The Importance of Claim Scrubbing and Denial Management in Maximizing Revenue and Reducing Operational Costs in Healthcare

Managing money in healthcare is complicated but very important for hospitals and medical practices in the United States. Healthcare providers rely a lot on Revenue Cycle Management (RCM). RCM tracks patient billing from the start to the end. This includes patient registration, insurance checks, capturing charges, sending claims, handling denied claims, and collecting payments. Two key parts of RCM that affect money and costs are claim scrubbing and denial management.

For medical practice leaders and IT managers in the U.S., knowing more about these parts can help improve finances, lessen staff workload, and make billing run more smoothly. This article talks about why claim scrubbing and denial management matter, the problems they face, and how new technology like Artificial Intelligence (AI) and workflow automation help healthcare groups succeed.

What is Claim Scrubbing and Why is it Important?

Claim scrubbing means checking medical billing claims before sending them to insurance companies. The goal is to find and fix mistakes like missing patient details, wrong codes, or differences that might cause claims to be denied or delayed. Claims that are “clean,” meaning no errors and complete, usually get paid faster and more often the first time they are sent.

Keeping a high Clean Claim Rate (CCR)—which is the percent of claims paid on first try—is very important. A CCR of 95% or more is seen as very good in the industry because most claims get paid without being rejected. Practices with high CCRs get money faster, have less paperwork, and spend less time fixing mistakes.

Errors in claims can come from:

• Missing patient or insurance info
• Wrong or old codes (like ICD-10, CPT, HCPCS)
• Not checking if insurance is valid
• Not getting needed authorizations before treatment

If claims have these errors, insurance companies often reject or deny them. This causes delays in payment and extra work to fix and send claims again.

The Impact of Denied Claims on Healthcare Organizations

Denied claims are a big problem for healthcare providers and cost millions every year. Data shows about 20% of all insurance claims get denied, and out of those, about 65% are never sent again. This means healthcare providers lose a lot of money they could have earned.

Denied claims not only delay payments but also increase costs by making staff spend time finding mistakes, fixing them, and filing appeals. On average, fixing one denied claim costs between $25 and $118 depending on how hard it is. Denials also cause claims to stay unpaid longer. More than 13.5% of claims are unpaid after 120 days.

Denials usually happen because of:

• Errors in documents
• Wrong coding
• Insurance coverage problems
• No or wrong pre-authorizations
• Bad communication between billing, clinical, and insurance teams

If denied claims are not handled quickly, it can cause money problems and make it hard for healthcare places to spend on things like operations, technology, or hiring staff. Many U.S. providers lose almost $5 million each year due to denied claims.

Denial Management: A Key to Financial Stability

Denial management means finding denied claims, figuring out why they were denied, fixing the problems, and appealing or sending claims again if needed. It is a very important part of good RCM.

Good denial management helps money flow better by:

• Cutting lost money from unpaid claims
• Speeding up payment times
• Lowering costs for handling denied claims
• Making cash flow more steady and predictable
• Improving patient experience by making billing easier

Healthcare groups without solid denial management often face money problems and run less efficiently. A special denial management team can watch denial patterns, set deadlines to fix claims, and make sure denied claims get handled fast.

Studies show almost 90% of denied claims can be prevented by solving issues before care or claim submission. This means denial management helps stop problems early.

Best Practices in Claim Scrubbing and Denial Management

To lower denials and increase money, healthcare groups can follow these good steps:

• Careful Patient Registration and Eligibility Checks
  Collect accurate patient and insurance info quickly to avoid denials from coverage issues.
• Pre-Submission Claim Scrubbing
  Use tools or manual checks to find coding mistakes, missing data, and payer needs before sending claims.
• Ongoing Staff Training
  Teach staff often about medical codes, billing rules, and payer policy changes to reduce mistakes.
• Clear Communication Within Teams
  Make sure clinical, coding, billing, and admin teams share complete and correct information.
• Tracking Denial Data and KPIs
  Watch denial rates, appeal success, account turnover, and write-offs to find problems and track progress.
• Structured Workflows and Denial Follow-Up
  Set clear steps for handling denials, assign tasks, and require timely appeals to avoid unanswered denials.
• Use of Technology and Automation
  Automate tasks like eligibility checks and claims tracking to reduce errors and free up staff for harder work.

