While providers focus on delivering patient care, the financial processes behind the scenes are increasingly burdened by inefficiencies, rising denial rates and administrative complexity. These challenges threaten the financial health of organizations, making denial management a critical issue that requires modern, data-driven solutions.
In an August 12 article, Stephanie Brookings, senior director of provider enablement at Zelis, examines the pressing issue of claim denials in healthcare, highlighting the financial strain they create and strategies providers can adopt to address them proactively.
Key takeaways are summarized below.
Understanding denial management
Denial management is the structured process of identifying, analyzing, resolving and ultimately preventing claim denials. Claims may be denied or partially paid for a variety of reasons, including payer guidelines, policy coverage or determinations of medical necessity.
Currently, many providers only address denials reactively, once they have already occurred, which results in lost revenue and wasted time. The average denial costs nearly $44 per claim, with providers spending an estimated $19.7 billion annually to process them. With denial rates climbing as high as 10–15% in some cases, the urgency to adopt more proactive strategies is clear.
The Current Challenge
One of the most significant obstacles in denial management is lack of insight. Providers often cannot easily see why denials occur, where bottlenecks exist or how payer performance trends affect their revenue cycle.
Data may be available from sources like clearinghouses and electronic health records, but reconciling it is time-consuming and rarely yields a single source of truth. This lack of visibility keeps providers locked in a cycle of reacting to denials rather than preventing them.
Building a Proactive Strategy
There are three key steps to shift denial management from reactive to proactive:
- Access critical business analytics – Providers need timely visibility into denial sources, underpayments, payer mix, accounts receivable performance and revenue recovery rates. A claims analytics tool is central to this transformation, enabling providers to detect patterns and act on them quickly.
- Simplify and digitize payments – Consolidating fragmented payment processes into a single, integrated solution improves efficiency, reduces manual work and makes insights easier to understand and act.
- Identify problem areas – With analytics, revenue cycle teams can pinpoint the root causes of denials, allowing for targeted improvements that reduce future denials and accelerate claims acceptance.
The role of claim analytics
Claim analytics serve as the foundation for a smarter approach to denial management. They enable providers to identify common denial reasons and streamline corrective measures, reveal why claims remain in accounts receivable longer than necessary and can improve billing efficiency and reduce delays in reimbursement.
By leveraging these insights, providers can transform denial management from a costly, reactive process into a proactive strategy that strengthens compliance, accelerates cash flow and ultimately allows more time and resources to be directed toward patient care.
Ms. Brookings emphasizes that investing in flexible, user-friendly claim analytics tools is a worthwhile step toward reducing inefficiencies and improving revenue cycle performance. With the right insights, healthcare providers can better understand denial trends, address systemic issues and protect their financial health.
