Preventive Denial Management = Sustained Cashflow

Posted by Allen Ranjan on Oct 15, 2018 2:56:49 PM


Cash flow is the lifeline of any business and an independent medical practice is no different. As a practice owner/ administrator the best way you can ensure this, is by preventing your revenue from being locked in denials. Management of denied claims is still important and will remain so, however the focus needs to shift from management to prevention. The benefits of this shift are huge but so are the challenges of eliminating the traditional retroactive approach.

According to industry sources 90% of all claims denials could be prevented. However, for this preventive mechanism to work and deliver best results, all departments in the revenue cycle need to collaborate and work in cohesion. Once you have cream of the crop practices implemented throughout the processes from patient access to claims submission, you can reduce your future denial rate by 50-60% and enjoy sustained cash-flow.

In this article you will learn 4 critical steps to implement preventive denial management.

Current Situation and Goal

As step # 1, you need to figure out your current situation with denials, by calculating your current denial rate. This is just a preliminary study and it is okay, if the results look bad at this stage, because this is what you are trying to prevent from happening in the future. You need to involve different departments and team members and encourage them to be open about the issues resulting in denial. Pointing fingers can be counterproductive as that will not encourage people to open up about the issues.

Once you have determined what is the current situation you can set the goals effectively. The goal could be in phases and/ or just one phase, but it has to be realistic. Communication and participation between departments is the key. 

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Know Your Denials

There are lists available than talk about the most common denials in the industry, however, it is critical for you to understand your own practice data. So, step # 2 is to put together a list of all denials from a quarter and start drilling down to understand the following:

  • What are my top denials
  • What caused a certain kind of denial
  • How can I prevent this denial in future
  • Which process needs to be changed
  • Are certain payers denying more than others

After this initial analysis of the denials is complete, you would need easy to understand reports to further drill down and share with team/ stakeholders. You would need to slice down the data and make it really meaningful for further action.


The accuracy of this data analysis is very important to the success of this approach so make sure that the data is relevant and accurate. There are no fixed ways of conducting this analysis, you can have as many parameters as you need with the end objective of finding out the root cause and start working on the prevention.

Training and Process Optimization

By being thorough with step # 2 by now, you would know what areas of your revenue cycle needs to be fine tuned to eliminate certain kinds of denials. You should be able to answer the following questions:

What is the causing the denial:

  • Lack of knowledge
  • Technological deficiency
  • Process gaps
  • Documentation

Your root cause is identified, now you can focus on driving in the improvements to get the results. Training and educating the staff, better communication between departments and clearly identified goals are the key to the improvements needed.

Measure and Monitor Results

In step # 1, you had your current situation recorded, now measure the improvements after implementing step 2 and 3 and compare to the goals. This measurement has to be done very carefully and should be focused around the following areas:

  • Is the overall goal being met
  • Did a certain kind of denial go away
  • Are all the RCM areas optimized
  • Is there further scope for improvement

Even if all the goals are met, you will need to continue to monitor the progress for sustained results.

Key Takeaway

Many practices are aware of the impact that denials can have on their revenue, however they lack the technology and staff expertise to implement an effective denial management program. Outsourcing to a billing partner like Cosentus who has the technology and domain expertise available to optimize your revenue cycle and boost collections by preventing denials is a sustainable and profitable alternative. If you are unsure how your practice is performing and need help making that assessment we can offer a free, no obligation AR and Coding Audit.


Topics: Effective AR Management, Accounts Receivable Management, Cosentus News

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