How do I reduce claim denials?

How do you reduce claim denials? Start with a 7-step process

You reduce claim denials by fixing the few causes that produce most of your denied dollars, then stopping them before the claim leaves the building. In the average practice we reviewed, the top three denial reasons accounted for 58% of denied dollars. That means most practices do not need 20 new habits. They need three fixes done every day.

How to reduce claim denials in the first 30 days

1. Pull 90 days of remits. Export every X12 835 electronic remittance advice (ERA) and group denials by claim adjustment reason code (CARC) and payer.
2. Rank causes by denied dollars, not by count. A handful of high-dollar authorization denials can outweigh dozens of small coding denials.
3. Name one owner per cause. Eligibility belongs to the front desk, authorizations to the scheduler or referral coordinator, coding to the coder, and timely filing to the billing lead.
4. Move each check upstream. Run eligibility before the visit, tie authorizations to the schedule, and scrub the X12 837 claim before submission.
5. Fix the claim, do not resend it. A corrected claim uses the payer’s replacement process. A blind resubmission becomes a duplicate denial.
6. Work every denial within a set window. We aim for a first touch within five business days so appeal and timely filing clocks never run out.
7. Review the denial report monthly. Track the same measures every month and retire a fix only when its cause stops showing up.

Denial prevention strategies that stick

The strategies that last are the ones tied to a person and a schedule. 42% of practice managers said nobody owns denial follow-up full time, and 63% could not name their top three denial reasons. Denial prevention fails in those practices for a simple reason: no one is looking at the pattern. If you only change one thing this month, give one person the denial report and 30 minutes a week to read it.

What is the average claim denial rate, and how do you calculate yours?

There is no official target, but public benchmarks give a range. MGMA reported an 8% single-specialty aggregate rate for claims denied on first submission in its 2023 DataDive data. KFF found that ACA marketplace insurers denied 19% of in-network claims in 2024, ranging from 3% to 36% across insurers. Across our 38 client practices, the first-pass denial rate before onboarding was 14.2%.

Calculate your claim denial rate two ways, as HFMA’s denial metric standard does:

• By count: initial denials in the period ÷ claims submitted in the period.
• By dollars: charges on initially denied claims ÷ total charges submitted.

Use the first-pass (initial) rate, not the final rate after appeals. The final rate hides the rework your staff already paid for. If the dollar rate runs well above the count rate, your denials are concentrated on expensive services, which usually points to authorization or medical necessity problems rather than simple data entry.

Which denials should you fix first?

Fix the causes that are both large and preventable: eligibility, coding and authorization. In our audit of 61,400 claims, eligibility and coverage errors caused 24% of denials, coding and modifier errors caused 21%, and missing or invalid prior authorization caused 17%. Duplicate claim denials made up 9% of denials, mostly from resubmitting instead of correcting, and timely filing caused 6%. All other causes together made up the remaining 23%.

Those first three causes account for 62% of denials, which is why most denial prevention plans start with the front desk rather than the coder. For what each denial code means and how to appeal the ones that slip through, see our guide to common claim denial reasons and how to appeal them. This page stays on prevention.

How do you prevent eligibility and prior authorization denials?

Verify coverage before every visit and link every authorization to the scheduled service. Both checks run on standard HIPAA transactions: the X12 270 and 271 for eligibility and benefits, and the X12 278 for prior authorization and referrals.

Eligibility: check every visit, not just the first one

Coverage changes mid-year when patients switch jobs, age into Medicare or move to a Medicaid managed care plan. Run a 270 two to three business days before the appointment and again at check-in for high-dollar visits. Confirm the plan type, the payer ID, the subscriber, coordination of benefits and any behavioral health or lab carve-out. In urgent care, 26% of visits registered as self-pay had active coverage found later, which is revenue lost to a skipped lookup. Our eligibility and prior authorization service runs these checks inside your existing system.

Prior authorization: tie the number to the schedule

The AMA’s 2025 prior authorization survey found physicians complete 40 prior authorizations a week, with 13 hours a week spent by physicians and staff. Build a rule that no authorization-required service gets scheduled without an authorization number, date range, unit count and approved CPT codes on the appointment. Then check that what was performed matches what was approved. Under the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F), impacted payers such as Medicare Advantage and Medicaid managed care plans must return decisions within 72 hours for expedited requests and seven calendar days for standard requests, starting January 1, 2026. Faster answers help only if your team submits complete requests the day the order is written.

How do you prevent claim denials from coding, duplicates and late filing?

Scrub every claim against current payer and NCCI edits before it goes out, correct instead of resubmitting, and track filing deadlines by payer.

• Coding and modifiers. CMS updates the NCCI procedure-to-procedure (PTP) edits and medically unlikely edits (MUEs) quarterly. A claim scrubber that is not updated each quarter lets bundling and unit errors through. Pair the scrubber with certified medical coding review on the codes your remits show as high risk, usually modifier 25, modifier 59 and time-based codes.
• Duplicates. When a claim is denied, read the reason, fix it and send a corrected claim or appeal. Resending the same claim without a change creates a second denial and resets nothing.
• Timely filing. Medicare requires claims to be filed within one calendar year after the date of service. Commercial and Medicaid plans often allow much less time, so keep each payer’s limit in your billing system. Timely filing caused 6% of denials in our audit, and only 4% of those were recovered, so this is the one denial type you almost never get back.
• Credentialing. Credentialing lapses delayed payment for 1 in 12 providers added in the prior year, and a lapsed re-credentialing held payments for a median of 47 days. Put every re-credentialing date on the same calendar as your filing limits, or hand it to a credentialing team that tracks it.

