HCA 110 Module 7 Analyzing Denied Claims Example

Where the Money Stops: A Denial Analysis for One Primary Care Practice

Student Name

Health Care Administration Program, Aspen University

HCA 110: Insurance and Healthcare Reimbursement

Instructor Name

Month Day, Year

Where the Money Stops: A Denial Analysis for One Primary Care Practice

Every practice has denied claims, but not every practice knows why. Working denials one at a time recovers some money, while analyzing them as a group reveals the causes that keep producing them. This paper analyzes one month of denials at a composite six-provider primary care practice, identifies the largest cause, traces it to its root and sets out corrective steps.

The Data

In the month reviewed, the practice submitted 4,200 claims and received denials on 336 of them, a denial rate of 8%, with $41,600 in charges affected. The billing manager pulled every denied line from the remittance records and grouped them by adjustment reason code. The table summarizes the categories.

Reading the Pattern

More than two-thirds of denials came from front-end problems: authorization, eligibility, missing data and coordination of benefits. Only a small share involved coding or medical necessity. This pattern is common and useful, because front-end denials are largely preventable. The reason codes, taken from the standard code list, made the grouping possible (X12, n.d.); a practice that posts denials as generic write-offs cannot do this analysis.

Root Cause: Imaging Authorizations

The billing manager reviewed all 92 authorization denials. Seventy-four were for imaging, mostly CT and MRI, ordered by practice physicians and performed at an affiliated center that billed under the practice. In 51 cases no authorization had been requested; in 16 it had been requested but was still pending when the scan was done; and in 7 it was obtained but the number was not entered on the claim. Interviews showed that physicians assumed the imaging center requested authorizations, while the imaging center assumed the practice did.

Why the Process Failed

The root cause was an unclear handoff, not individual carelessness. No one owned the authorization step, no list showed which plans required it for which studies, and scans were scheduled without checking status. A fishbone review found contributing causes in people (no assigned owner), process (scheduling not tied to authorization), tools (no tracking list) and payer rules (different requirements by plan).

Effects on Patients

Authorization failures affect more than revenue. When a scan is delayed for authorization, the patient's diagnosis is delayed too. When researchers pooled studies of health plan prior authorization in a 2026 systematic review, they reported harm to how well treatment worked and to how patients fared (Murphy et al., 2026). The practice therefore has two reasons to fix the process: to be paid and to avoid delaying care.

Corrective Steps

The practice assigned one referral coordinator to own imaging authorizations, built a payer-by-study list of requirements, and changed scheduling so that imaging slots cannot be booked for plans that require authorization until the number is entered. Urgent studies follow a separate path with same-day phone requests. For the 7 claims with missing numbers, the billing team sent corrected claims with the authorization added.

Other Categories

Eligibility denials were traced to coverage not checked on the date of service for returning patients, so eligibility is now verified in batch two days before each visit. Missing-information denials clustered around a new physician whose identifier was not yet linked to one plan. Coordination of benefits denials came from patients over 65 with employer coverage who had been billed to Medicare first, and registration now asks every Medicare patient about current employment.

Correct, Appeal or Write Off

Each denial needs a decision. Denials caused by the practice's own errors, such as a missing authorization number or a wrong identifier, are fixed with a corrected claim. Denials where the practice believes the payer was wrong, such as a medical necessity denial for a clearly indicated service, are appealed. Denials that cannot be won, such as a claim filed after the deadline, are written off with a specific adjustment code so they remain visible in reports.

Payer Differences in the Data

Denials were not spread evenly across payers. Medicaid managed care plans accounted for 38% of denials but only 22% of claims, largely because of authorization requirements that differed from plan to plan. This matches national evidence that Medicaid claims are denied far more often than Medicare claims (Gottlieb et al., 2018). The practice added a separate authorization list for each Medicaid plan it accepts and asked the plans' provider representatives to confirm the requirements in writing.

Commercial plans showed a different weakness: more denials for missing information, often a subscriber date of birth entered as the patient's. A registration screen that requires the subscriber's details as a separate field was requested from the software vendor.

Measuring Results

The practice set targets of a denial rate under 5% and authorization denials under 20 per month within three months. The billing manager will report denials by category each month to the practice leadership. A pediatric hospital that redesigned its registration process in a similar way cut missing fields by 67% and substantially reduced denials (Kovach & Borikar, 2018), which suggests the targets are realistic.

Sustaining the Change

Fixes fade without follow-up. The referral coordinator's role is written into the job description so it survives staff turnover, and the authorization list is reviewed each quarter when payers update their policies. The billing manager shares a one-page denial report at each monthly staff meeting so that front desk staff see the results of their work. When a new denial reason appears, the team applies the same approach: group the denials, find the root cause and fix the process that produced it.

Conclusion

Analyzing a month of denials as a group showed that most came from preventable front-end failures, and that the largest, imaging authorization denials, came from a handoff no one owned. Assigning ownership, linking scheduling to authorization and verifying eligibility before visits address the causes rather than the symptoms. Tracking results each month will show whether the fixes hold.

References

Gottlieb, J. D., Shapiro, A. H., & Dunn, A. (2018). The complexity of billing and paying for physician care. Health Affairs, 37(4), 619-626. https://doi.org/10.1377/hlthaff.2017.1325

Kovach, J. V., & Borikar, S. (2018). Enhancing financial performance: An application of Lean Six Sigma to reduce insurance claim denials. Quality Management in Health Care, 27(3), 165-171. https://doi.org/10.1097/QMH.0000000000000175

Murphy, J., Beauchamp, N., Sun, K. J., Lau, B. D., Wilson, R. F., Lobner, K., Conway, S. J., Hill, P. M., & Johnson, P. T. (2026). Adverse effects of health plan prior authorization on clinical effectiveness and patient outcomes: A systematic review. The American Journal of Medicine, 139(1), 24-32.e1. https://doi.org/10.1016/j.amjmed.2025.08.018

X12. (n.d.). Claim adjustment reason codes. https://x12.org/codes/claim-adjustment-reason-codes