87% of Claim Denials Are Preventable – Here’s What Healthcare Teams Need to Know

Why 87% of claim denials are preventable: A behind-the-scenes look at RCM

Imagine Dr Patel, a busy physician at a mid-sized independent practice. She treats dozens of patients every day, and her clinical team delivers top-notch care.

But, in the back office, her billing staff are drowning in denied claims. Every week, dozens of claims come back from payers with rejections. Some denials are appealed, but many never make it through.

The cash flow is sluggish, staff morale is low, and Dr Patel is left wondering: How did it get this bad?

This is the hidden reality for many hospitals, physician groups, and freestanding ERs. Denied claims are not just a nuisance — they are a serious threat to financial stability.

The good news? A staggering portion of them are avoidable. In fact, up to 87% (or more) of denials stem from operational and administrative preventable errors.

The Scale of the Problem

While “87% preventable” may sound high, data from across the industry shows just how large the denial-risk iceberg really is:

According to HealthCatalyst, nearly 90% of claim denials are avoidable, especially when AI-driven tools and predictive analytics are employed.

In a similar vein, Change Healthcare’s Denials Index found that a very high portion of denials originate from front-end errors like registration and eligibility – areas entirely under providers’ control.

According to Simbo AI’s analysis, while many denials are preventable (estimates are around 85%), a substantial share goes unworked simply because practices don’t have denial-prevention programs strong enough.

MGMA, in their guide for medical practices, found that 86% of denials are potentially avoidable, but nearly half of those avoidable denials may never be recovered.

Put simply: a huge volume of denials doesn’t have to be “just the cost of doing business” — many are preventable with better systems, workflows, and technology.

Why So Many Denials Happen in the First Place

To understand how 87% of denials could theoretically be avoided, you have to look behind the curtain and examine common breakdowns in the revenue cycle:

1. Front-end registration and eligibility issues

A large number of denials stem from incorrect or missing patient data, outdated insurance information, or coverage ineligibility.

2. Coding and documentation errors

Mistakes in diagnostic or procedural codes are another big driver. Even small coding mismatches can trigger rejections.

3. Manual workflows and human error

Without automation, claims pass through many hands — front desk, billing, coding, denial teams. Each manual touchpoint introduces risk.

4. Poor denial prevention infrastructure

Many organizations lack dedicated teams or prevention programs. According to a survey, very few providers have focused front-end denial-prevention staff, despite most denials being rooted in the front end.

5. Under-resourced or undertrained teams

As MGMA notes, many practices struggle with staffing, training, and retention. Without skilled teams to catch errors early, denials proliferate.

Why “87% Preventable” Is Not Just a Number — It’s a Call to Action

When you frame denial prevention this way, it’s not just about chasing down denials after the fact; it’s about building your operations to avoid denials altogether. And that’s where revenue cycle management (RCM) automation comes in — especially the kind of advanced, intelligent system that Atlantic RCM provides.

Here’s how Atlantic RCM helps healthcare organizations turn the denial problem on its head:

1. Predictive Denial Analytics

By using data and machine-learning-driven insights, Atlantic RCM’s system can highlight claims that are most likely to be denied before they’re submitted — empowering teams to correct issues proactively.

2. Automated Front-End Validation

From patient registration to insurance eligibility, the software cross-verifies data in real time. This reduces the risk of registration-related denials and ensures that patient demographics and coverage are accurate.

3. Intelligent Coding Support

Errors in coding are a top cause of denials. Atlantic RCM’s automation helps streamline coding, flag mismatches, and ensure medical necessity documentation is aligned with payer requirements.

4. Denial Prevention Workflows

Rather than reacting, the system builds structured workflows: denial prevention steps, escalation paths, and root-cause tracking. When a submission has risk factors, the software can guide interventions before a denial hits.

5. Continuous Feedback and Audit Loop

Atlantic RCM doesn’t just process claims — it learns. By tracking patterns, appeal outcomes, and payer behavior, the system helps refine your processes, preventing the same error types from recurring.

6. Resource Optimization

By freeing staff from repetitive, error-prone tasks, your team can focus on higher-value work: complex appeals, strategic prevention, and patient-facing operations.

