Denial Management Services | Coding Denial Management Services Focus – One O Seven RCM
                     Denial Management Services: A Research-
Based Pillar Guide to Revenue Protection in 
Healthcare
In the U.S. healthcare system, claim denials are far more than occasional setbacks—they are a 
systemic threat to practice revenue, administrative efficiency, and provider sustainability. 
According to Change Healthcare, denial rates have steadily risen, reaching 12% of all claims 
denied on first submission by early 2022. Studies show that the average cost to rework a denied 
claim can reach $25–$118 per claim depending on complexity, and practices frequently lose or 
never revisit a large portion of denyied claims. 
To counter this growing threat, more practices are implementing structured denial management 
services—and increasingly, with a strong coding denial management services focus—to 
identify, analyze, correct, and prevent denials across the lifecycle of a claim.
1. The Financial Toll of Denials: Why They Cost More Than
You Think
1.1 Rising Denial Rates
 Change Healthcare’s 2022 Denials Index reports that 12% of claims are denied at first 
submission—up from 9% in 2016. blr.postclickmarketing.com+1
 A Medical Group Management Association (MGMA) Stat poll reveals that 60% of 
medical group leaders reported an increase in denial rates in 2024, indicating that 
denials remain a rising concern for practices. mgma.com
1.2 Revenue Leakage & Appeal Costs
 Out of approximately $3 trillion in annual U.S. provider charges, roughly $260–$262 
billion are initially denied. Omega Healthcare+2Healthcare Dive+2
 Each denied claim’s rework or appeal can cost $25 to $118 or more per claim 
depending on the provider and documentation requirements. mgma.com+1
 Alarmingly, 50–65% of denied claims are never reworked or resubmitted, effectively
converting them into permanent revenue losses. journal.ahima.org+2mgma.com+2
2. Common Causes of Claim Denials: Where the Revenue Is 
Lost
Analysis consistently shows that most denials stem from a few recurring root causes, with a 
coding-related component often at the heart of the problem. The top denial reasons include:
Approximate
Cause Source / Implication
Percentage
Registration / eligibility Claims returned due to incorrect or incomplete 
~23–27%
errors patient/payer data apprisemd.com
Coding and claim data Errors in CPT/ICD-10 or missing modifiers 
~17–20%
issues apprisemd.com+1
Authorization / prior Services rendered without required authorizations 
~11–18%
approval problems journal.ahima.org+1
Timely filing and Claims not submitted within payer deadlines 
~10–15%
submission delays apprisemd.com+1
Documentation or Insufficient or missing clinical documentation 
Varies (~6–10%)
medical necessity issues apprisemd.com+2journal.ahima.org+2
These rates vary by specialty, payer, and practice type, but they demonstrate that up to 70% of 
denials are preventable with proper upstream interventions. mgma.com
3. The Importance of a Coding-Centric Approach to Denial 
Management
Coding accuracy is a foundational element of claim acceptance. A misapplied CPT code, a 
missing HCPCS modifier, or insufficient specificity in diagnosis coding can all lead to claim 
rejections—even when the clinician’s documentation is sound. The coding denial management 
services focus zeroes in on this aspect to proactively reduce denials.
3.1 Why Coding Errors Are So Costly
 Coding mistakes are implicated in nearly 42% of avoidable claim denials, according to 
multiple RCM and denial audits. Advantum Health+2apprisemd.com+2
 In specialties with frequent updates to coding guidelines (e.g., gastroenterology, 
cardiology), coding mismatches frequently drive claim rejections, payer audits, or 
downcoding.
3.2 How Coding Denial Management Services Make a Difference
 Specialty-focused audits: Providers receive coding reviews tailored to their clinical 
workflows—ensuring CPT, ICD-10, and HCPCS codes align with clinical documentation
and payer requirements.
 Real-time edits and scrubbers: Automated tools flag claims with mismatched codes, 
missing modifiers, or inconsistencies before submission, reducing denial risk.
 Ongoing coder education: Regular training sessions ensure coders stay current with 
payer guideline changes, ICD-10 revisions, and compliance updates.
 Feedback loops: Trend reports help coders understand denial causes and continuously 
improve code accuracy over time.
These interventions have helped some practices improve first-pass claim acceptance by up to 20–
25% within six months. MedicalEconomics
4. Designing a Pillar-Style Denial Management Strategy
A robust pillar-based denial management framework includes both reactive and proactive 
measures. Here's a step-by-step model based on best practices and industry research:
1. Denial Tracking & Categorization
o Use denial baskets or categories (e.g., coding, eligibility, authorization) to classify
denial causes.
o Apply data analytics to detect recurring trends and high-risk payers.
