Survey: Front-end workflows to blame for most claim denials

A recent national survey found that claims denials are a leading revenue cycle challenge for nearly three-quarters of healthcare organizations, with front-end workflows contributing the most to reimbursement breakdowns.

Claim denials narrowly beat patient payment collection as the top overall revenue cycle challenge, according to the survey of more than 400 industry leaders conducted by revenue cycle management vendor Inovalon.

No other issue, including prior authorizations and revenue cycle staffing shortages, received as many votes for the top revenue cycle challenge, researchers noted.

Denials continue to plague healthcare organizations of all sizes and types, with 88% of RCM leaders from hospitals and health systems identifying them as a significant challenge. About 73% of ambulatory RCM leaders and 63% of post-acute RCM leaders said the same.

But RCM leaders across organizational types generally agreed that front-end workflows are responsible for most claim denials.

In the survey, about four in five respondents attributed denied claims to at least one front-end revenue cycle workflow. The top three most frequently cited contributors were insurance eligibility and benefits verification, authorization and pre‑certification and patient registration and demographic verification -- all functions early in the revenue cycle process.

RCM leaders also still reported persistent issues with missing or invalid claim data (35%) and medical coding breakdowns (28%), although many also told researchers that payer-related challenges, such as insurer errors and inconsistent payer rules, contributed to their claim denial rates.

However, researchers pointed out that more than half of respondents identified a front-end workflow as the leading contributor to denied claims, underscoring critical gaps in patient access.

That hasn't stopped providers from trying to prevent denials by improving front-end processes. The top selected strategy for preventing claim denials, with 61% of respondents, was validation of patient demographic information, followed by greater monitoring of insurance eligibility changes, with 58% of respondents.

Rounding out the top three strategies for preventing claim denials, with 43% of respondents, was customized claim scrubbing to identify and correct errors.

Notably, automation of prior authorizations -- one of healthcare's most burdensome administrative tasks -- was toward the bottom of the list, with just 13% of respondents.

Providers of all shapes and sizes will continue to feel immense pressure from claim denials and prior authorizations, particularly as the healthcare industry at large grapples with major shifts in coverage under the Trump administration's healthcare agenda.

Under the administration's federal spending package signed last July, also known as the One Big Beautiful Bill Act, about 10 million people are expected to lose health insurance and become uninsured by 2034, according to federal estimates. Most of these people will be disenrolled from Medicaid, which will bear the brunt of health policy reforms.

Provider organizations are preparing to bolster insurance and eligibility verification processes ahead of the policy shifts to protect access to care and their bottom lines. The Inovalon research underscores this shift in RCM toward front-end optimization, according to Karly Rowe, president of the company's Provider Business Unit.

"Providers are spending too much time fixing problems after a denial occurs," Rowe said in a press release. "The greater opportunity is shifting left by preventing issues before they become denials through connected patient access, eligibility, authorization, and predictive intelligence embedded directly into provider workflows."

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.