How to Deal With Denial Management And Its Challenges? 17 Nov 2020

Denial Management – A Cumbersome Process

One of the most general yet troublesome areas that small practices face in common is Denial Management.

It is the practice of analyzing all the unpaid claims and discovering what went wrong in the claiming process and documents. With denial management, hospitals and small practices can figure out why the claims were denied payment and rectify the mistakes, so it never repeats. However, the challenges and claim methods are unique to every patient and provider. To sum up, there will be many unexpected obstacles in the whole of Denial Management.

In short, the objective of Denial Management is

  • To scrutinize all the unpaid claims,
  • Discover the pattern for rejection from the insurance carriers, and
  • Appeal the rejection addressing the accurate process as mentioned in the provider’s contract.

Contrary to claim rejection, where the claim is submitted to the payer with incorrect or missing data, claim denial is when the claim is processed and then rejected by the payer.

Unfortunately, claims once denied cannot be submitted again. The denied claims must address the reasons for denial accurately. Then, an appeal or reassessment of the claim has to be proposed by the provider. Ideally, the complete denial management process looks for the root cause of the denial along with the coded cause.

Claim Denials Management results for different reasons, like incorrect or missing information, late submissions, duplicate claims, outdated CPT or ICD-10 codes, out-of-network care, unlisted claims, lack of prior approval, etc. And the top reason for claim denial is perhaps the patient’s ineligibility, meaning the patient’s provider does not have insurance listed for that health condition or the patient’s insurance amount does not cover that health condition (out-of-network care).

Hospitals and small practices are finding the whole denial management complicated and are straining a lot to encash what they are owed. The threats are

1 – Keeping up with the requirements are complex.

Insurance providers are adding complex requirements in their contracts. There is a mere 20% of claims that come back rejected in the initial phase. And this means providers have to appeal one in every five claims. And the constant rework puts off from hospitals and slows down the revenue cycle improvement measures.

2 – Patients are under high pressure.

The employers and insurance providers are demanding more from the patients by charging high fees on health insurance plans and constantly adding more responsibilities to their tables. The patient’s initial contribution to the insurance plans has seen an upsurge in the past, and the process to collect it back from the providers has become challenging.

And as patient payments are increasing, it has become more complicated to collect payments on time. Presently, there are resolution programs that are asking for revenue cycle vitality.

3 – Value-based initiatives are a threat to the revenue cycle and gross profitability.

Value-based care has positive results for cost-savings and efficiency in the long-term. However, it also means that certain service lines may not prove beneficial now, as they used to be in the past, ensuing from the efforts to equalize payments and cost. It is crucial that the hospitals cut their overall overhead, which is inclusive of costs associated with their denials management initiatives.

4 – Having outdated denials management software.

In a survey conducted by HIMSS Analytics in 2016, approximately one-third of health care providers still fall back onto manual claim denials management process. Hospitals are not encouraging and showing interest in the denials management software and many are following outdated paper-based processes or depending on databases that were built in-house, which clearly impeded their decision-making abilities and prevents automation, which may help to optimize denials management otherwise.

How to overcome denial management challenges?

  • Firstly, identify the initial denial amount and understand the best solution to deal with these denial issues. Leverage the data analytics to get to the roots of the denial issues. After you have discovered the root cause, you will get a clear picture of the reason why you had to face the denial problem and who will be impacted more between the provider and the payor. In the interim, you must also consider revisiting and optimizing your existing clinical and revenue cycle areas for betterment.
  • Secondly, you must dip your toes on the registration and pre-service issues. Denials usually start at the beginning, that is from your front desk executives. Educate the front desk staff to be more responsible and pay more attention to the patient’s eligibility criteria against their insurance claims. It will reduce half of the incorrect claim denials.

Preauthorization starts with a specific plan of action that usually involves a plan, providers, and payors. Preauthorization is a specific task that is managed and sorted out by the nursing staff members. The preauthorization along with other medical denial accounts amounts to a certain denial percentage because of the delays in sanctioning the claims on time.

The information is obliged to proceed from the insurance provider to the payor, and then come back to the provider. The providers must consider improving efficiency by getting appropriate clinical guidance and support with evidence that will solve most of the complexity in the process. To do so, hospitals and practices can consider:

(i) Automating their preauthorization screening processes, thus making it easier for staff to validate all the documents, claims, and to ensure the whole process is set.

(ii) Automating payor policy maintenance in every location and be stringent to reduce the administrative work.

The staff has to ensure that all operational reports from finance and revenue cycles follow the hierarchy for reviewing and approvals. It will keep the whole process transparent and make it easy to understand in case the claims get rejected. The team has to regularly update and manage the data to reiterate the process, which can prevent future denials.

How can Velan help you handle Denial Management?

We have been associated with clients worldwide for more than a decade, and possess the experience and expertise to effortlessly handle all kinds of denial management requests. You will be entitled to the benefits highlighted below if you consider outsourcing your denial analysis requirements to us. They are

●      Medical data security

We sign globally approved NDA with our client and ensure that the data security policies are in place. You can be assured that every information disclosed to us will be highly secured.

●      Cost-effective pricing models

We are highly cost-effective and help you reduce your overhead costs. We have the experts who will seamlessly take care of the entire denial management for you.

●      Advanced software

We eliminate the need for you to invest in the medical billing software. We use the latest software to provide you with efficient services that will address all your challenges.

●      Highly accurate

Our skilled professionals will provide you with highly accurate denial analysis and help you with recovering payments from your denied claims.

●      Quick turnaround

We offer excellent and accurate denial analysis services in a very short time while keeping a check on premium quality.

Victor Bala

Medical & coding

About the Author:

Victor has over a decade of experience in delivering revenue cycle management services to the US healthcare providers. He has a proven track record of accelerating revenue collection by streamlining the billing, coding and AR processes. His team at Velan has been delivering revenue cycle management cycle, appointment scheduling, pre-authorization and credentialing services to physicians, group practices, and hospitals. He can be reached at


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