Did you know 20% of healthcare claims are denied, costing providers billions annually? Yet, over half of these claims can eventually be overturned. Following a clear, structured process can help you recover lost revenue and reduce financial strain.

Here’s a quick summary of the 5 steps to appeal denied claims:

1. Review the Denial Notice and Explanation of Benefits (EOB): Understand the reason for denial and gather all necessary details.

2. Collect Supporting Documents: Include medical records, physician statements, and other required evidence.

3. Submit the Internal Appeal: Follow payer-specific instructions and deadlines to formally challenge the denial.

4. Track Your Appeal: Monitor progress, respond promptly to payer requests, and maintain detailed records.

5. File for External Review (if needed): Escalate unresolved appeals to an independent review organization or federal process.

Key Facts:

• 54% of denied claims are overturned.

• The average cost to rework a denied claim is $118.

• Denials have increased by 16% between 2018 and 2024.

To succeed, act quickly, stay organized, and ensure compliance with payer rules. This step-by-step approach can help recover revenue efficiently and avoid leaving money on the table.

Best Practices in the Appeals Process

What Are Healthcare Claim Denials

Grasping the concept of healthcare claim denials is crucial for providers aiming to recover lost revenue and maintain financial health. While earlier we touched on their significant financial repercussions, it’s equally important to understand what exactly constitutes a denial and how it differs from a rejection.

Definition of a Denied Healthcare Claim

A denied healthcare claim refers to a situation where an insurance payer has reviewed and processed a claim but decides not to cover the medical services under the patient’s insurance plan. Essentially, the claim has been evaluated and rejected for payment based on the payer’s coverage policies. This differs from a rejected claim, which doesn’t even make it through the processing stage due to errors or missing information. Rejected claims can often be corrected and resubmitted, while denied claims may lead to unrecouped costs if appeals fail.

This distinction is vital for revenue recovery. Rejections result in delays, while denials can lead to permanent financial losses if they aren’t successfully appealed.

Having a clear understanding of these terms lays the groundwork for analyzing why claims get denied in the first place.

Why Claims Get Denied

The reasons behind claim denials are both varied and increasingly complex. Private payers initially deny about 15% of submitted claims, and this number has been climbing. A recent 2024 study revealed a sharp increase in claim rejections between 2022 and 2024.

Among the most common reasons for denials in 2024 were missing prior authorizations and incomplete or inaccurate information. However, the full range of causes includes:

• Administrative and Technical Issues: Duplicate claims, invalid or missing modifiers, errors in patient details, missed filing deadlines, and coordination of benefits mistakes. Filing delays alone account for 7% of claim denials.

• Clinical and Coverage Issues: Claims may be denied due to services deemed not medically necessary, unmet deductibles, exceeding coverage limits, coding errors, or insufficient clinical documentation.

• Authorization Problems: Missing or expired prior authorizations, or issues with authorization numbers, continue to challenge providers despite increased awareness of these requirements.

The financial toll is staggering. The average cost to address a denied claim is $43.84, adding up to $19.7 billion annually. What’s even more frustrating is that over half of initially denied claims are eventually overturned, which means much of this expense could be avoided with better initial submissions.

"We had hoped to see a decrease in claim denials from our previous survey, but it's clear these significant challenges are continuing, adding immense pressure on providers to improve their revenue cycle management processes. This growing crisis is a sign that traditional approaches are no longer enough, and providers should adopt more proactive strategies and the latest technology to navigate this volatility." - Clarissa Riggins, Chief Product Officer at Experian Health

Breaking down the causes of denials into technical and clinical categories is essential for tackling them effectively.

Clinical vs Technical Denials

Distinguishing between clinical and technical denials is key to formulating effective appeal strategies. This separation allows providers to allocate resources efficiently and tailor their approach to each type of denial.

Technical denials stem from administrative errors like incorrect coding, missing data, invalid subscriber IDs, or missing authorization numbers. These are more frequent but generally easier to resolve, often requiring simple corrections or additional documentation.

Clinical denials, on the other hand, revolve around issues of medical necessity, treatment coverage, length of stay, or adequacy of clinical documentation. These denials are less common but demand more intensive appeals, as they often challenge medical decisions and require detailed justification.