2. Root Cause Analysis (RCA)
o Drill down into why each category is occurring. Is the issue systemic (e.g., front-
desk eligibility errors)? Or technical (e.g., coding mismatch)?
o Identify upstream interventions to prevent recurrence.
3. Correction and Appeal Workflow
o Ensure denied claims are corrected, reworked, and resubmitted in a timely manner
—ideally within 30 days.
o Leverage templates and documentation tools to streamline appeals.
4. Prevention through Upstream Process Improvements
o Focus on eligibility verification and prior authorization processes before patient 
visits.
o Pre-validate patient demographics and coverage at intake.
o Align coder workflows with updated documentation standards.
5. Education and Training
o Provide regular coder and billing staff training on payer-specific requirements, 
coding updates, and denial prevention best practices.
o Share denial trend reports with teams to build accountability and continuous 
improvement.
6. Performance Monitoring and Continuous Improvement
o Monitor key KPIs such as denial rates, appeal success rate, denial correction time,
A/R days, and first-pass acceptance.
o Adjust strategies based on findings, focusing on high-frequency denial types.
According to MGMA and Conifer Health Solutions, practices that adopt such structured denial 
management protocols can reduce denials significantly, improve cash collections, and decrease 
administrative burdens. mgma.com+2mgma.com+2
5. Real-World Outcomes: Case Studies and Industry 
Insights
5.1 National Examples of Financial Recovery
 Billings Clinic, a large health system, reported an average revenue loss of nearly $5 
million per provider annually due to denied claims. By deploying analytics-driven 
denial management, they sharply reduced avoidable denials and improved revenue 
capture. Health Catalyst
 The Change Healthcare Denials Index estimates that the U.S. healthcare system faces 
$260–$262 billion in denied claims each year, based on approximately $3 trillion in 
charges. Omega Healthcare+2Healthcare Dive+2
5.2 Small-Practice Impacts
 In smaller clinics, denial resolution is especially critical—studies show that denial 
backlog and appeal tasks can consume 15–25 administrative staff hours per week. 
Practices that do not actively resubmit claims tend to write off 50–65% of denied 
claims, deepening their revenue losses. journal.ahima.org+2mgma.com+2
 MGMA reports that many practices are seeing denial rate increases of 17% or more 
year-over-year, underscoring the urgency of robust denial prevention workflows. 
mgma.com
6. Why Outsourced Denial Management Services Are Often 
More Effective
Conducting denial management in-house can be resource-intensive and error-prone, especially as
billing teams face staffing shortages and increasing payer complexity. Outsourcing to denial 
management services offers distinct advantages:
 Specialized expertise and focus – Dedicated denial analysts and coders focused 
exclusively on identifying and resolving denials.
 Technology and analytics – Access to advanced tools for claim scrubbing, trend 
analysis, and automated appeals.
 Reduced manual burden – Less time spent on appeals means more time for patient care 
and higher-priority billing tasks.
 Scalable service models – Whether your practice is solo or multi-specialty, outsourced 
services can scale to match your needs without hiring additional staff.
 Improved financial predictability – Consistent denial resolution translates to steadier 
reimbursement streams and fewer write-offs.
For many practices, this means immediate improvements in collections, reduced A/R days, and 
improved overall financial health. Omega Healthcare+1
7. Actionable Steps for Providers: Building Your Own 
Denial Management Pillar
If you want to convert denials from a financial liability into a manageable KPI, here are 
actionable steps every provider should take:
1. Build a denial dashboard to track denial types, frequency, and root causes monthly.
2. Audit coded claims regularly, ideally using both internal review and third-party coding 
audits.
3. Train front-office staff on eligibility verification best practices; implement pre-visit 
coverage checks.
4. Standardize appeals workflows with templates, deadlines, and accountability tracking.
5. Review and adjust denial prevention protocols quarterly, based on real data and 
appeal success rates.
6. Consider outsourced denial experts for scalability and targeted recovery, especially 
when backlogs are large or internal resources are limited.
8. Final Thoughts
Denial trends are not just a billing inconvenience—they are one of the biggest financial risks 
facing U.S. healthcare providers today. With structured denial management services and a 
coding-centric denial prevention strategy, insurers’ denials stop being revenue drains and 
become opportunities for improvement.
Denial management services aren’t just about recovering lost payments—they’re about 
ensuring clean claims, efficient workflows, and long-term revenue stability. And when coding 
denial management services focus is prioritized, the risk of costly, repetitive claim rejections is 
dramatically reduced.
If your practice is ready to stand firm against rising denial rates and financial uncertainty, it’s 
time to act—and build a denial management pillar that protects your bottom line today and in the
years to come.