Five Reasons Behind Claim Denials, and Why They Shouldn’t Be Stopping Your RCM Department in 2024

Five Reasons Behind Claim Denials, and Why They Shouldn’t Be Stopping Your RCM Department in 2024

Recent years have seen a noticeable uptick in claim denial rates, a trend that is not only alarming but also indicative of deeper systemic issues within the RCM processes. These denials often stem from various factors, including but not limited to, problems with authorization or eligibility verification, inaccuracies in coding, incorrect application of modifiers, and a variety of operational and administrative mishaps. Understanding these reasons is the first step towards mitigating their impact and steering clear of potential financial pitfalls. Here are 5 reasons that shouldn't be stopping your RCM department in 2024:

1. Authorization or Eligibility Verification Issues

A common roadblock to claim approval happens in the very first step of the RCM process - authorization and eligibility verification. The process of verifying that a patient is eligible for the proposed services under their insurance plan and obtaining prior authorization can be complex and tedious.

Automation tools streamline this process by providing real-time verification of insurance coverage, reducing the risk of denials due to authorization or eligibility issues. These tools can quickly access payer databases, verify patient coverage, and flag any potential issues well before services are rendered, allowing for timely resolutions.

And while humans are prone to mistakes like misinterpreting insurance coverage policies, overlooking exclusions and limitations, or neglecting to verify coordination of benefits,  incorporating automated verification tools can drastically reduce these types of denials by ensuring that eligibility and authorization checks are conducted accurately and efficiently, well in advance of service delivery.

Sophisticated automation tools, like Thoughtfuls, use a variety of tools for eligibility verification, including one to continuously monitor each state’s Medicaid site directly. As eligibility rules change across payors, Thoughtful’s Eligibility Verification automations house a dynamic rules engine to both update and initiate communication with the payor or provider, resolving unexpected changes in eligibility status. This state of the art technology has resulted in 20% decrease in denials due to eligibility discrepancies for Thoughtful customers.

And, whereas traditional bots could hit 10-15 snags along the way, causing them to break or drastically impact the speed of operations, Thoughtful has developed a unique technology of self-healing bots to enable them to fix themselves. The self-healing bots run alongside ongoing simulations to proactively monitor, predict and prevent, and fix breakage.

2. Inaccuracies in Coding

The accuracy of procedural and diagnostic coding is pivotal in claim submissions. Coding inaccuracies, such as incorrect or outdated codes, can lead to claim rejections or denials. The healthcare industry's constant updates and revisions to coding standards, including the transition from ICD-9 to ICD-10, exacerbate these challenges.

AI-driven coding solutions can help minimize these errors by providing up-to-date coding assistance, ensuring that claims are submitted with the most accurate and current codes, thereby reducing denials related to coding inaccuracies.

It can also ensure that specific supporting materials are included, such as X-rays, test results, and more, resulting in up to 15% reduction in claims denials due to missing evidence in doctor narratives, with up to 80% reduction in time spent with charge capture.

AI's role in improving coding accuracy cannot be overstated. With AI-powered coding assistance, RCM departments can reduce the frequency of coding errors, ensuring that claims are submitted with the correct codes the first time around. These systems stay up-to-date with the latest coding guidelines and regulations, automatically suggesting the appropriate codes based on the clinical documentation, thereby minimizing the risk of denials due to coding inaccuracies.

3. Incorrect Use of Modifiers

Modifiers play a critical role in coding, providing additional information about a procedure without altering its original code. However, incorrect or missing modifiers can lead to denials, as they may signify that a procedure was not necessary or was duplicated.

AI-powered coding tools like Thoughtful’s can assist in applying the correct modifiers, ensuring that claims accurately reflect the services provided and meet payer requirements.  Thoughtful’s bots can include information like recent patient visits, which are condensed into straightforward yes/no responses, simplifying the claims submission process.

This capability provides a huge unlock for clients with large amounts of data that must be carefully considered prior to addressing modifiers. Thoughtful’s tools process thousands of records a day for customers and report on findings so that when their staff shows up for work, all the investigative deep dive work is done and ready for them to start their day.

4. Incomplete or Missing Information

Claims with incomplete or missing information rank high among the reasons for denials. Simple oversights, such as missing patient demographics, provider signatures, or incorrect patient identifiers, can halt the processing of a claim, at any stage of the RCM process, from intake to claims processing. Thoughtful is able to reduce claims denials due to missing or incorrect demographic and prior auth info by 25% by improving the accuracy and completeness of patient information, reducing errors in data entry, and ensuring compliance with billing and coding requirements.

Automation and AI can help by pre-validating claim forms to ensure all required information is present and correct before submission, significantly reducing the likelihood of this type of denial.

5. Failure to Meet Submission Deadlines

Another critical reason behind claim denials is the failure to meet submission deadlines. In the intricate world of healthcare billing, timeliness is paramount. Payers often have strict deadlines for submitting claims, and missing these deadlines can lead to automatic denials or delays in reimbursement, ultimately resulting in cash flow issues and potential revenue loss. Payers may deny claims simply because they were submitted past the deadline, regardless of the validity of the claim itself. Moreover, delayed submissions can strain relationships with payers and erode trust, further complicating the reimbursement process.

Automations excel at meeting submissions for several reasons: Firstly, their rapid processing speed ensures they are not hindered by backlogs that typically cause stress for RCM employees. Secondly, top-of-the-line automation services such as Thoughtful employ highly trained Process Engineers to streamline RCM workflows, minimizing manual intervention and further expediting the claims submission process, thereby increasing the likelihood of meeting submission deadlines. Third, automated systems can be programmed to generate alerts and notifications for pending tasks or potential issues that may impact claim submissions. This proactive approach empowers RCM staff to promptly address any issues and ensure timely submissions, particularly when not burdened by a backlog. Additionally, the ability of automations to handle large volumes of claims significantly reduces the time required to process submissions.

For RCM departments still filing claims manually, failure to meet submission deadlines can have far-reaching consequences. It not only affects the financial health of healthcare organizations but also adds administrative burden and costs associated with rework. Additionally, it puts a strain on RCM managers who have to train staff to adhere to tight deadlines.

"Before utilizing Thoughtful, I had to trust that people that I didn't train were submitting claims correctly to the insurance, attaching x-rays, and narratives," says Thoughtful customer Cara Perry, the VP of Revenue Cycle Management for Signature Dental Partners, a top-rated DSO with about 98 practices nationwide. "With Thoughtful claims go out every night, the team has a lighter workload, and I know that it’s being done correctly."


The escalating trend of claim denials in healthcare is a pressing issue with far-reaching implications for the financial health of providers. As denial rates continue to climb, understanding the primary reasons behind these denials and adopting strategic measures to mitigate them becomes imperative. The integration of AI and automation into RCM processes offers a robust solution to this challenge, enhancing the accuracy and efficiency of operations from eligibility verification to claims coding and submission.

By addressing the root causes of claim denials head-on with AI and automation, healthcare providers are not only reducing the number of denials but also improving the overall efficiency of their RCM operations. The key to navigating the complexities of claim denials lies in embracing innovation and seeking out proven solutions, such as those provided by Thoughtful. As we move forward, the adoption of AI and automation in healthcare RCM is not just an option but a necessity for those looking to thrive in an increasingly challenging financial landscape.

In conclusion, the path to reducing claim denials and enhancing revenue cycle efficiency in 2024 is clear. It involves a strategic blend of technology adoption, process optimization, and continuous improvement. For RCM leaders, the time to act is now—by investing in the right tools and technologies, healthcare providers can transform their RCM processes, reduce denials, and ensure a financially healthy future.

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Published On:

April 25, 2024

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