"Technical denials are typically easier to appeal to as the root cause of these denials is process or administrative in nature." - Ehson Afshar, Director of Revenue Cycle, Healthrise

"Clinical denials are related to medical necessity, length of stay, coding, clinical documentation, or level of care (typically inpatient claims). These types of denials require longer and more intensive appeals to get the denial overturned." - Ehson Afshar, Director of Revenue Cycle, Healthrise

This distinction is critical when structuring denial management workflows. Many successful revenue cycle teams divide their efforts into specialized technical and clinical denial teams. Technical denials can often be resolved swiftly through administrative corrections, while clinical denials may require physician involvement, additional records, and detailed narratives.

The real key lies in quickly identifying the type of denial and routing it to the appropriate team equipped with the right expertise to address it efficiently.

5 Steps to Appeal Denied Healthcare Claims

Navigating denied healthcare claims can feel overwhelming, but a clear plan can make all the difference. These five steps outline a practical way to challenge denials and recover lost revenue efficiently.

Step 1: Review the Denial Notice and EOB

The first step in any appeal is understanding why the claim was denied. Carefully examine the Explanation of Benefits (EOB) and the denial notice. These documents provide crucial details about the denial.

Start by identifying the reason code listed on the EOB or denial notice. This code explains why the payer rejected the claim. The notice should also clarify whether the claim was fully paid, delayed, partially paid, or denied. If the claim was denied or partially paid, it will specify the reason and outline the steps and documentation needed to appeal or resubmit the claim.

Common reasons for denial include missing pre-authorization, claims labeled as not medically necessary, services not covered, or care provided out-of-network. Review any appeal instructions included in the EOB, denial notice, or member handbook. If the information isn’t clear, contact the insurance carrier directly for clarification. This initial review lays the groundwork for building your case.

Step 2: Collect Supporting Documents

Once you know why the claim was denied, the next step is gathering all the necessary documentation. Collaborate with physicians to obtain medical records, statements explaining medical necessity, and any other relevant materials. Double-check patient details to avoid simple errors.

Before submitting your appeal, familiarize yourself with the payer’s specific guidelines for appeals and their documentation requirements. Ensure your supporting documents clearly establish the medical necessity of the service, align with the payer’s policies, and back up the accuracy of the claim. Organize your evidence in a logical order, either chronologically or by category, to make it easier for reviewers to follow. Include a cover letter summarizing your case and connecting your evidence to the denial reasons.

Step 3: Submit the Internal Appeal

The internal appeal is your formal opportunity to challenge the denial. Follow the payer’s specific instructions and adhere to any deadlines. Most insurers require you to use their official appeal forms, which are typically available online or through customer service.

Write a concise appeal letter that directly addresses the denial, supported by the evidence you’ve gathered. Submit the appeal using the method preferred by the payer, and save all confirmation details for future reference. Once submitted, focus on tracking the appeal’s progress.

Step 4: Track Your Appeal and Respond to Requests

Keeping your appeal on track requires consistent monitoring and prompt responses to any follow-up requests from the payer. Use a tracking system to stay on top of deadlines, appeal status, and required actions. Regularly check the claim’s status through the insurer’s online portal or by contacting them directly.

Be alert for any mail correspondence, as requests for additional information are often sent this way. Follow the instructions provided in these requests. Keep detailed records of all communications and actions related to your appeal, using a claims denial log to organize key details. If the internal appeal doesn’t resolve the issue, you may need to escalate to an external review.

Step 5: File for External Review When Needed

If your internal appeal is denied, you might be eligible for an external review. For employer-sponsored plans governed by ERISA, a federal appeal may be required. Individual and small group plans typically allow external reviews through state insurance departments, each with its own rules and timelines.

An external review involves an independent review organization evaluating your claim. Usually, you must complete the internal appeal process before requesting an external review unless the insurer waives this requirement. Be sure to file the external appeal within the designated timeframe and include all documentation from your internal appeal.

Documentation and Compliance Requirements

Getting the documentation right and adhering to regulations are critical steps for a successful claim appeal. These guidelines work hand-in-hand with earlier appeal strategies, ensuring your process stays both compliant and efficient.

