It’s a good thing insurance providers include a reason code in the electronic remittance advice that they send back to your clearinghouse provider. Of course, the next piece of that puzzle is determining the most common types of denials your organization sees the most. Those two data points are the reason why I made the frank remark that it doesn’t really matter how well or poorly your organization handles claims that come back from insurance providers with a denied status, there’s always room for improvement. More than 85% of denials are potentially avoidable and one-third of them are absolutely avoidable. Regardless as to how well or grim the denial landscape at your organization looks, though, I have a more helpful statistic for you to know. In other words, your organization’s average denial rate is going to be different from the mental health facility up the street. Although it sounds scary, taking the total yearly cost of denials and dispersing it across the entire industry isn’t accurate.
The reality is that the denial landscape is different for every healthcare organization. If the average dollar amount of denials costs providers that much, regardless of the size of their practice, how are they supposed to keep their doors open? If you ran the math and divided that number by the total number of healthcare providers in the U.S., it would amount to around $5 million worth of denials per. $262 billion worth of claims get denied on an annual basis according to HFMA.