The Financial Impact of Denials
The American Medical Association estimates that 17% of all medical claims are initially denied, costing practices $262 per claim in rework. The most preventable denials fall into five categories:
Denial #1: Eligibility Issues (31% of denials)
Root Cause:
- Coverage terminated without practice notification
- Incorrect policy number entry
Prevention Strategy:
- Real-time eligibility checks via integrated payer portals
- Automated flagging for high-risk patients (e.g., Medicaid recertification dates)
Denial #2: Missing/Incorrect Authorizations (24%)
Specialty-Specific Examples:
- Dermatology: MOHS surgery pre-approvals
- PT: Visit limit overrides
Solution:
- Centralized authorization tracking dashboard
- Staff training on payer-specific requirements
Denial #3: Coding Errors (19%)
Common Mistakes:
- Unbundling related procedures (e.g., 11720 + 11721)
- Insufficient documentation for modifier -25
Coding Audit Process:
- Pre-submission review of 10% random claims
- Quarterly coding education sessions
- Updated cheat sheets for new CPT changes
Denial #4: Timely Filing (15%)
Payer Variations:
- Medicare: 1 year from DOS
- UnitedHealthcare: 90 days for commercial plans
Workflow Fixes:
- Automated claim aging reports
- Escalation alerts at 45/60/75 days
Denial #5: Duplicate Claims (11%)
Prevention Protocol:
- System-wide claim number tracking
- 48-hour hold before resubmission
The Financial Upside
Practices that address these denials typically see:
- 12-18% improvement in clean claim rates
- $83,000 annual revenue recovery per FTE biller