Lost Revenue from Claim Denials

What are the best ways to tackle it now and avoid it happening in the future?

Claim denials cause significant loss of revenue for nursing care facilities. If only 5% of medical claims were denied – which is rarely the case – the revenue loss would be substantial.

Case in point: suppose a nursing home is submitting 100 medical claims per day to insurance providers. With a reimbursement rate of approximately $100 per claim, that brings the facility close to $10,000 of revenue per day. Claims get denied around 15% of the time. But to effectively show this, let’s look at an average of 5%. That means five claims would be denied every day totaling $500 of revenue loss per day. Looking through a financially strategic lens, that’s a loss of $120,000 a year. Ouch!

Therefore it is crucial to tackle claim denials before the re-submission deadline and to create a strategy to avoid it happening in the future.


Here are a few steps to do this effectively:


Step 1: Point your staff in the right direction.

Provide the staff with the necessary motivation so that they can help with the process. They should be shown the actual revenue loss that occurred or that is ongoing due to claim denials. This will vary from facility to facility, so it’s important to research and provide accuracy.

Step 2: Find the reason for each claim denial.

This is important as the reasons for denial can vary.

Ways to go about doing this:

  • Analyze trends in billing data that may cause denials
  • Is there a spelling error or is the inputted information altogether wrong?

Check resident, provider, and insurance provider information for accuracy.

Examples of this can be name, DOB, sex, insurance ID number, treatment received, relevant medical codes, provider ID, facility mailing address, contact name, policy number, address of insurance provider, insurance contact info, etc.

When there is a better understanding of what is causing claims to be denied, it’s appropriate to move to the next step.

Step 3: Develop an effective strategy.

This is important to reduce future denials, saving the facility valuable time and money.

Optimally this would be done using machine learning software and advanced analytics specifically designed for claim denial management. These systems work with large data sets, and can potentially save millions in lost revenue.

Other helpful strategies include:

  • Double checking codes.
  1. CPT codes, Point of Service codes, and ICD-10 codes are easily confused.
  • Researching the correct number of digits entered for each type of code.
  • Making sure the code matches the treatment provided.

In short, pay attention to your claim denials! They can cause a significant loss of revenue when not acted upon. There are appropriate ways to deal with claim denials:

  1. Motivate your staff.
  2. Research common trends.
  3. Create an effective strategy.

These steps should help your facility avoid claim denials and ultimately a large loss of revenue.

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