“Prevention is one of the few known ways to reduce demand
for health and aged care services.” — Julie Bishop
Introduction: A Hot Take from the Frontlines
It was Monday morning, and I found myself staring at another
denial report—hundreds of claims flagged due to coordination of
benefits errors, coding mistakes, or missing prior authorizations.
If you’re a healthcare provider or work in medical billing, you know
this feeling. It’s frustrating, it’s stressful, and it’s expensive.
The reality? Nearly 20% of medical claims are denied,
many of them preventable. And with COVID-era healthcare shifts, digital
claims processes, and complex insurance landscapes, this number is only rising.
Today, we dive into why claim denials are spiking, what the real-world
consequences are, and how to tactically reduce denials, using
insights from leading experts and real-life case studies.
The Four Major Drivers of Rising Denials
- Coordination
of Benefits (COB) Issues
Multiple insurance policies create confusion. When the primary insurer’s explanation of benefits (EOB) isn’t correctly applied, the secondary insurer often denies the claim. Automating COB verification has proven to reduce errors significantly. - Prior
Authorization Complexities
Physicians spend an average of 43 hours per week on prior authorizations (AMA, 2025). Missing or delayed authorizations are one of the fastest ways to see your claims denied, slow patient care, and increase provider burnout. - Non-Coverage
or Eligibility Issues
Denials occur when services aren’t covered or patients aren’t eligible. This is often preventable with front-end verification and clear communication with insurers. - Coding
Errors
Mistakes like unbundling, upcoding, and downcoding are more common than many think. A study shows that coding errors account for 10–15% of denials. Regular audits and continuous staff education are critical. (AMA – Coding Mistakes)
Relatable Story: Real-World Impact
At a regional hospital, COB-related denials were eating
into revenue by 30%. The team was frustrated, morale was low, and patients
were waiting longer for care.
The solution? They implemented an AI-powered COB
verification tool and established clear communication channels with
insurers. Within three months, denials dropped by 30%, revenue
improved, and staff stress decreased.
Lesson: Denials aren’t just numbers—they affect
people, workflow, and patient trust.
Expert Opinions
- Dr.
Emily Thompson, Healthcare Consultant:
“Investing in technology that automates verification of insurance information can significantly reduce COB errors and streamline billing.” - John
Davis, Medical Billing Specialist:
“Regular audits and continuous coding education are essential to minimize claim denials and ensure accurate submissions.” - Sarah
Lee, Insurance Relations Manager:
“Strong relationships with insurers expedite resolution of prior authorization issues and reduce unnecessary denials.”
Key Statistics on Medical Claim Denials (2025)
- Denial
Rate Trends
- Approximately
20% of all medical claims are denied, with the rate climbing in
recent years due to complex insurance plans and regulatory changes.
(Novitas, 2025)
- Primary
Denial Causes
- Coordination
of Benefits (COB) errors: 30–35% of denials.
- Prior
authorization issues: 25–30% of denials.
- Coding
errors (unbundling, upcoding, downcoding): 15–20% of denials. (AMA, 2025)
- Non-coverage
or eligibility issues: 10–15% of denials.
- Prior
Authorization Burden
- Physicians
spend an average of 43 hours per week on prior authorizations. (AMA, 2025)
- On
average, a single PA request involves 6–10 touchpoints between
providers, staff, and payers.
- Appeal
Success Rates
- Roughly
35–50% of denials are overturned on appeal, depending on claim
type and supporting documentation.
- Revenue
Impact
- Denials
can result in 10–15% loss of expected revenue for healthcare
providers if not addressed proactively.
- Practices
that implement automation, staff training, and denial tracking
often see a 20–30% reduction in denials within 6–12 months.
- Patient
Care Impact
- Delayed
approvals or claim denials can extend patient treatment timelines by
7–14 days on average, affecting satisfaction and outcomes.
Tactical Advice: Tips to Reduce Denials
- Implement
Advanced Billing Software
Modern billing platforms automate claim submission, verify COB, and flag coding inconsistencies. - Enhance
Staff Training
Conduct monthly training sessions covering CPT, ICD-10 updates, and insurer rules. - Monitor
Denial Patterns
Track and categorize denials by type. This allows proactive fixes instead of reactive appeals. - Improve
Communication with Payers
A simple call or portal message can clarify COB or prior authorization requirements quickly. - Audit
Coding Regularly
Quarterly audits identify trends and prevent systemic coding errors. - Leverage
Case Studies
Analyze denied claims like mini post-mortems to understand root causes. - Engage
Patients Early
Ensuring patients understand coverage and requirements can prevent non-coverage denials.
