what is denial in medical billing

Denial in medical billing is the refusal of an insurance company or carrier to pay for healthcare services obtained from a healthcare professional. Denials can happen for various reasons, but they are often related to incorrect billings, lack of insurance coverage, inaccurate patient information, missing or invalid information, coding errors, and issues with eligibility. Denials can be categorized as soft and hard. Soft denials are temporary denials with the potential to be paid if the provider corrects the claim or sends additional information. Hard denials cannot be reversed or corrected, and result in lost or written-off revenue. Denials have a domino effect on the overall financial performance of the healthcare organization, preventing cash from being available to meet payroll and pay other bills such as utilities, food service, etc. . The average claim denial rate across the healthcare industry is between 5% and 10% . Denial management is an imperative process for physician practices to optimize their revenue cycle and recoup all the revenue they’re owed or receive it days faster.