What is Denial Management?

Denial Management is the strategic and operational process of identifying, tracking, categorizing, correcting, and appealing claims that have been formally rejected or denied by a payer during Claims Adjudication.

Effective denial management focuses on more than just appeals; it uses denial data to identify the root causes (e.g., front-end errors, coding issues) to prevent future denials.

Why Denial Management is Critical for CFOs and Financial Leaders

Denials are a direct hit to profitability, increasing the Cost to Collect and slowing cash flow.

• Recovering Lost Revenue: Denials represent services already rendered. A robust management strategy ensures the highest possible percentage of these claims are recovered, maximizing the Net Collection Rate (NCR).
• Accelerating Cash Flow: Manual denial rework is slow. Automated systems accelerate the root-cause and appeals process, reducing the time claims spend in Accounts Receivable (A/R) Follow-up.

Key Use Cases: How Automation Transforms Denial Management

RCM Automation is essential for managing the high volume and complexity of denials.

• AI-Driven Root Cause Analysis: Machine Learning (ML) analyzes denial patterns and root causes across thousands of claims, automatically categorizing denials based on the required fix (e.g., eligibility, coding).
• Automated Appeals Workflow: Automated systems compile necessary documentation (often from the EHR/EMR), auto-draft appeal letters, and manage the submission process, greatly reducing the manual effort required.

Claim Rejections vs. Denials

These are two distinct outcomes:

• Claim Rejection: Occurs before adjudication, typically due to formatting or submission errors. They can be quickly fixed and resubmitted.
• Claim Denial: Occurs after adjudication, when the payer deems the service unpayable. Denials require a formal Appeals Process.

Resources and Education

• Candid Health Blog: Denial Prevention /blog/denial-prevention
• Product Analytics: Denial Root Cause Analysis /product/analytics