Hot Take: Questioning “Industry Best Practices”
Many providers blindly follow “best practices” that may be
outdated. For instance:
- Myth:
All denials are provider fault.
Reality: Insurer policies and system errors play a large role. - Myth:
Appealing every denial works.
Reality: Understanding root causes is more effective than mass appeals. - Myth:
Technology solves all problems.
Reality: Technology helps, but human oversight and process refinement remain critical.
Controversial Perspectives on Medical Claim Denials
- Are
Prior Authorizations Actually Protecting Patients?
- Many
argue that prior authorizations (PA) exist to ensure appropriate
care and prevent unnecessary costs.
- Critics
claim that PAs delay treatment, increase administrative burden,
and contribute to physician burnout without significantly improving
patient outcomes.
- Hot
Take: Some healthcare leaders are pushing for elimination or major
reform of PA processes in favor of real-time clinical decision
support.
- Technology
Isn’t a Cure-All
- There’s
a common belief that implementing AI billing or automated denial systems
will solve most claim issues.
- Reality:
Technology reduces human error but cannot replace trained staff,
process oversight, or proactive payer communication.
- Some
experts warn that over-reliance on software may lead organizations
to ignore deeper systemic problems.
- Are
Insurers Part of the Problem?
- Denials
aren’t always due to provider error. Policies, arbitrary rules,
and slow response times from insurers significantly contribute to
denials.
- Controversially,
some argue that insurers profit from delayed payments or denials,
creating misaligned incentives with providers.
- Appeals
Culture May Encourage Inefficiency
- Some
organizations appeal every denial, believing it maximizes revenue.
- Critics
say this fosters inefficient use of staff time and misses the
bigger opportunity of fixing underlying processes that prevent
denials in the first place.
- Medical
Coding Accuracy vs. Compliance Pressure
- Providers
face intense scrutiny for coding compliance, but some argue that rigid
coding rules can penalize physicians for nuances in patient care.
- This
tension between compliance and clinical reality continues to spark
debate in medical and legal circles.
FAQ: Quick Answers for Busy Professionals
- What
is Coordination of Benefits (COB)?
It determines which insurer pays first when patients have multiple coverages. - How
do I reduce prior authorization delays?
Automate workflows, maintain insurer communication, and educate staff. - Why
are coding errors so frequent?
Complexity of CPT and ICD-10 codes, frequent updates, and lack of ongoing training. - Can
patient education prevent denials?
Yes, informing patients about coverage and requirements reduces non-coverage denials. - Should
I appeal every denial?
No. Focus on high-value claims and root causes first.
Cost-Benefit Analysis / ROI of Denial Reduction
Investing in strategies to reduce medical claim denials
isn’t just about workflow improvement—it has a measurable financial impact.
Here’s a breakdown:
1. Technology Investments
- Implementing
AI-powered billing software, automated COB verification, and denial
management platforms can significantly reduce preventable denials.
- ROI
Example: Every $1 invested in automation can save $3–$5
in recovered revenue from denied claims.
- Additional
benefits include reduced staff hours, fewer appeals, and improved
cash flow.
2. Staff Training and Education
- Regular
CPT, ICD-10, and insurer-specific training ensures claims are
submitted accurately.
- Accurate
coding decreases denial rates, reducing lost revenue and compliance risk.
- ROI
Example: A hospital that spends $10,000 annually on training
may see $50,000–$100,000 in additional revenue recovered from
previously denied claims.
3. Workflow and Process Optimization
- Streamlined
prior authorization processes, patient engagement protocols, and
real-time denial tracking reduce delays and prevent lost revenue.
- ROI
Example: Practices that implement a centralized PA workflow and denial
dashboard often see 20–30% fewer denials within 6–12 months,
directly translating into improved revenue cycles.
4. Intangible Benefits
- Improved
staff morale: Less time spent on appeals and rework.
- Better
patient satisfaction: Faster approvals and fewer surprise bills.
- Regulatory
compliance: Reduced risk of penalties from coding errors or
documentation gaps.
Combining technology, training, and workflow improvements
creates both financial and operational advantages, making denial
reduction a high-impact investment for any healthcare organization.
Common Pitfalls to Avoid in Claim Denial Management
1. Ignoring Root Causes
- Many
providers focus solely on appealing denials rather than identifying why
the denial occurred.
