How hospitals, physicians and health systems can leverage advanced analytics to reduce claim denials, strengthen financial performance

Hospitals, physicians and health systems are operating in a challenging economic environment characterized by ever-changing payer contracts and increasingly complex payment models. To maintain fiscal strength, healthcare organizations must develop and implement an effective revenue cycle management strategy that includes a process to address the unnecessary revenue loss caused by insurance claim denials.

Unfortunately, without the right data and tools, claim denials can be a pervasive and complicated problem for provider organizations to resolve, especially when organizations hold contracts with several health insurers.

This content is sponsored by GE Healthcare 

GE Healthcare estimates that payers initially reject about one in every five claims, and that the majority of those denials are preventable. The reasons claims are denied differs year to year and payer by payer, but most denials fall into one of two categories: administrative or clinical.

Clinical and administrative claim denials: The most common culprits
Common administrative claim denials include timely filing — which occurs when a healthcare organization submits a claim for payment outside of the timeframe established in the payer contract — and lack of authorization, when services are provided to a patient without prior approval from their health insurance plan. 

Within the clinical category, inadequate clinical documentation and lack of medical necessity are two common reasons payers reject claims. Accurate coding of claims is dependent on correct clinical documentation. If documentation is incorrect or lacking, coders are unable to assign proper codes, which could result in a claim being rejected. Claims are denied for medical necessity when the payer determines there was not an evidenced-based reason for the services, tests or procedures provided to the patient.   

The financial toll of a high rate of claim denials  
Claim denials can impede cash flow and wreak havoc on a healthcare organization's finances. According to GE Healthcare, a medical technologies and services provider, hospitals lose between 2 percent and 5 percent of their net patient revenue to avoidable claim denials written off to bad debt.

After a payer rejects a claim, provider organizations spend significant resources attempting to correct the claim to resubmit it for payment. On average, it costs a hospital or health system $25 to rework and resubmit a claim after it is denied by a payer. Although the cost per claim is relatively low, a high rate of claim denials can result in a total cost that can take a significant toll on the organization's bottom line.  

By developing and implementing an effective claim denials strategy, hospitals, physicians and health systems can strengthen financial performance by recouping lost revenues and improving reimbursement. For example, a $1 billion health system can get a 0.5 to 1 percent lift to its operating margin by reducing claim denials, which amounts to $5 million to $10 million annually, according to GE Healthcare.  

Implementing a plan to improve claim denials management
David Gaydosh, managing director at Accenture Health Practice responsible for the North America Revenue Cycle practice, says there are three key components to a successful claim denials management strategy: process, people and technology.


Process is crucial to identifying and resolving problems on the front-end of the revenue cycle that cause adjudication problems downstream. Many insurance claims are denied for simple and avoidable errors that occur during the pre-registration, registration, insurance authorization and the verification processes. Implementing standardized templates across the organization significantly reduces most front-end errors. For example, provider organizations can implement electronic registration forms that flag missing patient data at registration or during scheduling.

Provider organizations can also use standard templates to drive clinical documentation improvement. These templates can help guide what physicians document while providing patient care to help ensure the clinician is capturing the key information payers seek when reviewing claims. Accurate clinical documentation is key to reducing preventable insurance denials, particularly those based on medical necessity.


The human component of a process cannot be underestimated. Front-end revenue cycle management staff must take a proactive approach to verifying patient information to reduce insurance claim denials. Insurers reject claims that contain demographic and technical errors, such as the wrong plan code or Social Security number. This type of information is typically collected during the registration process, making it vital for staff to validate information new and returning patients orally communicate. It is also important for organizations to train front-end staff to identify contradictory information entered in the patient's record.


Hospitals and health systems are increasingly deploying advanced analytics solutions that use complex algorithms and enormous datasets to dig deeper into claim denials. Before hospitals had access to big datasets and analytics tools, hospital staff lacked the ability to discern larger trends and patterns when reviewing claim denials. "It used to be like a paper-based inbox on your desk," said Travis Frosch, director of analytics and cybersecurity at GE Healthcare.

However, with advanced analytics solutions hospitals and health systems no longer have to use this inefficient manual process. Leveraging analytics can help healthcare organizations improve performance by pinpointing the reason a payer denied a claim and uncovering denial trends. GE Healthcare's analytics solution, DenialsIQ™, uses a statistical algorithm developed by GE's Global Research Center to uncover trends in claim denials. The tool performs root-cause analysis to uncover the issues that cause payers to reject claims. This insight helps hospitals and health systems appeal and reverse the initial denial and to fix the problem prospectively to prevent future denials. 

Analytics can also help identify claims that a payer improperly denied. The contracts between payers and providers dictate reimbursement rates, specify which services require prior authorizations and many other parameters regarding payment. It is vital for provider organizations to ensure incoming payments match the payer contract terms to avoid revenue loss. For example, GE Healthcare analyzed payments from one payer to a healthcare organization and found many improperly denied claims. "When we pulled their data through DenialsIQ, we were able to uncover about 1,200 denials that shouldn't have been denied under the payer contract," said Mr. Frosch from GE Healthcare.

Since GE Healthcare launched DenialsIQ in 2016, the company has helped its customers  uncover more than $2 billion in actionable health insurance claim denials. About 30 percent of those denials stemmed from coding issues and another roughly 20 percent were denied due to eligibility discrepancies. Timely filing, prior authorization and credentialing issues were also among the top culprits for claim denials.

Gaining long-term sustainability with support
To realize the full benefits of an analytics solution for denials management, hospitals, physicians and health systems need to know what data to prioritize or how to address the issues causing insurers to deny their claims. Provider organizations also need to implement processes that will allow them to create a sustainable denials management program. 

After launching DenialsIQ in 2016, GE Healthcare recognized healthcare organizations needed more than an analytics solution to drive the long-term change needed for an effective claim denials strategy. To address this issue, GE Healthcare partnered with Accenture, a global management consulting and professional services company, to offer provider organizations GE Healthcare's analytics solution as well as advisory and consulting services.

"We partnered with Accenture because we wanted someone with industry leading revenue cycle redesign experience…to leverage DenialsIQ and then take that next step with change management," said Mr. Frosch from GE Healthcare.

A key determinant of a successful claim denials management strategy is sustainability. The GE Healthcare and Accenture partnership helps organizations achieve continuous improvement. After implementing GE Healthcare's advanced analytics solution, "Accenture comes in and deploys process teams to build out training, deliver training, standardize process and build out functioning claims denial strategy," said Mr. Gaydosh from Accenture.

Once a hospital, physician or health system develops and deploys a plan to reduce claim denials, then it is time for individuals within the organization to take ownership of the strategy and accountability for improvement. Claim denials can occur at various points, including the front-end during registration and scheduling, while the service is being provided, or at the back-end of the revenue cycle. Many people are involved in the life cycle of an insurance claim, which means healthcare organizations must establish clear lines of accountability to prevent blame shifting when a claim is denied or needs to be re-worked for appeal, according to Mr. Gaydosh.

Hospitals, physicians and health systems can reduce avoidable denials by deploying the right tools and processes to identify the precise root causes of denials, reverse the denial and put an improvement process in place to ensure the same type of denial does not reoccur.

An effective claim denials management strategy requires standardized processes and the deployment of advanced analytics in key areas of the revenue cycle to pinpoint the cause of the denials and then using that insight to prevent future claims from being rejected. Although technology is a key component, everyone within a hospital or health system, from billing staff to clinicians, plays a role in driving this improvement.

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