Over the last several years, medical claim denial rates have increased significantly. In 2016, claims denial rates were about 9% and in 2020, they increased to 11.3% nationally. Front-end revenue cycle problems, such as registration, eligibility, authorizations, and unpaid services, take responsibility for half of these denials. Since 2016, registration and eligibility have accounted for the majority of denials—nearly 27%.
Preventing Medical Claim Denials
The good news is that 86% of denials are avoidable or have the potential to be avoided.
About 21% of denied claims occur during the mid-cycle process. These denials result in the loss of millions of dollars in revenue. Frustrating and expensive, the number of denied medical claims continues to rise. But that trend can change if coders understand the root cause of denials and take action to improve claims.
Understanding the Challenges of Claim Denials
There are several barriers to effective claim management and denial prevention:
- Attrition– complex clinical cases require robust education and ongoing training
- The lack of front-end and mid-cycle denial prevention strategies
- Non-automated workflows for clinical attachments
- Ongoing regulatory changes
- Inconsistent system updates
Managing coding denials and clinical appeals requires extensive coding expertise and clinical knowledge, as well as analytical skills. Unfortunately, many healthcare organizations have not embraced the denial prevention capabilities of their technology platforms, while they are continuing to use them on the front end of coding.
Recognizing the Top Denial Trends
The most common reasons for denials in 2021–2022 included the use of telehealth services as modifiers that were improper for the procedure, improper use of the code’s CO-4 and CO–199, and improper use of the revenue code–CPT–Modifier combination. Other leading reasons for denials included: claims billed with inappropriate diagnosis and not meeting the medical necessity, primary diagnosis invalid, and not following ICD-10 guidelines.
Denial Improvement Impact
AGS Health provides clients with a list of coding suggestions, which can immediately be put in place to reduce denials. Additionally, our team consistently develops content and hosts webinars to help coding teams stay current about new and upcoming changes. We also share common coding challenges to help prevent denials
The AGS Approach
AGS Health has deep expertise in RCM, including medical coding and billing aspects, claims management, AR management, patient verification, automation, and analytics. Our analysis satisfies quality standards and accomplishes quality objectives throughout the transition to AGS systems. Our trend-based audits are grounded in customer feedback and internal analysis. We maintain an impact of 97–98% compared to the industry benchmark of 95%.
For more information, watch our recent webinar.
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