Proactive is always better: A denials management strategy

Hospitals and health systems can no longer afford to take a reactive stance on policy changes. As highlighted in Becker’s Hospital Review, the financial sustainability of healthcare organizations depends on anticipating regulatory shifts and adjusting operations accordingly. The same principle applies to revenue cycle management, particularly in the realm of denials management. Rather than waiting for denials to occur and scrambling to appeal them, a proactive approach can help ensure that hospitals get paid accurately and efficiently from the outset.

The cost of a reactive approach

Denial rates have increased, with recent reports indicating that up to 15% of all claims are initially denied. The traditional approach of waiting for claims to be denied and then starting the appeals process is inefficient and costly. Appeals require additional staff time, delay reimbursement and put revenue at risk. Many denied claims may never even be resubmitted, leading to millions of lost revenue annually.

A reactive approach to denials management mirrors the very challenges hospitals face with shifting regulatory policies. When organizations fail to prepare for new payer rules or coding updates, they find themselves in a cycle of lost revenue and inefficiencies. Instead, a forward-thinking strategy that anticipates denials before they happen can help organizations safeguard its financial health.

A proactive strategy for denials prevention

An effective proactive denials management strategy starts with getting claims right the first time. This means leveraging AI-powered technologies and real time data analytics to identify risk areas before claims are submitted. This philosophy should be the foundation to your entire revenue cycle management process, using advanced AI-powered solutions to improve coding accuracy, enhance clinical documentation integrity (CDI) and streamline the entire revenue capture process.

1. AI-driven coding and CDI: By embedding AI into coding and CDI workflows, hospitals can catch potential coding errors or documentation gaps before claims are sent to payers. This minimizes the risk of denials related to insufficient documentation or incorrect code assignments.
2. Predictive analytics for denials prevention: Machine learning algorithms can analyze historical claims data to identify patterns that lead to denials. This allows revenue cycle teams to implement preventive measures, such as refining coding practices, improving provider documentation habits and flagging high risk claims before submission.
3. Automated auditing: AI-driven audit solutions ensure compliance with payer policies and regulatory changes. Instead of performing audits post-denial, automated tools provide real time insights to ensure claim integrity before submission.
4. Comprehensive revenue cycle solutions: From capture to code, a streamlined revenue cycle approach ensures alignment between clinical documentation and billing, reducing the risk of discrepancies that often lead to denials.

The future of denials management: A shift in mindset

Much like hospitals must stay ahead of evolving healthcare policies, revenue cycle leaders must shift their mindset from reactive to proactive denials management. The goal is not just to respond to denials but to prevent them from occurring in the first place.

By investing in AI-driven coding, CDI, and audit solutions, hospitals can reduce denial rates, accelerate reimbursements, and secure anticipated revenue, without unnecessary administrative burden. As the healthcare financial landscape continues to evolve, a proactive approach is not just an option; it’s a necessity for long-term sustainability.

In a time when hospitals can’t afford to be reactive to policy changes, they also can’t afford to be reactive when it comes to getting paid. The key to financial resilience lies in anticipating challenges before they arise and leveraging technology to ensure every dollar earned is a dollar received.

Josh Amrhein is a business manager for revenue integrity at Solventum.