Denial Management in Healthcare

Denial management in healthcare is a process by which healthcare organizations and providers identify the reasons for claim denials and take steps to prevent them. Reimbursements are providers’ biggest source of revenue; denials or rejections of claims can hurt revenue cycles. Solutions for denial management in medical billing help to know why payers have denied certain claims, enabling providers to address that problem and increase their incomes. Denial management solutions have become extremely important since the loss of reimbursements costs the healthcare industry billions every year. 

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Denial management in healthcare is one of the most crucial elements that ensure steady cash flow and powerful revenue cycle management. Denial management services include identifying the key problems that cause claim denials, classify them based on cause & source, and develop an effective denial management software strategy.

We provide tailored denial management solutions that help to enhance their clean-claims rate, manage denied claims effectively and have proficient assistance in handling the appeals. Our healthcare denial management can help providers to identify and exact causes of denials to improve your clean-claims rate. It can streamline workflows for faster appeals and improved cash flow while lowering the cost of managing denied claims and the administrative burden. Resolving underpayments while reducing regulatory risks to keep the financial performance optimum is the primary goal of OSP’ tailored healthcare denial management systems.

A well-defined advanced payer rule engine helps to track payer-specific rules for claim payments, identify their denial activity and recognize new rules. Defining claims qualification for each payer within the system can be made possible with a sophisticated payer rule engine. It can anonymously track these rules for each user base and automatically distribute current rules over the entire network.

OSP can build a custom denial management in medical coding that can assess your 835-remittance data to reveal the major reasons causing the claim denials. Our tailored healthcare denial management systems can analyze, track, and create intuitive reports on denial data in order to discover unpublished payer rules. We can customize the denial management software to recommend the relevant fixes for each denied claim. A rule engine can help implement the right billing processes to reduce the denials rate and increase revenue flow.

The potentially high cost of appeals emphasizes the value of implementing an effective denial management process. An organization’s clean claim rate is one of the highest priorities. Clean claim rate (CCR) is defined as the ratio of passed claims that pass edits cleanly. The cleans claims do not require any correction or manual work prior sending it to the payers.

Our denial management in medical billing helps to simplify the transactional complexities between providers and payers by creating a seamless process of error-free claim submission. Though our custom denial management services, we focus on increasing the CCR through the revenue cycle to the point of claim creation, data collection has been correct and efficient. The solution can be tailored to provide timely claim alerts to notify them being flagged by the rule engine.

In-depth analysis of root cause of the claim denials is highly crucial for denial management in US healthcare. As per the HIMSS analytics survey of 2016, more than 50% of hospitals do not leverage denial management analytics, eventually failing to reduce the denial ratio. The analysis helps to understand the standard triggers which cause claims denials instantly and the current faulty system can be optimized for better results.

We help the provider to understand the denial data and make it meaningful for the users with real-time analytics and easy-to-understand dashboards. Denial management medical billing can be made effective by visualizing the highly common denial trends. Healthcare denial management can be focused on these trends to create a smart action plan with alert parameters. The dashboard provides valuable performance metrics like initial denial rate, the rate of appeals, and win/loss ratio to streamline healthcare denial management in RCM.

Automated claims management system or medical clearinghouse solutions are the most important part of denial management solutions. Before submitting the electronic claims to the payers, the in-house medical clearinghouse solution scrubs the claims for any missing data to validate the claims against payer-specific rules. Providing all users with a single, on-demand solution for managing every aspect of claims denial, from receipt to resubmission is the highest need of the hour.

OSP’ advanced claims management solutions thoroughly scrub the claims and flag those require review. This help to resolve the issues and errors before submitting the claims. A detailed claims processing report offers a complete list of errors and causes of rejections which are needed to be resolved for claim submission. Healthcare denial management systems can be customized for payer-specific rules to optimize the efforts of claims processing.

As per the Advisory Board’s survey, the provider claims denial appeal is not a successful venture. The success rate for such appeals has dropped from 56% to 45% for private health plans. Denials for the patient in the emergency department are easy to appeal but managing the appeals successfully for a person being treated for a longer period of time is a cumbersome task.

OSP can replace the manual process of appeals and grievance management (A&G) by streamlining the complete process through automated denial management in US healthcare. A smart interface can help you to manage a seamless workflow for effective denial management in medical coding.  Automating the ongoing manual appeals management process can help providers to reduce stress, time and money needed to invest to get reimbursed for their authentic medical claims.


It should come as no surprise that denial management software has become a must-have for healthcare organizations of all sizes. The reasons for denials can vary from patient to patient, but it costs providers all the same. The healthcare denial management solution that OSP can build is an investment that pays off in the long run by preventing delays or losses in reimbursements. In other words, this type of software provides sizeable returns on investment.

OSP can develop a suite of claims denial management to cater to the needs of all types of healthcare organizations. These include dental clinics, physiotherapy centers, psychiatric care institutions, outpatient care centers, in addition to large hospitals. We customize the features of healthcare denial management software to suit the needs of the respective organizations. Our solutions will enable all providers to improve their revenue cycles and better serve their patients.

Managing the denials of reimbursement claims involves assessing the claims themselves and addressing their problems. In other words, the claims need to be scrubbed to fix any problems that would cause payers to deny or reject them. The denials management software we can offer automates many processes in claims scrubbing and other denial management activities. As a result, providers can experience greater productivity at lower overhead.

