Claim Denials in Medical Billing: What 400+ Revenue Cycle Leaders Report

Claim denials have become one of the most persistent and costly revenue cycle challenges. Driven by declining reimbursements, increasing administrative complexity, and evolving adjudication requirements, denials are placing growing strain on staff productivity and financial performance. Even when claims are carefully prepared and authorized, many organizations report denials that require significant rework.

Inovalon surveyed more than 400 revenue cycle leaders and managers to learn where claims denials start and what organizations are doing to prevent them. This page summarizes the findings, and the full white paper covers the prevention strategies in detail.

Key Findings

The survey of revenue cycle leaders found that claim denials and the front-end issues behind them are a major challenge in every care setting, felt most by acute and ambulatory organizations.

• 72% of revenue cycle leaders say claim denials are a significant challenge, ranking higher than any other revenue cycle issue in the survey
• 78% say front-end workflow issues contribute to denied claims
• 58% identify a front-end process as the single top driver of claims denials
• 61% validate patient/resident demographic information to prevent denials
• 58% monitor insurance eligibility changes
• 43% use customized claim scrubbing before claim submission

What Causes Claim Denials?

Most claim denials start well before a claim reaches the payer. In the survey, 78% of revenue cycle leaders attributed denied claims to front-end workflow issues. Another 58% named a front-end process as the single top driver.

Respondents identified three leading front-end contributors:

1. Insurance eligibility and benefits verification was the most frequently cited cause.
2. Authorizations were the second most frequently cited cause.
3. Patient/resident information verification came third.

In each case, the claim is denied because the data behind it was incomplete, outdated, or incorrect at intake. Coverage may change between scheduling and service. An authorization may be missing or expired. A demographic field may not match what the payer has on file. By the time the denial arrives, fixing it means tracking down information that should have been confirmed at the start.

This problem isn’t limited to one type of provider. Respondents reported denials as a significant challenge across a variety of care settings.

Best Practices to Reduce Claim Denials in Healthcare

The organizations in the survey rely on a set of core prevention tactics, and each one targets a specific front-end cause of denials.

• Validate patient/resident demographics. 61% of respondents check names, dates of birth, and member IDs before submission.
• Monitor insurance eligibility changes. 58% track coverage changes, especially for long stays and recurring services.
• Confirm authorizations before services. Authorizations were the second most-cited cause of denials.
• Use customized claim scrubbing. 43% review claims against payer-specific rules before submission.
• Reduce manual review. The white paper covers how organizations use AI and automation to catch errors earlier.

This white paper examines claim denials in medical billing, what’s driving them, and how organizations are using AI and other tools to prevent and manage them.