How to Reduce Denials and Boost Your Medical Billing Collections

Have you ever felt the frustration of denied medical claims and wondered how it impacts your bottom line?

Denials not only slow down cash flow but can also jeopardize the financial stability of healthcare organizations. 

What if there was a way to transform these roadblocks into opportunities for improvement?

In this guide, we’ll explore proven strategies to minimize denials and maximize collections.

Stay with Cadence Collaborative and discover our actionable strategies that can revolutionize your revenue cycle management.

Why Are Insurance Claims Denied? Key Root Causes

One of the biggest challenges in medical billing is claim denials. They not only delay payments but also increase administrative burdens for healthcare providers. 

The most common reasons for claim denials include:

• Complex coding errors: Medical billing relies on a wide range of codes, like ICD-10 for diagnoses and CPT for procedures. 

Even a small mistake—like using the wrong code or not matching the diagnosis with the procedure—can lead to a denial. 

For example, if a claim lists a diagnosis that doesn’t justify the treatment provided, insurers may reject it. This is why accuracy in coding is critical.

• Documentation gaps: Insurers need detailed medical records to approve claims. If there’s missing or unclear information, like incomplete patient details or vague treatment notes—the claim might be denied. 
• Payer-specific requirements: Each insurance company has its own set of rules about what they will cover. 

These guidelines can change frequently, making it hard to keep up.

Some payers may deny claims for services they consider experimental or not medically necessary, even if other insurers would cover them. 

• Coordination of Benefits (COB) issues: When patients have more than one insurance policy, figuring out which one should be billed first can be tricky. Mistakes in determining the primary payer can lead to denials if the wrong insurer is billed initially. 

Tackling these root causes head-on—whether it’s improving coding practices, ensuring thorough documentation, or keeping up with payer policies—can lead to a noticeable drop in denied claims.

As a result, you can boost revenue cycle efficiency and keep things running smoothly.

How Much Are Claim Denials Costing Your Practice?

Claim denials are a significant and growing financial burden for healthcare practices, costing the industry billions each year. 

On average, about 15% of all claims submitted to private payers are initially denied, and these denials can have a far-reaching impact on a practice’s bottom line. 

The direct cost of reworking denied claims is substantial—estimated at around $43.84 per claim, adding up to nearly $20 billion annually across the healthcare system.

This figure doesn’t even account for the additional labor costs associated with clinical staff involvement, which can further inflate the total expense.

For individual practices, the financial strain is palpable. The administrative effort required to resubmit or appeal denied claims consumes valuable resources, often leading to cash flow issues that can disrupt daily operations. 

For instance, delayed payments from denied claims extend accounts receivable (AR) days, making it harder to meet operational costs like payroll and supplies.

Moreover, when claims are denied for expensive treatments (often exceeding $14,000), the financial stakes become even higher.

Proven Strategies to Build a Strong Denial Management Framework

To effectively reduce claim denials and boost collections, it’s essential to build a robust denial management framework. Here are some proven strategies:

• Root cause analysis: The first step in reducing denials is understanding why they happen. By tracking denied claims and identifying patterns—whether it’s coding errors or missing documentation—you can address systemic issues at their source.
• Pre-submission validation: Implementing a thorough review process before claims are submitted can catch errors early. This includes verifying patient information, ensuring accurate coding, and confirming that all required documentation is attached. 
• Specialized denial teams: Establishing a dedicated team focused solely on denial management can streamline the process of handling rejected claims. 
• Appeal processes: Not all denials are final. Having a structured appeal process in place allows your team to challenge unjustified denials effectively. 

Key Steps for an Effective Denial Prevention Strategy

Preventing denials is all about being proactive and having the right processes in place. Here are some simple but effective steps to help reduce denials:

1. Focus on problem areas: Start by identifying which types of claims are getting denied most often. This could be certain procedures or specific payers. Once you know where the issues are, you can target those areas for improvement.
2. Use real-time tools: Technology can help catch errors before claims are submitted. Real-time rules engines automatically check claims against payer requirements and flag any potential issues, like missing information or incorrect codes. Fixing these errors upfront can prevent denials later.
3. Keep your team trained: Regular training for your staff on coding updates, payer policies, and best practices is essential. Well-trained staff are less likely to make mistakes that lead to denials.

By focusing on these key steps, you’ll be able to prevent many denials before they happen and keep your billing process running smoothly.

How High-Quality Medical Coding Reduces Denials

Accurate medical coding is one of the most important factors in preventing claim denials. 

When coding is done correctly, it ensures that the services provided are clearly communicated to insurance companies, making it easier for them to approve claims.

High-quality coding means using the right codes for diagnoses and procedures, ensuring they match what was actually done. 

