Reducing claims denials is a top priority for healthcare providers across care settings. From a 10-bed skilled nursing facility to a multi-site hospital system, small and large providers alike are at risk of revenue loss, cash flow delays, and a negative resident/patient experience due to poor denial management.
Inovalon — a proud member of the MEDITECH Alliance and trusted partner for claims management and eligibility workflows — set out to take a closer look at how claims denials impact each care setting and to uncover innovative strategies for reducing claims denials. We gathered insights from more than 400 healthcare stakeholders at a managerial level or higher working in hospitals, skilled nursing facilities, home health and hospice agencies, and physician practices.
Their responses reveal the dollar value of claims denials, the most common contributing factors, and the opportunity technology presents in overcoming them.
“What we’re seeing is that regardless of care setting, claims denials are a key industry challenge,” said Liz Serie, Vice President of Product Management at Inovalon. “If left unaddressed, frequent denials hurt financial performance and cause frustration for providers and patients alike.”
Claims denials impact by the numbers
Across care settings and organization sizes, healthcare leaders and managers agree that claims denials are a significant challenge.
They’re most pressing for mid- to large-sized hospitals (more than 100 beds), with nine out of ten survey respondents in these organizations calling claims denials an important concern.1 Monetary impacts for this provider category can be staggering. For hospitals with 200 beds or more, annual financial losses from claims denials often ranged from $1 million to $10 million.
Smaller hospitals (50 or fewer beds) and ambulatory practices, like ambulatory surgical centers and behavioral health centers, also ranked claims denials as one of their biggest challenges. About eight out of ten respondents in these care settings cite denials as a pressing revenue cycle concern.
Claims denials don’t just threaten payer and patient revenue streams; they also put a strain on resources. About a third of larger hospitals (300+ beds) have 20 or more full-time employees 
dedicated to managing claims denials, while smaller hospitals (under 100 beds) typically have three to five employees.
Despite these dedicated teams and the hours they spend working denials, half of hospitals recover less than 50% of denied claims charges.
Top claims denial drivers
Claims denials have countless sources, but healthcare leaders believe one area of revenue cycle management has an outsized impact: front-end processes.
When asked to name the single top contributor to claims denials at their organization, survey participants zeroed in on three workflows:
1. Insurance eligibility and benefits verification
2. Authorization/pre-certification
3. Patient registration/information verification
All three of these processes take place at the beginning of the patient care journey, and a small error in just one of them can have a disruptive downstream impact. These stumbling blocks have something else in common, too: they can be addressed and effectively mitigated with the right technology.
Future-ready strategies for reducing claims denials
As our survey findings show, data — or lack thereof — is a significant factor driving claims denials. Comprehensive eligibility verification and claims management software can fill in the gaps.
“It’s all about getting the data you need, where and when you need it, without making staff do additional work,” said Serie. “Reducing the number of steps it takes to get a claim out the door not only increases efficiency, but greatly reduces denials.”
With integrated registration workflows, staff can quickly verify patient demographic data, find missing, unknown, and undisclosed insurance information, fill in missing coverage details, and check patients’ eligibility with multiple payers in one user-friendly workflow. Obtaining more accurate, complete information up front reduces downstream issues that can cause claims denials and slow down cash flow.
Smart claims management technology assists by simplifying essential tasks and flagging potential problems before claims go out the door. Built-in scrubbers check claims against the most up-to-date payer rules to catch discrepancies, while automated workflows prevent manual errors that can trigger denials.
Technology doesn’t just contribute to reducing claims denials; it can increase payment speed and prevent sizable revenue loss. Learn more about improving efficiency and financial performance with all-payer eligibility verification and claims management capabilities integrated directly with the MEDITECH EHR.
1 Claims Denials: Causes, Impact, and AI-Enabled Prevention Strategies, Inovalon White Paper, October 2024.
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