Denial prevention: Why manage denials when you can prevent them?

The denial challenge is getting tougher. In Experian Health’s latest State of Claims 2024 survey, almost three-quarters of healthcare administrators agree that claim denials are increasing. The majority also agree that difficulties with claims—like reimbursement times, errors, and payer policy changes—are becoming more common. It’s no surprise that denial prevention is a priority for 84% of respondents.

However, many organizations still focus on reactive strategies, like working harder with denial management teams or appealing claims once the denial comes through. These efforts have their place, but they only address the problem after it occurs. It’s a time-consuming, costly and ultimately inefficient way to face the denial challenge overall.

A better approach is to figure out how to prevent claim denials in the first place. This article looks at how to build a proactive denial prevention strategy using automation and artificial intelligence (AI), to streamline claims processing and nip denials in the bud.

Understanding denial prevention in healthcare

Preventing denials starts with understanding the “ins and outs” of the claims process, particularly payer requirements. Denials occur when a payer refuses to reimburse a provider for services rendered, often due to avoidable coding errors, missing documentation or procedural mistakes. When that happens, providers are left to rework the submission or look elsewhere – most likely to the patient – to fill the funding gap. Many are simply written off to bad debt.

To avoid receiving an 835 file with the dreaded claim denial notice, providers must focus on the root causes of denials and get ahead of the pitfalls.

The importance of claim denial prevention

With denial rates exceeding pre-pandemic levels, 42% of survey respondents say the economy and declining consumer confidence make payer reimbursements more urgent.

While financial stability is the obvious driver for getting claims right the first time, denial prevention also improves operational efficiency and reduces the billing and coding staff workload. Denials are frustrating for patients and staff. When claims are processed correctly the first time, providers avoid delays and billing complications and reduce patient stress over unexpected costs. Preventing denials is critical for maintaining trust and ensuring patients feel secure about their financial obligations.

How to prevent claim denials

Denial prevention strategies should start with addressing the underlying causes of denials. Here are five denial prevention strategies to consider:

1. Improve data accuracy from the start

Garbage in, garbage out. If patient information, insurance eligibility, prior authorizations and billing codes are input incorrectly or missing altogether, providers will continue to submit error-filled claims that have no hope of being paid. Tools like Registration Accelerator and Patient Access Curator can verify relevant data for accuracy before claim submission and reduce the risk of denial.

2. Use AI and automation for efficiency

If there was ever a case for using automation and artificial intelligence, it’s in claim denial prevention. However, around half of providers are still using manual processes, leaving them playing catch-up to the payers who are already using AI to work at scale. Only 10% have automated the process, using AI to correct and resubmit claims.Tools likeClaimSource® can automate eligibility verification and coding, perform error checks before submissions and ensure claims meet payer requirements instantly.This cuts the time and effort wasted on manual processes, releasing staff to focus on activities that need human attention.

3. Automate pre-claim scrubbing to catch errors

A great use case for automation is in providing an extra pair of eyes to pore over claims and catch common errors like missing data and wrong codes before submission. Experian Health’s Claim Scrubber analyzes claims line by line to ensure that claims are submitted to payers and clearinghouses without errors, increase first-time pass rates and prevent rebilling.

4. Track performance for ongoing improvement

Every denial prevention strategy should include monitoring and reporting. Tools that offer real-time tracking of key performance indicators such as denial rates, clean claim percentages, resubmission times, and the reasons for denials can help staff identify patterns. With these insights, they’ll have complete visibility into any recurring problems clogging up their claims processes.

5. Outsource to a trusted vendor for extra support and expertise

Finally, providers might consider outsourcing denial prevention to a specialist vendor who can help them develop the right strategy and toolkit to streamline billing, improve data integrity and manage claims to ease pressure on internal resources.

Proactively reducing claim denials

These strategies raise an important question: can existing revenue cycle technology handle the increasing volume of denials? Healthcare administrators aren’t convinced: only 54% of survey respondents feel their organization’s technology is sufficient to meet demand, down 23 percentage points since 2022. To implement these denial prevention strategies effectively, providers may need to consider upgrading their toolkit rather than relying on traditional systems.

Experian Health offers two AI-powered solutions that help providers better predict and prevent denials:

Prevent denials with Patient Access Curator

Too many denials originate in patient access, so prevention must start here. Patient Access Curator uses AI-driven data capture technology to verify patient details quickly and accurately. With a single click, PAC can automatically check eligibility verification, coordination of benefits, Medicare Beneficiary Identifiers, coverage discovery and financial status. Running multiple manual queries is a thing of the past, saving staff hours and propagating clean data throughout the entire revenue cycle.

Watch the webinar to learn more about how Patient Access Curator helps prevent denials with accurate data from the start.

Predict denials with AI Advantage^TM

Clean data sets the stage for denial prevention, but AI adds an extra layer of protection by forecasting potential issues before it’s too late. AI Advantage^TM does this in two ways. First, the Predictive Denials component analyzes claims using the provider’s own ClaimSource^® data and alerts staff to high-risk claims so errors, inconsistencies or missing documentation can be corrected before submission. Next, the Denial Triage component prevents missed revenue opportunities by segmenting denials and guiding staff to those worth reworking.

See how AI Advantage works: