10% and higher.

Revenue leakage may be the most apparent outcome of denied claims, but it is far from the only serious impact. Reworking denied claims consumes time and resources that few practices can spare. Also, frequent denials can lead to a crisis of confidence in payer relationships and technological support. According to Experian, providers’ confidence in payer reimbursements is sinking, due to patient concerns and stringent payer policies. Furthermore, only 54% of respondents were confident in their ability to manage revenue cycle demands with technology in 2024, compared to 77% in 2022.

Curbing denials and their downstream impact requires a dual approach: leveraging insights from denial analytics and relying on the specialized expertise of clinicians trained in revenue cycle management who are uniquely positioned to identify and respond to denial patterns.

Blame to share

Climbing denial rates can be blamed on a variety of issues, with payer maneuvering being a primary culprit—and prior authorization policies playing an outsized role. According to an American Medical Association (AMA) survey, 94% of respondents believed prior authorizations negatively impact patient outcomes, while 89% reported that they interfere with continuity of care, and 61% indicated that patients, once stable on a specific treatment, were at times destabilized.

Yet not only have payers expanding the number of services requiring prior authorization, but they have also demonstrated a tendency to frequently change the rules of engagement. For example, increasingly rigorous documentation requirements often lead to incomplete or inconsistent documentation, resulting in a higher number of rejected claims and heightened administrative burdens.

Payers also utilize increasingly advanced technologies to automate medical necessity reviews, enabling faster and more efficient pre-procedure denial of coverage. This same technology is used post-service to rapidly identify claims for denial, requiring practices to dedicate greater resources to both front- and backend rework for appeals and disputes at an average cost of $25 per claim, according to the AMA.

Payers cannot carry all the blame, however. Physician practices also hold some accountability for reasons ranging from outdated technology and workflow inefficiencies to disconnected revenue cycle management processes. In fact, half of all denials can be attributed to front-end revenue cycle issues, such as inconsistent internal processes that delay reimbursement and increase the time required to rework claims. Fragmented workflows and siloed patient access teams also come into play by creating barriers to efficient scheduling, eligibility and benefits checks, and prior authorization.

A lack of advanced technology and reporting capabilities is particularly problematic for physician practices, especially smaller practices with limited resources. Despite growth in the adoption of enhanced analytics and automation tools by payer organizations, physician practices remain entrenched in a world of spreadsheets and manual processes, where it is impossible to establish efficient and time-sensitive financial clearance and other patient access workflows.

This lack of analytics also makes it impossible to track authorizations, verify eligibility and benefits, and identify at-risk accounts for immediate attention—data that is crucial to preventing revenue leakage associated with denials, such as missed filing deadlines and incorrect claim submissions.

Rooting out systemic issues

Indeed, the ability to track and analyze denial data is one of the strongest business cases a practice can make for investing in advanced technologies, including workflow automation tools for enhanced revenue cycle management. They are essential to identifying and correcting the systemic issues contributing to rising denial rates (which should ideally remain below 3% of revenue as a benchmark for accurate billing) and associated revenue leakage.

By scanning historical claims, advanced denial analytics can detect recurring denial trends, such as specific CPT codes, payer types, or documentation gaps, and categorize them to help practices identify areas with the most frequent and costly denial-related issues. When artificial intelligence is thrown into the mix, high-risk claims can be flagged for review before submission, allowing errors to be corrected and denials avoided.

Denial analytics can also be leveraged to optimize front-end processes by revealing breakdowns in key areas such as patient registration, insurance verification, and preauthorization workflows—areas Experian indicates are responsible for up to 76% of denials, particularly those driven by missing, incomplete, or inaccurate data. This same data can be used to inform staff and clinician training by identifying departments or individuals that would benefit from targeted education or redesigned workflows.

Advanced analytics can also enable practices to identify which payers deny claims most frequently and the reasons behind these denials. This allows for improved contract negotiations and tailored submission strategies.

Insights from denial analytics can also be applied to billing and documentation processes to prevent repeat errors. Practices can also compare internal denial rates to industry standards or peer groups to gauge performance and set improvement goals.

Filling clinical resource gaps

One of the most significant challenges physician practices face in optimizing denial management to eliminate systemic issues is the limited availability of clinical resources capable of guiding the transition to a proactive denial prevention model. Successfully disputing denials and improving first-pass rates requires a medical background and skill set. It also requires the ability to coordinate effectively between clinical and business office teams.

The problem is that few practicing physicians have the bandwidth to add these tasks to their daily to-do list without impacting patient volume and care quality. Further, recruiting additional clinical resources in today’s labor market is a challenging and costly endeavor, regardless of how well-funded a practice may be. For many groups, outsourcing some or all clinical administrative services—including clinical documentation, utilization management, clinical prior authorization, clinical denials and appeals, and physician advisory services—to the right partner can put advanced denials management within reach.

Outsourcing clinical administrative services provides practices with access to credentialed physicians who have specific training and experience in both revenue cycle management and patient care. They are uniquely qualified to act as a bridge between clinical and business offices and also to identify and correct patterns in denials, particularly in terms of medical necessity. Importantly, their unique backgrounds and experience also allow them to optimize the use of denial data in a way that others cannot, driving lasting improvements.

This was the experience of a health care organization in the Midwest that was struggling with limited clinical labor resources and increased clinical denials, at a time when operational costs and wage growth were escalating. The group was also experiencing a growing need for Spanish-language support.

The group brought in an outsourcing partner to provide cost-effective, bilingual near-shore support and address claims denied for clinical reasons. The partner assembled a team of highly skilled clinicians, including licensed physicians, with expertise in utilization review, documentation improvement, and clinical denial management.

To ensure seamless integration, a collaborative training program was developed with the health care organization, aligning the vendor’s team with the client organization’s unique processes and diverse IT systems. The two organizations worked together to implement a robust process to analyze denials, evaluate recovery potential, and validate appeal cases using clinical indicators and CMS guidelines, successfully recouping lost revenue.

As the team expanded, the partner introduced a structured learning and development system that prioritized workflows based on complexity. This approach created a talent pipeline where team members gained on-the-job experience, progressing from low-complexity cases to high-complexity tasks, including physician advisory support and clinical documentation integrity.

Through its near-shore outsourcing partnership, the organization successfully recovered 55% of previously denied claims, totaling over $12 million in reclaimed revenue. This approach ultimately delivered a return on investment nearly 40 times the annual outsourcing cost.

The key to successfully outsourcing aspects of clinical administrative services for denial prevention is partnering with the right outsourcing vendor. Look for one with a deep bench of clinically trained experts with the skills and experience needed to augment the capabilities of internal RCM teams seamlessly. Prospective partners should also be able to scale services to meet changing needs rapidly.

Vendors with these capabilities can deliver prompt and precise processing of clinical documentation, authorizations, and other burdensome tasks, ensuring that each patient engagement receives consistent care and attention regardless of patient volume.

Proactive prevention

By shifting from reactive denial management to proactive denial prevention, physician practices can enhance cash flow, reduce administrative burden, and improve patient satisfaction. Denial data can provide a wealth of insights that, when leveraged for operational improvement, will ultimately reduce billing errors, reimbursement delays, and administrative burdens, while improving overall efficiency.

Debra Stall is the senior vice president of transitions with AGS Health.