Transforming Denials Management through Automation and Analytics

It is no surprise that denials continue to be a significant challenge for many healthcare organizations. Recent statistics indicate that the rate of denied claims is on the rise, with studies showing denial rates climbing above the historic 10% 'benchmark' and reaching as high as 15% for certain provider types. This growing denial rate not only impacts revenue but also places an enormous burden on healthcare staff, adversely affecting both morale and productivity. These factors contribute to reimbursement delays and slower cash flow, compounding the financial strain on healthcare organizations and making it even more essential for healthcare organizations to optimize their denial management processes.

Financial Impact of Denied Claims

Claims denials of 10% or more result in significant financial losses for healthcare organizations and directly impact their overall revenue. The combination of increasing denial rates and operational inefficiencies often results in critical delays in cash flow, hindering their financial stability.

Operational Challenges

The increasing volume of claim denials requires more time and resources from existing teams, that can ultimately lead to lower morale and higher staff turnover rates. As healthcare staff invest considerable time and effort investigating and appealing denials, operational efficiencies suffer. When combined with fixed budgets and increasing workloads, healthcare organizations find it increasingly difficult to keep up with denial volumes.

Patient Experience

Beyond financial and operational challenges, denial management processes can significantly affect patient experiences. Ineffective handling of denials can lead to confusing billing situations for patients, contributing to frustration and dissatisfaction.

Effective Denial Management: A Holistic Approach

To effectively address these challenges, healthcare organizations must adopt a comprehensive denial management strategy that integrates the right people, processes, and technology. A hybrid model that combines onshore and offshore resources can ensure cohesive alignment of key priorities and enhance collaboration across denial management initiatives.

1. People: Building the Right Team

   Whether utilizing in-house talent, outsourcing to a partner, or adopting a hybrid approach, the key to cultivating the right denials management team is alignment and accountability. A successful program involves establishing a denial steering committee representing all revenue cycle management (RCM) functional areas with executive sponsorship to oversee denial prevention initiatives. This committee should be supported by subject matter experts (SMEs) who perform in-depth denial reviews and create monthly denial report outs focused on root-cause analysis and results-driven change.

2. Process: Fostering a Culture of Continuous Improvement

   The best teams don’t just work denials, they prevent them. Key strategies include promoting cross-functional collaboration from all RCM teams, conducting regular denial analytics reviews, and establishing governance with executive backing. By implementing a formal denial steering committee, healthcare organizations can break down silos and ensure teams address the right denials at optimal times with the necessary information.

3. Technology: Automate and Analyze

   To navigate the complexities of denial management, healthcare organizations must effectively harness the power of automation. Automating routine tasks such as claim status checks, inventory management, and tracking appeals allows staff to focus on more complex issues that require human oversight. Integrating predictive analytics can help prioritize high-value denials and identify potential issues before claims are submitted.

Currently, only 31% of providers leverage automation in denial management, indicating an untapped opportunity to enhance cash flow and reduce operational burdens. The future of denials management involves the integration of emerging technologies such as predictive modeling, appeal automation, and AI agents. These advanced technologies have the potential to significantly transform denial team operations by predicting denials before they happen, automating time consuming appeals, better understanding payer behaviors, and using AI in place of humans to obtain additional information on denials.

For example, predictive modeling can enhance claims scrubbing to alert providers of claims with a high potential to be denied before they are billed, helping healthcare organizations focus their efforts on pre-bill remediation. Appeal automation can significantly reduce the time required for clinical appeals, and AI agents can handle complex calls with payers, expediting the denial overturn process.

With an effective "denials management program", healthcare organizations can improve their financial health, reduce denials, and accelerate cash flow to enhance operational efficiency, ultimately improving patient the patient experience and increasing financial stability. Watch our webinar, "Leveraging Automation and Analytics to Transform Denials Management", and discover practical strategies and insights to transform denial management in your healthcare organization.