Denial Management Services: How to Reduce Claim Denials

Mukesh MakwanaFounder & CEO · 8+ years hands-on in medical billing & RCM · Reviewed October 1, 2026

The way to reduce claim denials is to stop treating them one at a time. Group every denial by its reason code, trace each group back to the step that caused it (eligibility, authorization, coding, documentation or filing), fix that step, and work the denials you already have before their appeal deadlines pass. A denial management service runs that loop for you every week.

How to reduce claim denials, step by step

1. Count them properly. Pull every denial from your remittances for the last 90 days, not just the ones someone remembered. Record the payer, the Claim Adjustment Reason Code (CARC), any remark code, the provider and the service.
2. Group by cause, not by payer. A dozen different payers can deny for the same front-desk mistake. The reason code tells you which step failed.
3. Fix the upstream step. Eligibility denials are fixed at scheduling, authorization denials at the referral, coding denials at charge entry, documentation denials in the note. Working the denial without fixing the step guarantees the same denial next month.
4. Scrub before submission. Check every claim against payer edits, diagnosis and procedure pairing, modifiers and authorization numbers before it goes out.
5. Work every open denial before its deadline. Correct and resubmit what was a billing error. Appeal what was a judgment call. Write off only on purpose, with a reason.
6. Measure it monthly. Track the denial rate by reason group and the share of denials overturned. If a group is not shrinking, the fix in step 3 did not work.

Why claims get denied: the reason codes that matter most

Every denial on an electronic remittance carries a CARC, the standard reason codes maintained by X12. Learning to read a handful of them tells you where your revenue is leaking:

A rejection is different from a denial. A rejection never entered the payer's system, usually because of a format or data error caught by the clearinghouse or payer front end, and it can be fixed and resent. A denial was processed and refused, and it needs a corrected claim or an appeal.

How common denials are

Public denial data is thin, but the best federal source shows the scale. KFF's analysis of 2024 CMS transparency data for plans sold on HealthCare.gov found insurers denied 19% of in-network claims, with in-network denial rates ranging from 3% to 36% across insurers. Where a reason was reported, 36% were listed as "other" and 25% as administrative, while 9% were for missing prior authorization or referral and 5% for lack of medical necessity. Fewer than 1% of denied claims were appealed by consumers.

Two lessons for a practice. Denial rates vary enormously by payer, so your own payer mix matters more than any national average. And most denials are administrative, which means most are preventable with better front-end and claim-build work.

Deadlines you cannot miss

• Medicare first-level appeal (redetermination): must be filed within 120 calendar days of receiving the initial determination.
• Medicare second-level appeal (reconsideration by a Qualified Independent Contractor): within 180 calendar days of receiving the redetermination.
• Employer group health plans covered by ERISA: the plan must give claimants at least 180 days after an adverse benefit determination to appeal. Providers usually appeal on the patient's behalf under an authorization or under their contract.
• Commercial and Medicaid plans: appeal and corrected-claim windows are set by your contract and the plan's provider manual. Put them on a calendar per payer.

Deadlines are the reason old denials quietly become write-offs. If no one works a denial for four months, many of them are already beyond recovery.

What a denial management service does

• Posts every remittance and captures every denial with its reason codes, so nothing is lost in a paper EOB pile.
• Sorts denials into fix-and-resubmit, appeal, patient responsibility and true write-off.
• Writes appeals with the payer's own policy language and the supporting documentation.
• Works the oldest and largest balances first, inside each payer's deadline.
• Reports the root causes back to your front desk and providers so the same denial stops coming back.

Questions to ask a denial management company

• Do you work every denial, or only those above a dollar threshold?
• How do you track appeal deadlines by payer?
• Will you show us denials grouped by reason code and by the step that caused them?
• What do you do to stop the same denial from coming back, not just resubmit it?
• Do you charge separately for appeals or for working old denials?

How Sterling Global Solution LLC manages denials

We start before the claim exists: eligibility and benefits are verified and authorizations are started at scheduling. Before submission, every claim is scrubbed against payer rules and scored for denial risk, and high-risk claims are corrected rather than sent. After the payer responds, we post the remittance, root-cause each denial, correct or appeal it inside the deadline, and send you a report of what caused it and what changed. Appeals and reporting are part of the service, not add-on invoices.

Denial management is included in our 30-Day Free Trial, with eligibility verification, benefits verification and prior authorizations, so you can see what is driving your denials on your own claims. If authorizations are your biggest source, start with our prior authorization services. If the payer says the service was not needed, read what to do when a claim is denied as not medically necessary.

Frequently asked questions

Sources

X12, Claim Adjustment Reason Codes: official descriptions for CARC 11, 16, 22, 27, 29, 50, 97 and 197.
KFF, Claims Denials and Appeals in ACA Marketplace Plans in 2024, March 24, 2026: in-network denial rate, range across insurers, stated denial reasons and appeal rate.
Code of Federal Regulations, 42 CFR 405.942 (redetermination filing time frame) and 42 CFR 405.962 (reconsideration filing time frame).
Code of Federal Regulations, 29 CFR 2560.503-1: group health plan appeal period.

Appeal windows for commercial and Medicaid plans are set by each contract and provider manual. How we verify this guidance.

Related reading

• How AI predicts a denial before you submit. What a denial-risk score looks at before the claim goes out.
• The real cost of a denied claim. Why reworking a denial costs more than it looks.
• Why your clean claim rate is stuck. The front-end errors behind most first-pass failures.
• 2026 Medical Billing Benchmark Report. Denial rates, prior authorization and clean claim benchmarks with sources.
• Prior authorization services. Stop authorization denials before the visit.