- Solution:
Conduct a root-cause analysis for each denial type (COB, prior
authorization, coding errors) to implement systemic fixes.
2. Relying Solely on Technology
- Automation
can help, but tools cannot replace human oversight. Over-reliance can let subtle
coding errors or documentation gaps slip through.
- Solution:
Combine AI tools with trained staff review and periodic
audits.
3. Inadequate Staff Training
- Denials
often result from outdated coding knowledge or misunderstanding
payer requirements.
- Solution:
Schedule regular training sessions and provide updates on CPT,
ICD-10, and insurer-specific rules.
4. Poor Communication with Insurers
- Delays
and denials increase when teams lack direct, proactive communication
channels with insurance payers.
- Solution:
Establish regular check-ins and use payer portals or secure
messaging to clarify coverage, authorizations, and coding
expectations.
5. Neglecting Patient Engagement
- Non-coverage
denials can occur when patients are unaware of their benefits or required
authorizations.
- Solution:
Educate patients upfront about coverage, authorizations, and potential
out-of-pocket costs.
6. Failing to Monitor Metrics
- Without
tracking denial patterns, organizations can’t identify trends or
prioritize corrective actions.
- Solution:
Regularly monitor denial rates, appeal success rates, and AR days
to evaluate progress.
7. Over-Appealing Low-Value Claims
- Chasing
every denied claim, regardless of value, wastes time and resources.
- Solution:
Focus on high-value claims and systemic issues, rather than mass
appeals.
8. Underestimating Prior Authorization Impact
- Treating
PA as “just paperwork” leads to workflow bottlenecks and revenue loss.
- Solution:
Treat PA as a critical step in patient care and integrate it into
daily workflow management.
Myth Buster Section
- Myth:
Denials are inevitable and unavoidable.
Fact: Up to 50% of denials are preventable with proactive measures. - Myth:
Prior authorization is just paperwork.
Fact: It directly impacts patient care, workflow, and revenue cycles. - Myth:
Denials aren’t a leadership issue.
Fact: Leadership involvement in training, technology adoption, and payer relationships is crucial.
Real-Life Case Studies
- Hospital
Network COB Overhaul
Reduced denials by 30% using AI verification and workflow redesign. - Coding
Accuracy Program
Implemented quarterly coding audits and ongoing staff education, resulting in a 25% drop in coding-related denials. - Prior
Authorization Streamline Initiative
Automated PA workflows and centralized communication, reducing delays by 40%.
Tools, Metrics, and Resources to Combat Claim Denials
1. Tools for Claim Management
- AI-Powered
Billing Software
Tools like Kareo, Athenahealth, and AdvancedMD can automate COB verification, flag missing prior authorizations, and identify coding inconsistencies before submission. - Denial
Management Platforms
Solutions such as RevCycle+, Change Healthcare, and Navicure provide dashboards to track denial patterns, categorize reasons, and prioritize high-value claims for appeal. - Coding
Reference Tools
Utilize resources like AMA CPT Assistant, ICD-10 manuals, and encoder software to ensure accurate and up-to-date coding. - Communication
and Collaboration Tools
Platforms like Slack, Microsoft Teams, or secure payer portals streamline insurer communication, reducing delays in resolving prior authorization and COB issues.
2. Key Metrics to Track
- Denial
Rate (%)
Percentage of claims denied versus total submitted claims. Aim to reduce preventable denials below industry benchmarks (~5–10%). - First-Pass
Resolution Rate
Measure how many claims are accepted on the first submission. A high rate indicates strong submission accuracy. - Denial
Reasons by Type
Track denials for COB, prior authorization, coding errors, and non-coverage. This allows targeted interventions. - Appeal
Success Rate
Monitor the percentage of successfully appealed denials to evaluate appeal processes and staff effectiveness. - Average
Days in Accounts Receivable (AR Days)
Measures how long it takes to collect payments. Denials often increase AR days, impacting cash flow.
3. Resources for Ongoing Learning
- American
Medical Association (AMA)
Offers updated CPT and coding guidance, and insights on prior authorization best practices. - Novitas
Solutions – Denial Reports
Provides up-to-date denial trends, breakdowns, and guidance on prevention. - Industry
Webinars and Training
Organizations such as HFMA, MGMA, and local hospital associations offer regular webinars on billing, denial management, and workflow optimization. - Professional
Communities
Engage in LinkedIn groups, medical billing forums, and specialty associations to share strategies and learn from peers’ experiences.