It also means staying up-to-date with any changes in coding standards, like updates to ICD-10 or CPT codes. 

When coding is consistent and accurate, it reduces the chances of claims being denied due to mismatches or errors.

In addition to reducing denials, accurate coding helps speed up payments.

Claims that are coded correctly tend to get approved faster, which means quicker payments for your practice. Plus, it minimizes the need for rework or appeals, saving time and resources.

Tips for Improving Coding Accuracy

Improving coding accuracy doesn’t have to be complicated. A few simple adjustments can make a big difference:

• Keep up with coding changes: Coding standards change often, so it’s important to stay updated on any new codes or revisions. Regular training sessions or refresher courses can help your team stay informed.
• Double-check before submitting: A quick review of codes before submitting claims can catch small mistakes that might lead to denials. This extra step can save a lot of time in the long run by preventing rework.
• Use coding software: There are many tools available that help ensure accuracy by cross-checking codes with payer requirements. These tools flag potential issues before claims are submitted, reducing the risk of denial.

Essential Metrics to Reduce Denials

To effectively reduce denials, it’s important to track key performance indicators (KPIs) that directly impact your revenue cycle. 

Critical metrics include:

• Appeal Success Rate: This tracks how often appeals result in overturned denials. 

A high success rate indicates that your team is effectively challenging unjustified denials. If this rate is low, it might be time to review appeal strategies or improve documentation.

• Days in Accounts Receivable (A/R): This metric shows how long it takes to collect payment after submitting a claim. 

Fewer days in A/R means better cash flow. High A/R days could signal inefficiencies in billing or follow-up processes, including unresolved denials.

Monitoring these KPIs regularly highlights areas for improvement and ensures your denial management efforts are driving results.

Best Practices for Effective Denial Appeals

Having a solid strategy for appealing denied claims can make all the difference. Here are some best practices to improve your chances of success:

• Use payer-specific templates: Each payer has different requirements for appeals. 

Creating customized templates for each one ensures you’re providing exactly what they need, speeding up the process and increasing your chances of success.

• Track appeal success rates: Keep a close eye on which types of appeals are most successful, then focus on high-value claims or those with a better chance of being overturned. 

Following these best practices streamlines the appeal process and increases the likelihood of getting denied claims paid.

Steps to Improve Your Denial Appeal Process

Enhancing your denial appeal process can significantly boost your revenue recovery. Follow these five steps to streamline your approach:

1. Categorize claims by priority: Focus on claims that are time-sensitive or represent higher revenue. Addressing these first ensures you don’t miss out on important opportunities due to deadlines or high-value denials.
2. Assign an appeals expert: Designate a team member or small group who specializes in handling appeals. Having dedicated experts ensures that appeals are handled efficiently and with the necessary attention to detail.
3. Establish a follow-up routine: After submitting an appeal, it’s crucial to have a structured follow-up plan. Regularly check in with payers to ensure the appeal is being processed and avoid delays in resolution.
4. Analyze past appeal outcomes: Keep track of previous appeals, noting which strategies were successful and which weren’t. This data helps refine future approaches and improves your chances of success with similar cases.
5. Partner with professionals: Collaborating with experts like Cadence Collaborative isn’t just about getting extra help, it’s about boosting your bottom line. 

Without tailored solutions, you can optimize the entire denial management process, recover more revenue, and ultimately increase your practice’s profitability.

How Can Continuous Improvement Reduce Denials Long-Term?

Regularly reviewing your processes, setting specific goals, and making adjustments based on real-time data all contribute to minimizing denials over time.

Start by conducting frequent audits of your billing and coding practices.

These reviews help identify recurring issues, whether it’s coding errors, documentation gaps, or payer-specific requirements that are being overlooked. 

Once you know where the problems are, you can implement targeted solutions that prevent those issues from happening again.

It’s also important to set clear, measurable goals for your team.

Whether it’s reducing the overall denial rate by a certain percentage or improving the first-pass resolution rate, having specific objectives keeps everyone focused and accountable. 

Partner with Experts for Comprehensive Denial Management Solutions

Managing claim denials can be complex and time-consuming, but you don’t have to do it alone. At Cadence Collaborative, we offer a comprehensive solution tailored to your practice’s unique needs. 

It’s not just about handling tasks, it’s about partnering with a team that truly understands the intricacies of denial management and provides strategic insights to boost your revenue.

Our support goes far beyond reducing denials. Partnering with Cadence Collaborative means unlocking opportunities for greater financial performance. 

We help streamline your entire revenue cycle, recover more lost revenue from denied claims, and ultimately drive a significant impact on your bottom line.

When you work with us, you’re not just addressing today’s challenges, you’re setting up your practice for long-term financial health and sustainable growth.

At Cadence Collaborative, we are fully committed to your success. Contact us today!