Required Documents for Appeals

To make an appeal successful, your documentation must meet the insurer’s specific requirements. Start by reviewing the denial letter carefully - it should outline why the claim was denied, the insurance plan section that supports the denial, what evidence the insurer reviewed, and what additional information is needed for your appeal.

Your medical records should be thorough, well-organized, and match the billing documentation. Include clinical notes, diagnostic test results, treatment plans, and progress notes that clearly show why the service or treatment was necessary.

Billing documentation also needs to line up with medical records. Ensure all procedure codes, diagnosis codes, and modifier codes are consistent to avoid rejection.

To strengthen your case, provide evidence of medical necessity. Collaborate with physicians to create detailed explanations of why the treatment was appropriate for the patient’s condition. When possible, back this up with clinical guidelines, professional standards, or references to established treatment protocols.

Using a standardized documentation process can speed up appeal responses. This should outline which documents are needed for different types of denials, ensuring consistency throughout the appeals process. Well-prepared documentation not only supports your case but also helps recover revenue faster.

Following Federal and State Rules

Beyond gathering the right documents, you need to follow federal and state regulations closely. Appeals involve navigating a web of rules that vary depending on the insurance plan, so understanding these requirements is a must.

For employer-sponsored plans under ERISA, the denial letter should explain how to file an appeal, the deadline for submission, and the rights of beneficiaries to seek legal recovery. The ERISA process also provides a pathway to recover funds for older claims and denials.

The Affordable Care Act introduced standardized appeal processes across different insurance plans. Federal agencies like the Departments of Health and Human Services, Labor, and the Treasury have issued rules to streamline both internal and external appeals. Many states have adopted external appeal standards set by the National Association of Insurance Commissioners.

Appeals for Medicare and Medicaid follow specific guidelines from the Centers for Medicare & Medicaid Services (CMS), which differ from commercial insurance requirements. Staying informed on CMS updates and policy changes is essential for adjusting your strategies.

Regularly check for updates from CMS, the Department of Labor, and state agencies to ensure compliance. Keeping up with regulatory changes helps prevent costly mistakes.

For added support, consider working with compliance experts or legal professionals who specialize in healthcare appeals. Their knowledge can help you navigate complex regulations and ensure your documentation meets all requirements. Using checklists to confirm that every necessary document is included in your appeal submission can further reduce the risk of administrative errors or rejections.

Managing Payer Requirements and Deadlines

Keeping track of payer rules and deadlines is a critical step in ensuring the success of your appeal strategies. Once you've prepared and submitted your appeal, staying on top of deadlines becomes essential to avoid missing out on revenue recovery opportunities.

Missing appeal deadlines can lead to substantial financial losses. In 2022 alone, hospitals and health systems spent about $19.7 billion appealing denied claims. This underscores the importance of staying organized with payer-specific requirements and deadlines.

Every payer operates under unique rules, timelines, and documentation standards. Understanding these differences and setting up systems to manage them effectively can often determine whether you recover revenue or end up writing off legitimate claims.

Appeal Deadlines by Payer Type

Commercial Insurance Plans
Deadlines for appeals vary by plan. Denial notices typically include details about filing an internal appeal, while external appeals have their own specific timelines. Always review the information provided by the insurer.

Medicare
Medicare has a structured, multi-level appeals process with strict deadlines. Providers should consult the Medicare Administrative Contractor's guidelines to ensure timely filing.

Medicaid
Medicaid appeal deadlines differ by state. Check your state's Medicaid program requirements to understand the specific timelines for both internal and external appeals.

ERISA Plans
Employer-sponsored health plans under ERISA outline their appeal procedures and deadlines in denial notices. These plans generally specify how long you have to file an internal appeal and when to expect a decision from the plan administrator.

Expedited Appeals
In urgent cases where delays could harm patient care, expedited appeals may be an option. Confirm with the payer how quickly these appeals need to be processed.

Given the variety of deadlines, adopting a reliable tracking system is essential to ensure appeals are filed on time.

How to Track Important Deadlines

Leverage a centralized, automated tracking system
Use software to monitor payer names, denial dates, deadlines, and claim statuses. Automated systems can flag upcoming deadlines and highlight missing documentation. For instance, University Physicians Network in New York recovered $42,000 from a single policy change alert, proving how such systems can prevent costly mistakes.

