Denial management – the full process of identifying denied claims, reviewing, resolving them, and increasing efficiency of the process – has always been important to the healthcare revenue cycle. Many providers outsource the denial portion of their revenue cycle management services to revenue cycle management companies for efficiency, especially as the process has become more complex and payers become increasingly creative in denying claims. 

But in the last year, the importance of efficient denial management to providers and revenue cycle management companies has increased. This is because of growing losses and increases in denials themselves. 

Providers Are Losing Significant Amounts of Money
For providers concerned about revenue cycle management services and how they impact denials, a new survey provides valuable guidance. 

A recent survey found that more than 40% of providers questioned reported losing over half a million dollars every year from claim denials. A full 18% reported losing more than one million dollars annually. As a result, 43% of the respondents report that they are prioritizing denials management in 2024 [1]. 

While this is a growing concern, it highlights the importance of a strategic focus on revenue cycle management services with an emphasis on denials. 

The Source of the Problem
While the reasons for denial leakage can be multi-faceted, including inefficiency and a lack of training, there appears to be one key source of recent issues around denials. Payers are increasing denials. 

Kodiak RCA published a recent analysis of payer behavior and found a jump in claim denials and delays that are “wreaking havoc on providers’ revenue cycle performance” and are also blamed for contributing to health systems’ dwindling cash reserves and volatility in their accounts receivable [2]. 

Their analysis found a jump in overall initial denial rates, with an increase of 10.15% in 2020 to 11.2% in 2022. This trend continued to 11.99% in the Q1-Q3 of 2023. But there were also deeper insights. It found an uptick in the percentage of payer claim value in 90-day-plus accounts receivables for 2020-2023. This increase broke out to a jump of 19% to 36% for patients with Medicare Advantage and 27% to 36% for those with commercial coverage. The group concluded that it was clear that the leading driver of aged AR over 90 days is related to increases in initially denied claims. This is because these claims require more time and resources from the medical practices, hospitals, and health systems that have to resolve them. Other reports have confirmed their findings. 

A report from the American Hospital Association (AHA), looked at financial data of more than 1,300 hospitals and health systems. It found denial increases of 55.7% for Medicare Advantage payers and 20.2% for commercial payers from the beginning of 2022 and half way through 2023 [3]. 

This has created what it calls “significant volatility” across the country for accounts receivable. Measured in every $1 million in net patient service revenue, the measurement saw variation from its bottom at $18,896 in May 2023 to its highest point of $33,598 in February 2023. Monthly variability reached as high as $14,287 under commercial payers and $8,872 for Medicare Advantage.

A key problem with these trends is that they aren’t isolated. If providers aren’t reimbursed promptly, it interrupts not only cash flows, but also patients. If payer denials lag, providers then are delayed in billing patients. This can be frustrating for patients and can negatively impact the possibility that patients will pay their bills. The analysis points to insurers denying and delaying claims as a contributing factor in the 3.6% reduction in self payments after insurance collection from commercial payers, attributing it to an “out-of-sight-out-of-mind” dynamic.

Options in Denials Management 
When examining your revenue cycle management services and denials, it’s important to consider multiple options, including working with revenue cycle management companies

Keeping Things In House
Many providers’ first instinct is to look at their denial challenges and find ways to address the issues with the resource they have. This can be a good option if you have a strong, center-of-excellence approach to denial management. Ask yourself if you’re:

  • Identifying every possible denial
  • Appealing every case possible with high levels of success
  • Aware of and resolving any inefficiencies in your processes and workflows
  • Working with clinicians to ensure high levels of clinical documentation integrity
  • Leveraging data analytics to their fullest extent

Working With Revenue Cycle Management Companies
If you feel you are lagging in any of these areas, working with revenue cycle management companies might be a good consideration. 

The benefit here is that you can immediately take advantage of their efficiencies and expertise. This is critical in an environment where denials are increasing because time is of the essence. Many practices and providers do not have cash on hand to last the amount of time it would take to overhaul or hire a denials team, so outsourcing is likely the fastest way to see improvement in their denial management results. 

If you’re looking to change your approach to revenue cycle services to match shifting trends in denials, contact us today.


[1] A. Norris, “Denials Management Is Costing Some Revenue Cycles Millions,” HealthLeaders, 28 September 2023. Available:
[2] D. Muoio, “Payers’ increasing claims denials, delays ‘wreaking havoc’ on provider revenue cycles,” Fierce Healthcare, 14 December 2023. Available:
[3] J. Emerson, “American Hospital Association: Medicare Advantage denials jump 56%,” Becker’s Hospital Review, 21 November 2023. Available:

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