Why is Denial Management Important in the Healthcare Industry?

Why is Denial Management Important in the Healthcare Industry?

In the medical world, there is nothing more crucial than managing denial. When a patient is denied coverage for a particular procedure or medication, it can seriously impact their health and wellbeing. Also, improper denial management can have lasting implications for the healthcare organization.


Anyone working in the healthcare industry understands just how important it is to manage denials. A high rate of denied claims leads to lower reimbursement rates, which can ultimately impact the hospital’s financial standing. This article looks at the relevance of denial management.


What is Denial Management?

Denial management is the practice of improving claim denials and appeal success. The goal of denial management is to minimize denied claims, maximize claim approvals and minimize total cost. When appealing a denied claim, healthcare organizations should be able to prove that the denial was made in error or on insufficient grounds.


What Does the Denial Management System Do?

The entire denial management system should be able to identify and manage both expected and unexpected denials. The system will also ensure that the rating process complies with all pertinent regulations and agency guidelines. That includes ensuring that the organization’s rating policies comply with state or federal laws.


It is also essential for a good denial management program to integrate everything from the beginning of admission through aftercare services such as home health care or hospice care. It ensures that hospital staff is notified of payment changes throughout the patient’s stay and beyond. That eliminates any possible billing errors during the patient’s treatment cycle through post-treatment follow-up care services.


Importance of Denial Management

  1. Focusing on the Critical Things

The hospital will now focus on the most important thing, which is delivering quality services to patients. The process of identifying and assigning payment for specific services rendered is cumbersome. Having a denial management system in place will help significantly mitigate information gaps and streamline the process of making payments for covered services.

A remarkable denial management system will also be able to identify poor claims practices, missed diagnoses, or substandard care that might result from the absence of a standardized approach to claim to file, checking, and payment processing.


2. Keeping Track

Hospital denial management services will keep track of all types of services provided in the hospital, including emergency services offered outside of the facility by paramedics or other first responders, as well as x-ray, CT and MRI tests, and other diagnostic procedures.

Denial management helps hospitals keep track of the total amount spent on all patient treatments. It will also help monitor the status of payments received from insurance carriers or Medicare and Medicaid. That helps keep tabs on cash flow to ensure that operating expenses such as salaries, wages, and supplies are covered on a timely basis and that hospital bills are paid as they come due.


Denial management also ensures that hospital bills submitted to patients’ health insurance companies are paid expediently. A denial management program will also help hospitals collect on accounts receivable more efficiently by monitoring accounts past due and following up with collection efforts when necessary.


3. Systematic Approach

The other importance of denial management is that it provides a systematic approach to claims made. By following a precise system, the hospital can determine which records are sent to be reviewed and what authorized reviewer needs to sign off on prior authorization requests. The process should include creating a paper trail to establish proof of coverage of all claims processed and prompt payment of approved claims.


4. Additional Approvals

In addition to denials or partial denials, claims might require additional approval from an insurance company than just the immediate claim decision. For example, prescription medications might need permission from a pharmacy benefit manager (PBM) in addition to the patient’s insurer. In such cases, denial management verifies that all approvals are received by submitting rejected claims for additional clearance and informs you once it is received.


5. Accounts Receivable Management

Most hospitals have an internal accounts receivable department or vendor that bills patients for services rendered. However, some hospitals outsource this function entirely to outside vendors. Out-of-network providers don’t have any control over billing practices. So with approval from the internal AR department, you can integrate your EHR with ARI’s electronic billing platform for better control over collections.

It will also help in timely reimbursements received from patients’ health insurance companies, including Medicare and Medicaid, and commercial insurers. By seamlessly integrating EHR data with ARI’s robust software platform that handles most ACA compliance verification concerns, you can put an end to delayed payments and reimbursements.




Denial management is crucial in the healthcare industry as it helps to reduce the cost of care and enhance revenue. Hospitals and physicians can get this done by implementing a tiered denial management system that allows you to identify and address problems quickly. Doing so will not only save time but also put an end to patient dissatisfaction, which increases the risk of medical malpractice lawsuits.





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