Why a Low Denial Rate Could Be a Warning Sign

A low denial rate looks like good news. But it can also mean your practice is underbilling and missing out on thousands of dollars. Let me give you a real example and some practical tips.

Denial rates vary by specialty, but most fall between 8 and 12 percent. The top performers are closer to 5 percent.

A 2.2 percent denial rate

I worked with a private clinic that averaged a 2.2 percent denial rate, and never went above 4 percent in any month. If you work in this field, you might envy those numbers. I know I was surprised.

But as we looked deeper, we found a serious undercoding issue. Payers are often happy to approve claims quickly if it keeps their costs down. In the end, though, it's your practice that pays the price.

One patient's claims

Let me share a specific example from this case. We looked at the claims from one patient who had over 5 comorbidities:

• This patient was billed as low complexity.
• After that, the monthly visits were denied because the total allowed claim for that billing level had already been used up.
• The doctors kept caring for the patient anyway, and this was one of the rare cases that led to a denial for the clinic.

Do you see what I mean? It's a double whammy. The practice was paid less for the work, and then wasn't paid at all for the follow-up care.

What fixing it looks like

For this clinic, fixing the problem will lead to more denials. But total revenue should still rise 15 to 20 percent, even with the increase.

So if your denial rates are unusually low, it's worth double-checking the codes you're billing. And if your numbers are outside the norm for a good reason, that's something to celebrate.

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If you're not sure where your clinic stands, you can reach out to us below. We can help you check your coding quickly.

With a cold brew in hand,
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