The Role of AI and Workflow Automation in Enhancing Claim Scrubbing and Denial Management

AI and automation are used more and more in U.S. healthcare revenue management because they help improve accuracy, speed, and rule-following.

According to the American Hospital Association, about 46% of hospitals use AI in revenue operations, and 74% use some kind of automation, like robotic process automation (RPA). These tools help claim scrubbing and denial management by:

• Automated Coding and Claim Checking
  AI tools read clinical notes to assign correct billing codes and find errors before sending claims. This lowers denials from coding mistakes.
• Predictive Analytics to Stop Denials
  AI predicts which claims might be denied using past data. This lets staff fix or prepare appeals early. It also helps plan money flow.
• Generative AI for Appeals and Authorizations
  Some AI can write appeal letters and handle prior-authorization requests automatically, reducing staff work and quickening claim resubmission.
• Real-Time Insurance Checks
  Automation checks insurance coverage live during work, lowering denial rates from eligibility problems.
• AI-Driven Denial Pattern Analysis
  AI finds denial trends and gives advice to improve billing, documents, and staff training.

Some healthcare groups saw good results after using these AI tools. For example:

• Auburn Community Hospital cut “discharged-not-final-billed” cases by half and raised coder output by 40% with AI, RPA, and machine learning.
• Banner Health uses AI bots to find insurance coverage, update finance systems, and create appeal letters, which makes work run smoother.
• A California Health Care Network lowered prior-authorization denials by 22% and service coverage denials by 18% using AI without hiring more people.
• A McKinsey report said generative AI raised call center work by 15% to 30%, helping eligibility checks and early patient bill talks.

Challenges and Risks in Implementing AI and Workflow Automation

Even though AI and automation have many benefits, they also come with challenges:

• Data Bias and Accuracy
  AI needs good, balanced data to avoid unfair or wrong decisions.
• Need for Human Review
  Fully automatic systems can make mistakes, so people must still check claims, appeals, and sensitive info.
• Complex Healthcare Rules
  Coding and insurance rules change often, so AI tools need constant updates to follow all rules.
• Integration with Old Systems
  Hospitals may have trouble connecting new AI platforms with older health records and billing software.

Successful use of AI combines automated tools with skilled people and ongoing training.

Operational and Financial Benefits for U.S. Medical Practices

Good claim scrubbing and denial management, helped by technology, improve financial results by:

• Better Cash Flow
  More clean claims mean faster payments and fewer unpaid claims.
• Lower Administrative Costs
  Fewer denials reduce time and money spent fixing claims.
• Higher Revenue Recovery
  Catching and fixing denied claims helps get money that might be lost.
• Improved Patient Experience
  Easier billing and clear communication reduce disputes and help patients trust the provider.
• Better Staff Productivity and Morale
  Automation cuts boring tasks and lets staff focus on important work, which helps reduce burnout.

How Medical Practice Administrators and IT Managers Can Act

For healthcare leaders in the U.S., improving claim scrubbing and denial management is important. Suggested actions include:

• Buy advanced RCM software with built-in claim scrubbing and denial management features.
• Start staff training on current coding and insurance rules.
• Set up good communication between clinical and billing teams to keep data accurate.
• Check AI and automation tools carefully to make sure they work well with current systems and support rule compliance.
• Track denial metrics often and change processes when needed.
• Think about outsourcing RCM or denial management when internal staff or skills are limited, since outside experts can offer technology and know-how at lower cost.

In short, focusing on claim scrubbing and denial management matters a lot for healthcare providers managing money in the U.S. It helps cut costly denials, improve financial results, and reduce workload on staff. New AI and automation tools help these providers work more accurately and efficiently, supporting steady healthcare services over time.