7 Effective Strategies to Prevent Healthcare Denials

Preventing healthcare denials is both essential and challenging for health systems and hospitals.

In a recent interview with HealthLeaders Media, Jonathan Wiik, Vice President of Health Insights at FinThrive, shared that rising denials stem from the growing complexity of payer policies and the rising costs of non-compliance with documentation requirements.

For healthcare providers and billing entities, navigating the landscape of denials presents an ongoing challenge but one that can be effectively addressed with the right strategies and technological solutions in place.

Understanding Why Preventing Denials Matters

Denials not only delay payments but also strain administrative resources and impact patient care.

With denial rates having quadrupled since 2018, the financial and operational consequences for healthcare organizations are significant. Tackling denials head-on can lead to major cost savings and better patient satisfaction.

• 82% of denials get overturned eventually
• $181 is the average cost per claim to appeal
• 7%-11% of claims are underpaid

By recognizing the scale and impact of denials, healthcare providers can focus on effective mitigation strategies.

Common Causes of Denials

Spotting the root causes of denials is the first step toward prevention. Typical reasons include:

• Prior Authorization Issues - Nearly 82% of prior authorization denials are overturned on appeal, pointing to preventable administrative errors
• Incomplete Documentation - Errors or non-compliance with payer requirements often lead to claim denials
• Incorrect Coding - Mistakes in ICD-10 codes or mismatched procedural descriptions can result in rejections
• Eligibility Issues - Failing to verify patient eligibility before service can lead to immediate denials

In addition to these common scenarios, Wiik also believes the surge in denials can be attributed to more aggressive strategies by payers to achieve larger margins.

“Payers are aggressively managing care to ensure larger margins, exacerbated by the commercial payer market nearing monopoly status,” Wiik said. “When one factors in the uninsured, self-pay and the large number covered by government programs, hospitals possess limited negotiating power.”

  RELATED: Denial Management Best Practices Guide

Strategies to Prevent Denials

Here are six practical steps to significantly lower denial rates and improve your RCM performance:

Accurate Coding
Conduct training for all coding staff and stay updated on the latest ICD-10 codes and payer-specific guidelines. Regular audits and ongoing education help maintain high accuracy.

Comprehensive Documentation
Create a standardized documentation protocol that meets payer requirements. Use checklists and templates for completeness and compliance.

Real-Time Eligibility Verification
Use real-time eligibility verification tools to confirm patient coverage before services, preventing denials due to coverage lapses or plan changes.

Prior Authorization Management
Adopt a strong system for managing prior authorizations, including automated reminders and tracking tools to achieve timely submissions and renewals.

Timely Follow-Ups
Have a dedicated team to follow up on claims promptly. Regularly monitor submission statuses and address any issues immediately to avoid delays and rejections.

Continuous Training and Education
Invest in ongoing training programs for coding staff, billing teams, and clinical personnel to stay updated on changing payer rules and industry standards.

  RELATED: Cracking the Denials Code in Healthcare

The Role of Technology in Denial Prevention

Wiik notes that organizations who embrace technology as part of their denial prevention strategy are better positioned to address this growing issue.

“These providers are using denials management systems, robotic process automation (RPA) and clinical and financial data to tackle denial challenges more effectively,” Wiik said.

Wiik adds that a holistic strategy is best practice in avoiding claim denials.

RPA and Machine Learning
AI tools can predict potential denials by analyzing historical data and spotting patterns, while RPA automates repetitive tasks like data entry and eligibility verification, reducing human error and speeding up processes. These insights enable preemptive actions to fix issues before claim submission.

According to Wiik: “These solutions systematically address denials at every stage and effectively bridge the gap between what a provider submits from their electronic medical record (EMR) and what the payer requires for seamless payment processing.”

  RELATED: The Healthcare Finance Leader’s Guide to Increasing Revenue

Denials Management and Prevention Platforms
Integrating denials management solutions into the EMR provides organizations with a comprehensive view of the denials landscape. This enables early identification of potential documentation issues and contractual discrepancies.

Prior Authorization Tools
Authorization tools are crucial for getting pre-approval from insurance companies for certain treatments and services. By using these tools, you can:

• Confirm Prior Authorizations: Get the necessary approvals before providing high-cost treatments. This step reduces the risk of claims being rejected later.
• Stay Updated with Payer Rules: Authorization tools can automatically update payer rules daily. This means you’ll always be working with the latest guidelines, helping to prevent denials caused by outdated information.

Preventing denials is a complex but crucial part of healthcare revenue cycle management. By understanding common causes, implementing effective strategies and leveraging technology, healthcare providers can significantly reduce denial rates and ensure timely payments.

Ready cut down on denials? Learn how FinThrive can help optimize your revenue cycle.

To read Wiik’s full interview with HealthLeaders Media, click here.

About the Author
Jonathan G. Wiik, MSHA, MBA, CHFP
Vice President, Health Insights

Jonathan Wiik, VP of Health Insights at FinThrive, has over 25 years of healthcare experience in acute care, health IT and insurance settings. He started his career as a hospital transporter and served in clinical operations, patient access, billing, case management and many other roles at a large not-for-profit acute care hospital and prominent commercial payer before serving as Chief Revenue Officer. Wiik works closely with the market and hospitals on industry best practices for revenue management. He is considered an expert in the industry for healthcare finance, legislation, revenue management and strategic transformation.