To reduce claim denials at a medical practice, verify eligibility and prior authorization before every visit, code from the documentation with certified coders, scrub every claim against payer rules before it leaves, work each denial inside the payer’s deadline, and change the workflow behind any denial reason that keeps coming back. Practices that do this consistently keep their initial denial rate at or under the 5 percent benchmark MGMA uses for better-performing practices, while Change Healthcare’s national denials index has put the average closer to 10 percent and found that most denials are avoidable. MGMA estimates each denial costs roughly $25 in staff time to rework, so prevention is cheaper than appeals, and the sections below take the five steps in the order they pay off.
Every denied claim costs a practice twice. First there’s the delay in getting paid, and then there’s the staff time it takes to research the denial, correct the claim, and resubmit or appeal it. When denial rates climb, billing teams fall behind, the backlog grows, and some of that money is never collected.
The good news is that most denials follow patterns. A practice that understands why its claims are being denied can usually prevent a large share of them from happening in the first place.
The most common reasons claims are denied
Denial reasons vary by specialty and payer, but a handful of causes show up in nearly every practice:
- Eligibility and coverage problems, such as inactive coverage, the wrong payer on file, or a patient who changed plans
- Missing or expired prior authorizations and referrals
- Coding errors, including missing modifiers, codes that don’t match the documentation, and diagnosis codes that don’t support medical necessity
- Missing or incomplete documentation requested by the payer
- Duplicate claims submitted before the original was processed
- Claims filed after the payer’s timely filing deadline
- Coordination of benefits issues when a patient has more than one insurance plan
Start by measuring it properly
You can’t fix a denial problem you can’t see. The first step is to track your initial denial rate, meaning the share of claims denied on first submission, and to break it down by payer, by denial reason, by provider, and by location. MGMA uses 5 percent or lower as the benchmark for better-performing practices, and Change Healthcare’s denials index has put the national average closer to 10 percent. Your denial rate is simply the number of claims denied on first submission divided by the number of claims submitted in the same period.
Every denial comes back with a reason code from the payer. Grouping denials by those codes usually reveals that a few root causes account for most of the problem, which tells you exactly where to focus.
Fix the front end first
A large share of denials start at the front desk, long before a claim is created. Verifying insurance eligibility before every visit, not just the first one, catches coverage changes before they turn into denials. So does confirming that prior authorizations and referrals are on file and still valid for the service being performed. The AMA’s 2023 physician survey found that practices complete about 43 prior authorizations per physician every week and spend roughly 12 hours of staff time on them, which is why this step needs an owner and a daily routine rather than a spare moment at check-in.
Getting the patient’s demographic and insurance details right at check-in matters more than most practices realize, because a single wrong digit in a member ID can send a claim straight back.
Tighten coding and documentation
Coding denials usually trace back to a gap between what the provider documented and what was coded. Regular coding reviews help catch patterns, such as a modifier that’s consistently left off or a diagnosis that doesn’t support a frequently billed procedure. Certified coders, such as those credentialed through AAPC or AHIMA, are trained to catch these issues before the claim goes out.
It also helps to give providers quick feedback when their documentation is causing denials, so the fix happens at the source instead of in the billing office.
Scrub claims before they go out
Most clearinghouses and practice management systems can check claims against payer rules before submission. Keeping those edits up to date, and actually working the claims they flag, stops many rejections and denials before they happen.
Work every denial, and work it quickly
Prevention won’t stop every denial, so the follow-up process matters just as much. Each denial should be assigned, worked, and either corrected, appealed, or written off for a documented reason. Payers set deadlines for corrected claims and appeals, and those windows close faster than most people expect, so the oldest and highest-dollar denials should be worked first.
Close the loop
The practices that keep denial rates low treat every denial as information. When the same reason keeps coming back, they change the workflow that caused it, whether that’s a front desk step, a coding rule, or a template in the EHR. Over time the denial rate comes down because the causes are removed, not just because the denials are worked faster.