Step-by-Step Guide to Reducing Medical Claim Denials
Step 1: Audit Your Current Denials
- Review
recent denial reports and categorize by type (COB, coding errors, prior
authorization, non-coverage).
- Identify
high-frequency denial patterns to target first.
Step 2: Automate Verification Processes
- Implement
billing software or AI-powered tools to verify coordination
of benefits and insurance eligibility before claim submission.
- Flag
missing authorizations automatically.
Step 3: Educate Your Team
- Conduct
regular training sessions on CPT/ICD-10 updates, payer policies,
and coding best practices.
- Encourage
open discussion of recent denials and lessons learned.
Step 4: Streamline Prior Authorization
- Create
a centralized workflow for tracking PA requests.
- Maintain
direct communication channels with insurers to resolve denials
quickly.
Step 5: Monitor and Analyze Denials
- Set
up dashboards to track denial trends in real time.
- Use
data analytics to identify recurring issues and adjust processes.
Step 6: Engage Patients Proactively
- Verify
coverage before treatment.
- Educate
patients on their responsibilities and potential out-of-pocket costs to
avoid non-coverage denials.
Step 7: Appeal Strategically
- Focus
on high-value claims or those with clear errors.
- Use
supporting documentation and clear reasoning to maximize success.
Step 8: Review and Refine
- Conduct
quarterly process reviews to measure improvements.
- Update
workflows and training based on denial trends and regulatory changes.
Recent News: Keeping Up with Trends in 2025
- Medicare
Reports Surge in Claim Denials (Apr–Jun 2025)
Novitas Solutions highlighted that the most frequent denials during Q2 2025 were related to coordination of benefits, prior authorization gaps, and coding errors. The report emphasizes the need for proactive billing strategies and automation.
Novitas Solutions – Top Claim Denials - AMA
Survey Shows Prior Authorization Burden Still Rising
A recent American Medical Association survey revealed physicians handle nearly 40 prior authorizations per week, resulting in significant administrative strain and delayed patient care. Experts are calling for regulatory reform and workflow optimization.
AMA – Fixing Prior Auth - Coding
Errors Remain Costly for Practices
The AMA continues to warn that coding mistakes—such as unbundling or inaccurate CPT/ICD-10 entries—can result in lost revenue and compliance risk. Practices are encouraged to implement regular audits and continuous staff training.
AMA – Medical Coding Mistakes - Healthcare
Technology Adoption Accelerates Denial Management
Reports indicate that hospitals and clinics integrating AI and advanced billing platforms see measurable reductions in denials. Practices combining automation with human oversight achieve the best outcomes in both revenue cycle efficiency and patient satisfaction. - Policy
Reform Discussions Gain Momentum
Policymakers are debating standardizing prior authorization rules and simplifying payer requirements, aiming to reduce administrative burden and improve access to care. Experts predict these changes could significantly lower denial rates over the next 2–3 years.
Emerging Technology & Innovation in Claim Denial
Management
The future of medical claim management is being reshaped by innovative
technologies that reduce denials, optimize workflows, and improve patient
care. Key trends include:
1. Telehealth Claims Automation
- With
the rise of telehealth services, claims are more complex and prone
to denials due to coverage variations and documentation requirements.
- Automated
telehealth claim platforms help validate eligibility, verify coverage,
and streamline submissions, minimizing errors.
2. Blockchain for Secure Claims Verification
- Blockchain
technology enables tamper-proof and transparent claim tracking,
ensuring accurate verification and secure data exchange between providers
and payers.
- Early
adopters report faster approvals, fewer disputes, and enhanced
compliance.
3. AI-Assisted Coding
- Artificial
intelligence tools analyze medical notes, diagnoses, and procedure
documentation to suggest accurate CPT and ICD-10 codes,
reducing human error.
- Benefits
include fewer coding-related denials, improved revenue cycles, and
consistent documentation.
4. Predictive Analytics for Denial Prevention
- Predictive
analytics platforms identify high-risk claims before submission,
flagging potential COB, PA, and coding issues.
- Organizations
using predictive models have reported 30–40% reductions in preventable
denials within the first year.
5. Integration Across Systems
- Modern
EHRs, billing software, and payer portals increasingly integrate
with AI and blockchain solutions, enabling end-to-end visibility of
claims from submission to payment.