Assign specific payers to staff members
Designate team members to handle specific payers. This approach reduces errors and improves appeal outcomes by fostering specialized knowledge of payer rules.

Implement a real-time dashboard
Create a dashboard to display updates on denied claims, including their current statuses and resolution timelines. This helps managers quickly identify and prioritize urgent appeals.

Maintain detailed records of insurer communications
Document every interaction with insurers, noting the representative's name, date of contact, discussion points, and any follow-up actions.

Develop quick-reference guides
Prepare materials summarizing appeal deadlines, required documentation, and payer contact details. These guides streamline the process and help manage deadlines efficiently.

Schedule regular policy reviews
Stay informed about changing payer requirements by subscribing to newsletters, attending webinars, and joining provider forums. Regular training sessions can also keep your team updated on new policies and procedures.

Conclusion: Your Next Steps for Successful Appeals

To successfully navigate denied healthcare claims, having a clear and methodical strategy is non-negotiable. By following the five essential steps outlined earlier and ensuring precise documentation, you can create a solid foundation for recovering lost revenue. Each step is interconnected, forming a structured approach to maximize your chances of success.

The stakes are high - 20% of all healthcare claims are denied, yet only 40% are ever resubmitted. Even more compelling is the fact that up to two-thirds of these denied claims can be recovered. This translates to millions of dollars in potential revenue that many organizations may be unknowingly forfeiting.

At the heart of successful appeals lies thorough documentation and strict compliance. As Wendell Potter, a former Cigna executive, wisely advises:

"Never take 'no' as a final answer, ever"

This mindset, paired with meticulous record-keeping, adherence to payer guidelines, and effective teamwork, significantly improves your chances of overturning claim denials.

Time is critical in the appeals process. Start appeals immediately after receiving a denial, and ensure your records are well-organized and concise. Given the substantial administrative costs tied to denial management, investing in efficient systems and expert resources is not just practical - it’s financially rewarding.

For organizations looking to refine their appeals process, JXH Recovery offers a specialized solution. Their performance-based model ensures you only pay when revenue is successfully recovered, making it a low-risk way to improve your financial outcomes. With expertise spanning ERISA appeals to clinical denials recovery, they provide a comprehensive service that integrates seamlessly with your existing systems while offering transparent reporting.

FAQs

What are the most common reasons healthcare claims get denied, and how can providers prevent them?

Healthcare claim denials are often the result of incomplete or incorrect patient information, coding mistakes, missing documentation, or late submissions. These issues can create significant delays in reimbursements and disrupt revenue flow.

Here’s how providers can address these challenges:

• Verify patient information and insurance eligibility during the visit to catch any discrepancies early.

• Double-check coding for accuracy, ensuring all codes are correct before submitting the claim.

• Include all necessary documentation to meet payer requirements and avoid rejections.

• Submit claims on time, adhering to filing deadlines set by insurers.

Taking these steps can minimize denial rates and streamline the claims process, helping maintain a steady revenue cycle.

What are the best ways for healthcare providers to stay organized and meet payer deadlines when appealing denied claims?

To keep everything on track and meet payer deadlines, healthcare providers should implement a centralized tracking system. This tool helps monitor claims, deadlines, and required documentation, ensuring no critical steps are overlooked. Align your internal schedules with payer-specific deadlines and set up regular follow-ups to stay ahead.

Clear and organized documentation is just as important. Train your staff regularly on appeal processes and take time to review common denial patterns. This can help pinpoint problem areas and improve workflows. By refining these practices, providers can cut down on errors, recover more claims, and reduce revenue loss.

What are the best strategies to ensure accurate claim submissions and avoid denials?

To cut down on claim denials, start with a detailed review process. This means carefully verifying patient details, ensuring coding is correct, and confirming all necessary documentation is included before submitting claims.

Investing in ongoing staff training is equally important. Keeping your team up to date on billing practices and changes in payer guidelines can significantly lower the risk of mistakes during the submission process.

Additionally, consider leveraging clearinghouse services. These services act as an extra layer of protection, flagging potential issues before claims are sent to payers. This not only reduces errors but also boosts the chances of claims being approved on the first try.

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• ERISA Appeals vs Commercial Payer Appeals: Key Differences