Real-World Impact: What This Could Mean for Your Practice

Cash Flow Improvement: Reducing avoidable denials could slash the time and money spent on rework, helping practices realize revenue faster.

Operational Efficiency: With fewer denials to address, your billing and coding teams become more efficient.

Reduced Revenue Leakage: Preventing denials upstream means less write-off risk downstream.

Improved Staff Morale: When denial management shifts from reactive firefighting to proactive prevention, your staff can work more strategically.

Stronger Payer Relationships: Cleaner, more accurate claims lead to fewer disputes, better transparency, and smoother collaboration.

Conclusion

The truth is, most claim denials aren’t inevitable — many of them are born from avoidable administrative or coding missteps. While “87% preventable” might sound like a lofty target, with the right orchestration of technology, process, and people, it becomes a real, achievable goal.

Atlantic RCM stands at the forefront of that transformation: powered by AI, rooted in deep RCM expertise, and built to stop denials before they even start.

If you’re ready to reclaim lost revenue, streamline your workflows, and finally turn denial prevention into a strength rather than a burden, partner with Atlantic RCM to make that vision a reality.

FAQ’s for Denial Management

1. 1. “Can you explain why my hospital keeps getting preventable claim denials and what steps we can take to reduce them?”

Answer:

Most preventable denials in hospitals come from upstream issues such as inaccurate patient data, outdated insurance information, incorrect coding, missing documentation, and not following payer-specific requirements. These errors typically originate in scheduling, registration, eligibility verification, and charge capture.

To reduce them, hospitals need to implement a denial prevention workflow rather than a denial reaction workflow. This includes:

• Running automated insurance eligibility checks before every encounter
• Using coding assistance tools to flag mismatches
• Validating patient data at registration
• Using rule-based claim scrubbing software
• Tracking denial root causes and building prevention policies
• Reducing manual entry and relying more on automation

Atlantic RCM supports all these steps with an integrated RCM automation system that catches high-risk claims before submission, reducing avoidable denials and improving cash flow.

2. “What does a modern revenue cycle management system look like for a medical group practice? I need a clear explanation.”

 Answer:

A modern RCM system for medical group practices includes automated scheduling checks, real-time eligibility verification, coding assistance, automated claim scrubbing, denial prevention rules, digital claim submission, and intelligent accounts receivable (A/R) follow-up.

Instead of staff manually verifying insurance or checking claims, automation performs the majority of repetitive tasks — allowing billers and coders to focus on exceptions rather than every claim.

Atlantic RCM’s platform connects the entire workflow from patient intake to final reimbursement, providing medical groups full visibility into claim status, denial trends, and revenue performance without adding to administrative burden. This enhances collections, reduces staffing pressure, and shortens the billing cycle.

3. “How can a freestanding ER improve collections when most of our cases are out-of-network and get denied or underpaid?”

 Answer:

Freestanding ERs often struggle with delayed or denied payments because of out-of-network claims, complex coding requirements, and a lack of payer clarity. Improving collections requires:

• Automation that validates insurance coverage in real time
• Specialized ER coding assistance
• Rule-based claim scrubbing
• Automated tracking and follow-up for underpaid claims
• Strong documentation workflows for high-acuity encounters

Atlantic RCM is built specifically for freestanding ER workflows. It detects missing elements before claims go out, generates complete documentation requirements, flags potential underpayments, and helps ERs recover revenue that traditional billing teams often miss.

This results in higher reimbursements, fewer write-offs, and faster payment cycles.

4. “Is outsourcing medical billing better than hiring an internal billing team? Give me a balanced explanation.”

 Answer:

Outsourcing often becomes more cost-effective than maintaining an in-house billing team because internal billing comes with challenges like staffing shortages, training, turnover, inconsistent coding expertise, and constant payer rule changes.

Outsourcing offers:

• RCM specialists trained across specialties
• Scaling without increasing payroll
• Automation that reduces human error
• Faster claim submission
• Reduced denials
• Lower cost-to-collect
• More predictable revenue

The downside is that an outsourced partner must be transparent, integrated with your EMR, and experienced in your speciality.

