# Evaluating Your Practice’s Revenue Cycle: Denial Rate

## Denial Rate

Presenter:
Asia Blunt, MBA, CPC
Practice Management Strategist

This six-minute presentation quickly helps you learn how to calculate your practice’s denial rate. After watching this presentation, you will know how to:

• Obtain a better understanding of the denial rate and find out why it’s important for your practice.
• Learn how to calculate the denial rate.
• Discover problems to avoid, such as lack of an internal process to identify mistakes prior to claim submission.

The denial rate represents the percentage of claims denied by payers during a given period. This metric quantifies the effectiveness of your revenue cycle management processes. A low denial rate indicates cash flow is healthy, and fewer staff members are needed to maintain that cash flow.

Best Practice Tips

• A 5% to 10% denial rate is the industry average; keeping the denial rate below 5% is more desirable.
• Automated processes can help ensure your practice has lower denial rates and healthy cash flow.

### Calculating Denial Rate

To calculate your practice’s denial rate, add the total dollar amount of claims denied by payers within a given period and divide by the total dollar amount of claims submitted within the given period.

### Sample Calculation

• (Total of Claims Denied/Total of Claims Submitted)
• Total claims denied: \$10,000
• Total claims submitted: \$100,000
• Time period: 3 months
•  \$10,000/\$100,000
• 0.10
• Denial rate for the quarter: 10%

### Other Considerations

Failure to identify mistakes prior to claim submission. Mistakes made during coding and charge entry can result in claims that are adjudicated and rejected by a payer. Establishing an internal process to identify and correct any mistakes prior to claim submission will decrease denial rates and produce a healthier cash flow.

The denial rate represents the percentage of claims denied by payers during a given period. This metric quantifies the effectiveness of your revenue cycle management processes. A low denial rate indicates cash flow is healthy, and fewer staff members are needed to maintain that cash flow.