Understanding the Latest Denial Trends in Revenue Cycle Management
The healthcare billing process continues to increase in complexity, and understanding denial trends is crucial for diagnostic organizations aiming to protect their revenue and streamline their operations. The 2025 Payor Denial Impact Report from XiFin highlights significant denial patterns across clinical laboratories, molecular diagnostics, and anatomic pathology. Here, in the first in a series of three articles, we dive into the latest denial trends and the key strategies organizations can implement to navigate these challenges.
Denial Rates: What the Numbers Show
The data, a sampling of over 20 million claims with 2024 dates of service (DOS), shows that denial rates have improved overall compared to previous years, dropping from 9.9% in 2023 to 8.0% in 2024. However, despite year-over-year improvements in all segments, denials continue to be especially challenging in the molecular diagnostics segment.
| Segment | % Billed CPT Codes Denied (2023) | % Billed CPT Codes Denied (2024) | % Change (2024 vs. 2023) |
|---|---|---|---|
| Clinical and Hospital Outreach and Outpatient Laboratory Claims | 19.3% | 6.5% | Improved 66.3% |
| Molecular Diagnostic Claims | 35.3% | 32.9% | Improved 6.8% |
| Anatomic Pathology Claims | 10.8% | 5.5% | Improved 49.1% |
Key Denial Reasons: Why Claims Are Denied
Top denial reasons remain consistent across all segments year over year. The most common denial codes include:
- Procedure Not Paid Separately: This reason for denial was the most significant contributor to denials across all segments, especially in clinical laboratories, accounting for over 53% of total denials.
- Duplicate Denial: While decreasing, duplicate denials remain challenging, representing almost 20% of denials in the clinical and molecular segments.
- Non-Covered Services: A substantial portion of denials in the molecular and pathology segments is attributed to claims deemed “non-covered” by payors.
Impact of Payor Behavior on Denials
The report also illuminates shifting payor behaviors and how they affect denial rates. For example, contracted payors (whether Medicare, Medicaid, or commercial) have lower denial rates due to established policies, whereas non-contracted payors show significantly higher rates. Understanding these behavioral trends is crucial for diagnostic providers to identify the payors with the highest potential for reimbursement.
- Medicare and In-network Payors: These tend to have lower denial rates due to clearer, more predictable policies and strong front-end claim validation processes.
- Non-contracted Payors: Denial rates for non-contracted payors are significantly higher, as much as 22.7% compared to 7% for contracted payors.
Strategies for Addressing Denials
While denials are an unavoidable part of healthcare billing, there are proactive measures providers can take to minimize their occurrence. Effective strategies include:
- Improving Front-End Edits: Investing in automated front-end edits can help identify and address issues before claims are submitted, reducing the likelihood of denials.
- Automating Claims Submission: Streamlining the submission process through automated workflows helps reduce errors and ensures that claims are submitted with the correct information from the start.
- Educating Staff on Payor Policies: RCM teams must be well-versed in payor policies and updates, as these can vary significantly between payors and affect denial rates.
Looking Ahead: The Importance of Transparency
Payor policies will continue to evolve, and understanding these shifts will be critical for organizations aiming to reduce denials. XiFin’s Payor Rate Transparency Monitor can help providers understand their reimbursement rates across multiple payors, allowing them to make data-driven decisions and build stronger relationships with payors.
Stay tuned for the next article in this series that addresses the importance of a strategic appeals process in revenue cycle management.