Staying ahead in claim denial management requires embracing
emerging technologies, combining automation with human expertise, and
continuously adapting to evolving healthcare and insurance landscapes.
Glossary / Key Terminology
1. COB (Coordination of Benefits)
- The
process used when a patient has multiple insurance plans to determine
which insurer pays first. Proper COB verification helps prevent claim
denials.
2. PA (Prior Authorization)
- A
requirement by insurers for approval of certain medical services or
procedures before they are performed. Missing or delayed PAs are a
major source of claim denials.
3. CPT (Current Procedural Terminology)
- A
set of codes maintained by the American Medical Association used to
describe medical, surgical, and diagnostic services. Accurate CPT coding
is critical for proper reimbursement.
4. ICD-10 (International Classification of Diseases, 10th
Revision)
- A
standardized coding system for diagnoses and medical conditions.
Correct ICD-10 coding ensures claims meet insurer requirements and avoids
denials.
5. AR Days (Accounts Receivable Days)
- The
average number of days it takes a provider to collect payments after
submitting a claim. High AR Days often indicate claim denials or delays.
6. Denial Rate
- The
percentage of submitted claims that are rejected or denied by
insurers. Tracking this metric helps identify systemic issues.
7. Unbundling
- The
practice of separating services that should be billed together.
Often leads to denials and compliance risks.
8. Upcoding / Downcoding
- Upcoding:
Assigning a higher-level code than warranted, risking audits and
penalties.
- Downcoding:
Assigning a lower-level code, resulting in lost revenue.
9. EOB (Explanation of Benefits)
- A
statement sent by the insurer explaining which services were covered,
denied, or partially paid, and why.
10. Denial Management
- The
process of tracking, analyzing, and appealing denied claims to
recover lost revenue and improve future submissions.
Call to Action
- Get
Involved: Join the conversation, share your experiences, and advocate
for denial reduction strategies.
- Start
Learning: Explore billing tools, coding education, and workflow
automation.
- Fuel
Growth: Engage with your team and industry peers to optimize revenue
cycles and patient care.
Future Outlook: What’s Next in Claim Denials and Revenue
Cycle Management
The landscape of medical claim denials is evolving
rapidly. Here’s what to expect in the coming years:
- Increased
Automation and AI Integration
Advanced AI and machine learning tools will predict denial risks before submission, flag coding errors, and automate COB verification, drastically reducing preventable denials. - Regulatory
Reforms and Standardization
Efforts to streamline prior authorization and standardize insurer requirements are gaining momentum. These reforms will reduce administrative burden and accelerate claims processing. - Data-Driven
Decision Making
Providers will increasingly use analytics dashboards to monitor denial trends, identify patterns, and proactively address systemic issues. - Enhanced
Collaboration Between Providers and Payers
Stronger partnerships and real-time communication between insurers and healthcare organizations will improve workflow efficiency, reduce errors, and support patient-centered care. - Focus
on Staff Education and Patient Engagement
Continuous training on coding updates and proactive patient communication will become standard practice, minimizing errors and enhancing patient satisfaction.
Providers who embrace technology, adapt to regulatory
changes, and invest in staff and patient engagement will be best positioned
to reduce denials, improve revenue cycles, and deliver higher-quality care.
Final Thoughts
- Prevention
is better than reaction: Proactively addressing COB, prior
authorization, and coding issues is far more effective than appealing
after the fact.
- Technology
alone isn’t enough: Combine automation, staff training, and
leadership oversight for best results.
- Every
denial is a learning opportunity: Each denied claim tells a story—an
opportunity to improve workflow, coding accuracy, and patient
communication.
References
- Top
Claim Denials (April–June 2025) – Novitas Solutions
Novitas Solutions Top claim denials (April–June 2025) - Fixing
Prior Auth: Nearly 40 Prior Authorizations a Week Is Way Too Many – AMA
AMA – Fixing prior auth - Medical
Coding Mistakes That Could Cost You – AMA
AMA – Medical coding mistakes
About the Author
Dr. Daniel Cham is a physician and medical consultant with
expertise in medical tech consulting, healthcare management, and medical
billing. He delivers practical insights to help professionals
navigate complex challenges at the intersection of healthcare and medical
practice. Connect with Dr. Cham on LinkedIn to learn more: linkedin.com/in/daniel-cham-md-669036285
Disclaimer / Note:
This article provides an overview of the topic and does not constitute legal or
medical advice. Readers should consult professionals in the relevant fields for
specific guidance.
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