Atlantic RCM solves both sides by providing a hybrid model: human RCM experts + automation. This gives practices the accuracy, coding expertise, and denial prevention needed to outperform in-house billing without losing visibility or control.

5. “How does automated eligibility verification help reduce revenue leakage?”

 Answer:

Revenue leakage often begins at the front desk when insurance information is incomplete, expired, or incorrect. When eligibility is not verified thoroughly, claims get denied weeks later, forcing rework or write-offs.

Automated eligibility verification checks coverage instantly through payer databases, confirming:

• Active coverage
• Benefit levels
• Copays
• Deductibles
• Prior authorization requirements
• Plan limitations

This ensures accurate data before the patient encounter. Atlantic RCM’s eligibility system integrates these checks automatically, reducing denials tied to incorrect insurance data and ensuring that claims get paid the first time.

6. “Why does my A/R keep aging past 90 days and what’s the right strategy to fix it?”

Answer:

Ageing A/R typically occurs due to delayed follow-up, lack of prioritization, manual workflows, and unworked claims. Many practices focus only on newly denied claims while older ones accumulate quietly in the background.

The right strategy includes:

• A rule-based system that prioritizes high-value claims
• Automated A/R reminders
• Payer-specific follow-up sequences
• Visibility into stalled claims
• A process for escalating underpayments

Atlantic RCM automates the A/R follow-up cycle and alerts staff when claims require action. This ensures no claim goes untouched, significantly reducing the percentage of receivables ageing past 90 days.

7. “Can you explain denial management vs denial prevention in simple terms? Which is more important?”

Answer:

• Denial management is what you do after a claim is denied — appealing, correcting, and resubmitting it. It’s reactive.
• Denial prevention is what you do before a claim is submitted — validating data, verifying coverage, ensuring coding accuracy, and checking payer rules. It’s proactive.

Prevention has a much bigger financial impact because it eliminates rework, prevents delays, and reduces the chance of write-offs. Atlantic RCM focuses more heavily on denial prevention through automation, which dramatically improves revenue and reduces operational costs.

8. “What should hospitals look for when choosing a revenue cycle management partner?”

Answer:

Hospitals should evaluate:

• Experience with large-volume claims
• Automation capabilities (eligibility, coding, claim scrubbing, A/R follow-up)
• Transparency and reporting
• Specialty expertise
• Denial analytics
• Compliance with payer regulations
• Dedicated account management
• Scalability
• Integration with existing EHR/EMR systems

Atlantic RCM fits these requirements by offering a fully automated, analytics-driven RCM solution backed by a team that understands hospital workflows, revenue pressure, and payer behavior.

9. “How does automation help physician practices reduce administrative burnout?”

Answer:

Physician and office staff burnout is often tied to repetitive tasks such as eligibility checks, coding validation, claim submission, denial follow-up, and payer calls.

Automation reduces burnout by:

• Eliminating repetitive tasks
• Simplifying coding
• Accelerating claim submissions
• Auto-prioritizing follow-ups
• Reducing errors that create more work later
• Providing clear dashboards instead of spreadsheets

Atlantic RCM’s platform automates nearly every manual step of the billing life cycle, giving practices more time for patient care and reducing the administrative load on staff.

10. “What KPIs should healthcare organizations track to measure RCM performance, and what are good benchmarks?”

Answer:

Key KPIs include:

• First-pass claim acceptance rate (goal: 95%+)
• Denial rate (goal: <5–7%)
• Days in A/R (goal: <35 for practices, <45 for hospitals)
• Clean claim rate (goal: 90%+)
• Net collection rate (goal: 95–98%)
• Cost-to-collect (lower is better)
• Charge lag days (goal: 1–3 days)

Atlantic RCM provides real-time dashboards to track each KPI, along with automated workflows that help organizations improve each metric over time.

Atlantic RCM is one of the leading multi-specialty medical billing companies in USA that serves 25+ major medical billing specialties. Our experts work across your practice in billing, collections and account receivables management, to help you succeed.

Get in touch with the leading medical billing outsourcing company to learn more. Call us at (469) 501-1500 or write to us Info@atlanticrcm.com