🇺🇸United States

Patient Frustration and Churn from Repeated Denials and Appeals

3 verified sources

Definition

Delays and confusion caused by claim denials and protracted appeals create friction for patients, who may receive unexpected bills or encounter long waits for resolution. Denial-management literature notes that improving denial prevention and resolution not only enhances financial performance but also patient satisfaction, implying that current denial and appeals practices often harm the patient experience.

Key Findings

  • Financial Impact: Adonis’ hospital example shows that addressing frequent prior-authorization denials both reduced denials and improved patient satisfaction, indicating that the prior workflow was causing recurring patient friction with financial implications such as bad debt and lost loyalty.[3] KMS Technology similarly frames improved denial handling as critical to supporting the organization’s ability to deliver quality care, underscoring the connection between operational denial failures and patient dissatisfaction.[4]
  • Frequency: Daily
  • Root Cause: Patients are not informed upfront about coverage requirements and potential denials; when denials occur, communication is slow and fragmented, leaving patients caught between hospital billing offices and payers during lengthy appeals processes.[1][3][4]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Hospitals.

Affected Stakeholders

Patients and families, Patient financial services and customer service reps, Front-desk and registration staff, Denial and billing teams, Marketing and patient experience leadership

Deep Analysis (Premium)

Financial Impact

$ lost revenue from 32.5% front-end denials[6] • $100,000-$200,000 annually in WC denial delays; legal disputes extend resolution 90+ days • $100,000-$200,000 annually in WC-related bad debt; legal holds delay resolution 60+ days

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Current Workarounds

AR Manager manually submits appeals to Medicare Administrative Contractors (MACs), uses spreadsheet to track appeal status, patient called after 60 days with no update • AR Manager manually tracks pre-op auth status via spreadsheet, appeals denied outpatient surgery claims via email templates, patient given verbal status during follow-up call • AR Manager receives denial, manually logs into payer portal, downloads denial reason, creates appeal in Word doc, sends via fax/email, tracks in Excel

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Lost Revenue from Unworked and Written-Off Denials

HFMA reports that about 85% of denials are preventable, and other industry research commonly cites that 3–5% of net patient revenue is at risk from denials that are not successfully recovered; for a $500M hospital this equates to roughly $15M–$25M per year in leakage attributable to denials and insufficient appeals.[9][2][6]

Permanent Revenue Loss from Missed Appeal and Timely-Filing Deadlines

Waystar notes that payers may allow only 90 days for an appeal on some claims and up to a year on others, and that failing to resolve denials within these windows results in lost reimbursement; in many hospitals, millions of dollars are written off annually due to aging denials that exceed these limits.[6][4]

Denied Claims from Prior Authorization and Eligibility Failures

Experian’s 2024 State of Claims report (cited by RevCycle) attributes 76% of denials to missing, incomplete, or inaccurate data such as eligibility and authorization details, implying that a large portion of denial-related revenue loss stems from these front-end failures.[2] A hospital case example from Adonis shows that fixing missing prior authorizations for certain procedures materially improved financial performance, indicating that prior-authorization denials were a recurring revenue leak before process changes.[3]

Excess Labor Costs from Rework and Manual Appeals

HFMA notes that 85% of denials are avoidable, implying that the substantial labor spent working them is largely preventable overhead.[9] Denial-management vendors emphasize that without automation, organizations must invest heavily in human resources for appeals; for a mid‑size hospital, it is common for dozens of FTEs to be dedicated to denial and appeals work, representing several million dollars per year in salary and benefits tied to avoidable rework.[5][6]

Rework and Lost Revenue from Coding and Documentation Errors

FinThrive identifies coding errors and documentation gaps as common causes of denials that directly affect reimbursement.[1] RevCycle, citing Experian’s 2024 State of Claims report, notes that 76% of denials are due to missing, incomplete, or inaccurate data, which includes documentation and coding errors.[2] This translates into recurring rework costs and lost revenue opportunities across virtually all hospital departments.

Extended Days in A/R from Denial-Driven Payment Delays

KMS Technology reports that when a claim is rejected, reimbursement is typically delayed by 21–45 days.[4] For hospitals with millions of dollars tied up in denied claims, these delays translate into substantial working-capital requirements and interest or opportunity costs, as well as higher risk of eventual write-off if denials are not resolved quickly.[4][6]

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