revenue cycle management

Denial Management in Healthcare: Optimizing Revenue

A denial management process is a systematic approach to identifying, analyzing, and resolving insurance claims that have been denied or rejected by the insurance provider. Denial management is important for healthcare providers to make sure they are financially stable in this complex healthcare landscape. Effective denial management programs not only help healthcare organizations to recover revenue but also streamline operational efficiency, reduce billing errors, and improve the overall functioning of the revenue cycle. Let’s take a look at what denial management in healthcare is and strategies for optimizing revenue. 

What does denial management in healthcare mean?

Denial management in healthcare happens because of activities undertaken by healthcare organizations to prevent, identify, appeal, and resolve denied or rejected claims from insured persons. The denial can happen because of missing information, coding errors, insufficient medical necessity documentation, and other services not covered.

Claim denial management in healthcare includes evaluating patients and insurance providers, doing analysis, and taking the right steps. This makes denial management a continuous process that requires healthcare organizations to manage front-end processes to prevent future denials.

What are strategies for optimizing revenue by denial management in healthcare?

Here are the top 4 strategies for increasing revenue by denial management in healthcare: 

  1. Manage denials by data-driven approach.
  2. Manage denials with exact priorities.
  3. Set and share KPIs.
  4. Give denial prevention training.

Manage denials by data-driven approach.

Many denials are not submitted on time, resulting in a revenue loss for healthcare organizations. This happens because they lack a well-defined method for tracking denials. Implementing real-time data and analytics can help an organization submit claims and manage denials more effectively. By implementing a data-driven denial management approach that includes a well-defined list of claim adjustment reason codes (CARC) and explicitly designated roles, your team will be equipped with the necessary data and structure to succeed.

Manage denials with exact priorities.

When a claim is rejected, payment is delayed for 21-45 days. Cash flow is essential for every business, and so in healthcare organizations, to provide the best possible care to patients. Denials should be submitted within 48 hours of the bill. In that situation, you can help staff to deal with denials more efficiently by providing them with accessible data, valuable incentives, and more effective ways to integrate documentation updates.

Set and share KPIs.

Setting and tracking key performance indicators (KPIs) helps providers to take the appropriate actions. This helps them to increase payment, make quicker payments, reduce denials and appeals, and improve the revenue cycle. You should track 3 key KPIs: denial rate, ultimate denial write-off, and clean claim percentage. However, denial management in healthcare should not be a solo effort. You should share your goals and KPIs with all departments. It includes registration, patient financial services, nursing, health information management, and information technology to increase workflow.

Give Denial Prevention Training.

You should provide additional training to your employees for insurance fundamentals and denial prevention tactics to get a solid basis for all revenue cycles. When employees understand how denials affect total cash flow, they will understand the responsibility for preventing them. These trainings can take the shape of comprehensive revenue cycle instruction for the entire staff. Make sure your finance executives can also provide continuing assistance to their team members.


You can also read: How Revenue Cycle Management Can Help Medical Billing Business?


Healthcare organizations’ financial stability depends on denial management. An effective denial management program can reduce revenue loss, maximize reimbursement, and boost operational efficiency for healthcare providers. Denial management in healthcare organizations can be managed successfully using rejection monitoring, staff education, front-end process enhancements, documentation improvement, claims scrubbing, denial appeals, and follow-up. Contact Akshar MediSolutions for simplifying revenue cycle management and optimizing revenue for your healthcare organization.

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