10 Warning Signs Your Practice Needs Denials Management Services
Claim denials present a significant challenge for healthcare practices, often resulting from issues such as incomplete data, outdated coding, or payer-specific requirements. These denials contribute to delayed reimbursements, increased administrative burden, and long-term revenue loss when not properly addressed. This blog highlights 10 warning signs that indicate when your practice should consider Denials Management Services to reduce denials, recover revenue, and improve billing efficiency.
Table of Contents
1. High Volume of Claims Rejected for Missing Data
According to the Medical Group Management Association (MGMA), nearly 42% of claim denials stem from demographic or eligibility errors. Missing patient birth dates, incorrect ID numbers, or absent authorization codes may look minor, but they account for millions in lost revenue annually. Denials Management Services deploy automated validation tools at the registration and claim entry stages to catch these issues before submission.
Common Data Errors Leading to Rejections
2. Unresolved CARC/RARC Codes in Denial Reports
CARC (Claim Adjustment Reason Codes) and RARC (Remittance Advice Remark Codes) are payer messages explaining why a claim is denied. For example:
CARC 16 – Claim lacks information.
CARC 109 – Not covered by payer.
RARC N290 – Missing prior authorization.
Unresolved CARC or RARC codes often account for 10–15% of denials in many practices. When these codes are not reviewed and resolved within 30–60 days, claims may expire and become uncollectible. Denials Management Services use structured tracking and payer-specific workflows to ensure each denial code is addressed promptly and effectively.
3. Lack of Root-Cause Classification in Denials
A denial rate above 10% is considered a red flag by HFMA (Healthcare Financial Management Association). Yet many practices only count denials instead of categorizing them. Without grouping denials into eligibility, coding, duplicate claims, or medical necessity, staff cannot identify systemic issues. Denials Management Services segment denials according to ANSI group codes (CO, PR, OA, PI), providing actionable reports that drive improvements across departments.
If you are interested to read more about denial management, please have a look at this blog on ‘’ Understanding Denial Management in Healthcare’’.
4. Declining First Pass Resolution Rate (FPRR)
The First Pass Resolution Rate measures the percentage of claims paid on the first submission. Becker’s Hospital Review reports that leading practices maintain FPRR at 92–95%. Anything below 85% indicates significant inefficiencies. If your staff is reworking more than 1 in 10 claims, you’re losing valuable time and resources. Denials Management Services optimize claim validation processes and apply payer-specific edits to lift FPRR closer to best-in-class benchmarks.
FPRR Performance Standards
5. Rising Telehealth-Related Denials
Telehealth has surged since 2020, but claims data from Change Healthcare shows that telehealth denial rates are 10–15% higher than in-person visits. The most common reasons are wrong modifiers (95, GT, FQ), incorrect place-of-service (POS) codes, and outdated payer rules. Denials Management Services ensure coding protocols are updated, reducing costly telehealth denials and supporting compliance with CMS and commercial payer policies.
6. Escalating Medical Necessity Denials
Medical necessity denials account for 12–15% of all rejections (HFMA). They often result from incomplete documentation or poor alignment between provider notes and payer criteria. For example, payers may require specific lab results or prior treatments before approving services. Denials Management Services train staff on payer documentation requirements, integrate clinical coding checks, and support appeal strategies to overturn medical necessity denials. For practical guidance, explore our guide on denial management service recovery.
7. Duplicate Claim Submissions Above Normal Levels
Duplicate claims waste staff time and lead to automatic denials. CMS data suggests duplicate submissions represent 3–5% of all denials, often caused by EHR integration failures or lack of claim lifecycle visibility. Denials Management Services apply automated claim tracking and clearinghouse edits, preventing duplicates from being submitted more than once. For additional insights, Check out this blog on denial management in healthcare.
8. Regular Errors in Coordination of Benefits (COB)
COB denials occur when payers disagree over who should pay first. These account for nearly 10% of denials, particularly for patients with Medicare and commercial secondary insurance. Practices without robust COB verification face repeated rejections. Denials Management Services integrate real-time eligibility tools and payer hierarchy checks, reducing COB errors at registration. For more insights on reducing denials and improving claim outcomes, check out our guide on denial management solutions.
9. Out-of-Network Denials Increasing Unexpectedly
Out-of-network denials often reflect credentialing lapses, contract mismanagement, or outdated payer rosters. CAQH data shows credentialing delays account for up to 25% of denied claims for new providers. Denials Management Services monitor payer contracts, manage enrollment renewals, and keep provider directories updated to minimize out-of-network rejections.
10. No Reporting on Denial Trends or Benchmarks
Without reporting dashboards, practices operate blind. Industry data indicates that practices tracking denial trends cut rejection rates by 20–30% in the first year. Benchmarks matter: the average denial rate across U.S. providers is 5–10%.Practices not measuring denial rate, FPRR, or aging buckets risk falling behind. Denials Management Services deliver benchmarking and analytics to bring clarity and accountability.
Denials are not small administrative issues—they are measurable financial leaks. Industry data confirms that without structured tracking, practices lose thousands each month to preventable errors. Recognizing these warning signs early gives practices the chance to implement Denials Management Services, recover lost reimbursements, and build more efficient claim workflows. It’s time to stop letting denials cost your practice— contact MBW RCM today and learn how we can help you stay ahead.
FAQs: Denials Management Service
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Every practice faces challenges with claim denials—whether it’s missing data, payer rules, or unresolved appeals. If you need guidance on identifying root causes, reducing rejection rates, or improving reimbursement outcomes, our experts are ready to help. Fill out the form below, and the MBW RCM team will contact you to discuss solutions tailored to your practice’s needs.
