The average claim denial rate across healthcare sits between 5% and 10%. For general practices with limited billing staff, it's often higher. Every denied claim costs $25–50 to rework and delays payment by 30–90 days. Here's a systematic approach to getting your denial rate below 5% - and keeping it there.
Know Your Denial Categories
Before you can reduce denials, you need to categorize them. The major categories are: eligibility/coverage denials, prior auth denials, coding errors, documentation insufficiency, and timely filing. Most practices have one or two categories that account for 60%+ of their denials.
Pull your last 90 days of denials and categorize each one. This tells you exactly where to focus.
Fix Eligibility Verification
Eligibility denials are the most preventable category. They happen when you bill a payer that is no longer active or when coverage details have changed.
Fix: Verify eligibility electronically for every patient at every visit - not just new patients. Real-time eligibility checks take seconds and prevent the most frustrating category of denials.
Implement Pre-Submission Scrubbing
A claim scrubber checks every claim against payer-specific rules before submission. It catches coding errors, missing modifiers, invalid diagnosis-procedure pairings, and formatting issues.
Practices that implement comprehensive claim scrubbing typically see their clean claim rate jump from 80–85% to 95%+ within the first month.
Automate Denial Follow-Up
Many denied claims are never reworked - they simply die in the AR queue. Automated denial management ensures every denial is categorized, assigned, and tracked through resolution.
Set clear timelines: denials should be worked within 48 hours of receipt. Appeals should be filed within 5 business days. Any denial older than 30 days without action should trigger an escalation.
Track and Trend Monthly
Measure your denial rate monthly by category and by payer. Look for trends: is one payer suddenly denying more claims? Is a new code combination causing errors? Is a specific provider's documentation triggering more denials?
A practice that tracks denial trends monthly and takes corrective action can sustain a denial rate below 4%.
How Pono Helps
Pono's clean claim optimization scrubs every claim against payer-specific rules before submission, and our automated denial management ensures nothing falls through the cracks.
Want to see your current denial rate breakdown and where the biggest opportunities are?
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