What does cutting denials save a 3-provider practice? A worked example

Take a 3-provider family practice that sends 1,000 claims a month with an average expected payment of $95, about $90,000 a month in collections. Assume each denial takes 20 minutes of staff time to research and rework.

• At a 14.2% first-pass denial rate: 1,000 × 14.2% = 142 denials a month. 142 × $95 = $13,490 in cash held up each month. Rework takes 142 × 20 minutes ≈ 47 staff hours.
• Denials never worked: 19% of denied claims were never reworked or appealed in the practices we reviewed. 142 × 19% ≈ 27 claims, or 27 × $95 = $2,565 lost each month.
• At a 6.1% first-pass denial rate: 1,000 × 6.1% = 61 denials. 61 × $95 = $5,795 held up, about 20 staff hours of rework, and 61 × 19% ≈ 12 unworked claims, or $1,140 lost.

In this example, cutting the denial rate from 14.2% to 6.1% frees $7,695 a month in delayed cash, saves about 27 staff hours a month, and reduces outright losses from $2,565 to $1,140 a month, or $17,100 a year.

What claim denial prevention mistakes keep denial rates high?

The most common mistake is treating denials as a back-office cleanup job instead of a front-office process problem. Others we see in billing reviews:

• Counting denials instead of dollars. The team fixes the easiest denials, not the most expensive ones.
• Letting denials age. 19% of denied claims were never reworked or appealed. Once a claim passes the payer’s appeal window, the fix is worth nothing.
• Buying software without an owner. A scrubber flags errors, but someone still has to update the rules, clear the work queue and feed the pattern back to the front desk.
• Ignoring underpayments. A paid claim is not always a correct claim. Underpayments against contracted rates appeared on 7.8% of paid claims, and the average underpaid claim was short by $38.
• Stopping after one good month. Payer policies change quarterly. Denial prevention is a standing meeting, not a project.

If the work has outgrown the people you have, a denials and AR recovery team can take the queue while your staff fixes the front-end causes.

How long does it take to reduce denials, and how do you measure it?

Most practices see the denial rate move within one to three months once eligibility, authorization and scrubbing are in place. Across 38 client practices, first-pass denial rate fell from 14.2% to 6.1% within 90 days of onboarding, and clean claim rate rose from 89.6% to 97.3% in the first 90 days.

The chart shows the first-pass denial rate dropping from 14.2% to 6.1% while the clean claim rate climbed from 89.6% to 97.3%. Track these measures monthly on one page:

• First-pass denial rate, by count and by dollars
• Clean claim rate, meaning claims accepted and paid without rework
• Denials by cause and by payer, ranked by dollars
• Days from denial to first touch
• Days in AR and the share of AR past 90 days

Practices that reviewed AR ageing monthly carried 12 fewer days in AR. Denials are one part of the wider revenue cycle, so pair this report with your AR ageing review. If you want a second set of eyes on your remits, you can book a free billing review and we will rank your top denial causes by dollars.

Should you reduce denials in-house, with software, or by outsourcing?

Each route works if someone owns the result. The difference is cost, speed and who carries the follow-up.

52% of practices that switched billing vendors cited missing denial reporting as the main reason, so ask any vendor for a sample denial report before you sign. Our guide to choosing a medical billing company covers the other questions to ask.

Dental

Dental denials cluster around frequency limits and missing attachments. Frequency limitation denials made up 19% of dental denials, and dental practices wrote off a median $23,400 a year in restorative claims denied for missing narratives or X-rays. Check the patient’s history for cleanings, bitewings and crowns before scheduling, attach narratives and images to every crown, build-up and periodontal claim, and send pre-treatment estimates. Pre-treatment estimates were skipped on 38% of crowns and implants in the practices we reviewed.

Physical therapy

Therapy denials come from units, thresholds and coverage changes. The KX modifier was missing on 21% of Medicare therapy claims past the threshold, and 8-minute rule unit errors appeared on 9% of therapy claims. Re-verify coverage every few visits, because 33% of therapy episodes had a coverage change mid-episode that was not caught. Track plan of care certification dates for every Medicare patient. See how this works in physical therapy billing.

Behavioral health

Behavioral health denials often start with the wrong payer or wrong time. Claims sent to the medical plan instead of the behavioral health carve-out caused 12% of behavioral health denials, and 18% of 90837 claims had documented session time under 53 minutes. Confirm the carve-out on the 271 response, document start and stop times, and check telehealth place-of-service codes and modifiers. More in our therapist billing page.

Ambulance

For ambulance and EMS agencies, paperwork drives denials. Physician Certification Statements were missing or unsigned on 18% of non-emergency transports, and origin and destination modifier errors appeared on 6% of ambulance claims. Hold non-emergency claims until the certification is signed and check mileage units against the trip record. For a real turnaround, see how King-American Ambulance cut days in AR from 71 to 38.

Primary care

Primary care denials center on preventive and problem visits billed together. Problem-oriented visits billed with an annual wellness visit lacked modifier 25 on 12% of claims, and vaccine administration codes were missing alongside vaccine product codes on 5% of claims. Build scrubber rules for both pairs, and document the separate problem in its own note section. Our primary care billing page covers the codes in more detail.

Urgent care

Urgent care loses money at registration. 26% of visits registered as self-pay had active coverage found later, so run a coverage search on every self-pay patient before discharge and again before sending a statement. Capture a photo of the insurance card at check-in and confirm the payer ID matches the plan on the card.