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Denial Management Software Development Services 


Development of Healthcare Denial Management Solutions

  • Automated reminders and alerts for filing denials within deadlines
  • Feature for classifying denials according to reason or other parameters
  • Access controls to implement role-based access
  • Dashboard for monitoring denial management in real-time
  • Storage and retrieval of Explanation of Benefits (EOB) for each patient

Design of Denial Management Software for Healthcare Organizations

  • Automation of processes in the denial management workflows
  • Assessment of denials to identify the root cause
  • Customization of workflows for appealing denials
  • User-friendly interface for navigability and smooth operation
  • Assured HIPAA compliance to protect sensitive data

Development of Software for Denial Management in Medical Billing

  • Analytics of denials to find the most common cause
  • Identification of denied claims that can be resubmitted or appealed
  • Customizable according to the requirements of clinics
  • A single platform to consolidate all the denial management workflow
  • Option for a cloud-based solution or an on-premises one

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Frequently Asked Questions

Denial management analyzes the reasons for medical claim denials to prevent them from happening again. Ultimately, denial management seeks to curb losses for healthcare providers due to revenue loss caused by claim denials.

RCM stands for revenue cycle management in healthcare. Claim denials from insurance payers affect providers’ revenues, prompting denial management’s rise. The process of denial management involves the following: 

  • Identifying the reasons for the denial. 
  • Correcting them. 
  • Resubmitting the claim, if possible, for the appropriate reimbursement. 

In other words, denial management forms an important part of RCM activities since it prevents loss of revenues due to claim denials.

There are two types of denials –   

Hard Denials: hard denials cannot be appealed again; they are irreversible and most often result in revenue loss for providers.   

Soft Denials: Soft denials can be appealed and even reversed if the provider makes corrections to the claim or provides the required information.  

Insurance Verification  

This is one of the first activities providers must do to prevent possible claim denials. They need to check if the patients they are treating are enrolled in health plans that will cover the medical services. Failure to do so invites risk and the possibility of providing services not covered, resulting in denials.  

Acquaintance with Payer Policies  

The policies surrounding reimbursements, prior authorizations, referrals, medical necessity, and others might vary from payer to payer. So, providers must be well aware of this before providing medical services. Otherwise, payers are likely to deny or reject claims.  

Coding and Documentation Accuracy  

With changing ICD codes and regulations around medical coding, it is important to know the requirements and manage workflows around them. The staff at clinics and hospitals needs to be aware of these necessities.  

Investing in Technology  

Implementing reliable revenue cycle management (RCM) software or a denial management solution will go a long way in preventing denials. Such software platforms streamline medical billing and coding activities while simplifying payment processing. Most importantly, good RCM solutions will help scrub claims and verify them before submitting them to payers.  

Learning From Previous Denials  

This, too, is one of the most important aspects of denial management. There are several reasons a payer might deny a claim. So, providers need to understand each of them and take steps to prevent future denials.  

Patient Registration  

This step takes the patient’s demographic information as part of the intake process. It is the first thing patients do when they walk into a clinic or hospital.  

Insurance Verification  

This is where the providers’ staff verifies if the patient’s health plan covers the medical services needed.  

Medical Transcription  

This involves compiling a report on the patients’ clinical encounters with their providers.  

Medical Coding  

This is one of the most important processes in the RCM process flow. The transcribed clinical encounter is converted into standardized ICD codes to summarize the medical services rendered. This is used to generate the claims, which will be sent to payers.  

Charge Entry  

The charges for the medical services will be mentioned in the claims sent to the payer. This needs to be accurate, or it might result in a denial or rejection.  

Charge Transmission  

Transmitting the claims through electronic data interchange (EDI) to the payers is called charge transmission. Only the claims with accurate coding will be transmitted.  

Denial Management  

This process kicks in when the payer has denied a claim. It involves examining the claims and the reasons for denial by the payer. Later, the claim is modified and re-sent to payers with the corrections. It depends on the reasons for the denial. Some denied claims cannot be appealed and become losses for providers.  

Payment Posting  

This is the last step in mainstream medical RCM. It involves entering the payments into the billing software and provides a view on the explanation of benefits, out-of-pocket payments from patients, and others. 

One of denial management’s central activities is knowing the difference between rejected and denied claims. A denied claim has been adjudicated and disapproved by the payer. On the other hand, a rejected claim has been submitted with incomplete information or coding errors.


This is the first step involved in the denial management process. As the name suggests, it involves identifying the reason for the claim to be denied. When a claim has been denied, the payer will state the reason in the EOB statement.   


This happens after the providers receive a claim denial. This step involves an elaborate workflow that examines the reasons for the denial and goes about rectifying them. Incorrect information, incomplete data, and coding errors are common reasons for claim denials. The staff of the provider organization must sort this out and transmit the claim before the stipulated deadline.   


It is important to monitor and track the whole workflow around denial management. The larger a hospital gets, the more the volume of claims it would send and hence, the greater the number of denials it needs to manage. This is why it becomes necessary to monitor the performance of the entire denial management efforts.  


This step involves implementing preventive measures to minimize or stop future claim denials. Needless to point out, it requires detailed insight into the main causes of denials in the first place, after which a provider organization can go about preventing it.

A denied claim costs the providers precious revenues and their time. Repeated denials that need to be addressed will adversely affect a provider’s revenue cycle. This is why hospitals need to implement efficient denial management measures. Large hospitals would handle large quantities of claims and, so, would face greater chances of denials. Managing them is vital for the overall revenue cycle management.  

Claim denial management examines each claim to know the reasons for denial by payers. This process helps providers rectify denied claims and re-send them for their reimbursement. Additionally, claim denial management also seeks to learn from the reasons for the mistakes that caused denials and enable providers to take steps to prevent them in the future.

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