How to reduce claim denials: strategies for hospitals and clinics

In 2024, Brazilian private hospitals had R$ 5.8 billion in payments withheld by health plans through denials, which represented 15.89% of the total they should have received from payers (an increase of four percentage points over 2023). The data comes from a survey by Anahp (National Association of Private Hospitals) covering 85 institutions. Historically, the denial rate hovered between 3% and 5%. In 2022, it jumped to 9%; in 2023, to 11.8%; and in 2024, it reached nearly 16%.

Beyond the immediate impact on cash, the average time to payment for hospital claims jumped from 60–70 days to 120 days in 2024.

Some denials stem from clinical disagreements between providers and payers, but another share (significant and avoidable) originates in the hospital’s own internal processes. This article focuses on that second front: the strategies that are within the control of hospital management.

What causes hospital claim denials

Every denial has a root cause. Once identified and addressed, it stops repeating. In hospital practice, the most frequent origins fall into four categories.

For a complete overview of what denials are and how they are classified, see the article Claim denials: what they are and how to avoid them.

Coding and form‑filling errors

Incorrect procedure coding is one of the main sources of technical denials. When the TUSS code recorded on the claim does not match the procedure actually performed, or when the diagnosis code (ICD) is incompatible with the procedure billed, the payer has grounds to deny the item.

The cause is usually a lack of standardization between the clinical team and billing: the physician records with one terminology, the billing specialist codes with another. Without an alignment protocol, the noise builds up claim after claim.

Prior authorization failures

Procedures performed without proper authorization from the payer (or with an expired authorization) are denied almost automatically. The same happens when the authorized code differs from the billed code, even if the procedure performed is the same.

Care pressure in emergencies increases this risk. Without an organized check before the procedure, authorization can turn into a bottleneck in the revenue cycle.

Incomplete clinical documentation

The medical claim must be supported by documentation that proves the clinical need for each item billed. Unsigned reports, incomplete progress notes, missing justification for special materials such as OPME (implants and special materials) or generic medical reports are frequent reasons for clinical denials.

This type of denial is especially common in high-complexity claims, where the volume of items billed requires documentation with a proportional level of detail and traceability.

Administrative denial: contractual discrepancies

An administrative denial originates in inconsistencies between what was billed and what the contract with the payer provides for. Billing an item outside the agreed price table, using a room daily rate higher than the one contracted or billing a fee at a percentage different from the one agreed are typical examples.

In most cases, this type of denial reveals that the billing team is working with an outdated version of the current contract, or does not know it.

How to measure the impact of denials on the revenue cycle

Reducing denials starts with measuring them. With reliable indicators, management not only knows the problem exists but can size it and track corrective actions. Four indicators form the basis of an effective dashboard.

Initial denial rate

Measures the percentage of gross billing that the payer denied in its first review of the claim, before any appeal. It is the most immediate indicator of the size of the problem.

Formula:

(Amount denied / Amount billed) x 100

The historical benchmark for private hospitals was 3% to 5%. That level has been consistently exceeded since 2022, which reinforces the need to monitor the rate by payer and by type of procedure, not just in aggregate.

Accepted denial rate

Measures the percentage of the denied amount that, after the appeal process, the institution itself accepts as a valid denial. It is the indicator that separates legitimate denials from improper ones.

Formula:

(Accepted denial amount / Total amount denied) x 100

Data from the Anahp Observatory 2025 show that the accepted denial rate was 1.96% of gross revenue from health plans in 2024. This means that most of the denied volume is, at the end of negotiations, recognized as payment due. The problem lies in the time and resources consumed in the process.

Denial recovery rate

Measures the effectiveness of the appeal process: of the total denied, how much the hospital actually recovered.

Formula:

(Amount recovered through appeal / Total amount denied) x 100

A low recovery rate may point to flaws in the appeal process, missed deadlines or a lack of supporting documentation. A high rate, on the other hand, may mask a bigger problem: the denial should not have happened in the first place.

Average denial resolution time

Measures the time between identifying the denial and its final resolution, whether through payment after appeal or through the accounting write-off of the loss. It has a direct impact on the hospital’s cash flow.

Tracking this indicator by payer reveals important patterns: some payers have faster review processes; others extend the resolution time, which increases the financial cost of the denial for the provider.

Monitoring these indicators in a segmented way, by payer, type of denial and department, is the starting point for a consistent reduction.

7 strategies to reduce denials in hospitals and clinics

The following strategies act at two moments: before billing, preventing the denial; and afterward, increasing the recovery rate. The greatest impact comes from combining both fronts.

1. Standardize procedure coding

Standardization begins by mapping the procedures the institution performs most often and defining the corresponding TUSS codes, validated jointly by the medical team and the billing department. This alignment eliminates the room for interpretation that creates inconsistency between what was performed and what was billed.

This mapping should become a formal protocol, accessible to all billing specialists and updated with every change in the TUSS table or in the contracts. See the 2025 TUSS Table updates.

2. Implement concurrent audit

Concurrent audit is performed during the patient’s hospital stay, before the claim is closed. Its goal is to identify inconsistencies in the recording of procedures, materials and medications while they can still be corrected, without losing deadlines or documentation.

In practice, it reduces technical and clinical denials preventively, without relying on a later appeal.

3. Train billing teams continuously

Form-filling errors, the use of outdated codes and a lack of knowledge of each payer’s contractual rules are, to a large extent, training problems. A continuous training program for billing specialists, with special attention to updates in the TUSS and TISS tables and to each payer’s particularities, consistently reduces the incidence of administrative and technical denials.

Training should also reach the care team: physicians and nurses who correctly record and justify procedures contribute directly to the quality of billing documentation.

4. Automate pre‑billing checks

Manually checking complex claims is slow, prone to human error and hard to scale. Automation systems can verify, before the claim is submitted, whether the codes are correct, whether there is a valid authorization, whether the materials billed are in the contract and whether the clinical documentation is complete.

This pre-billing validation layer reduces the volume of denials in the payer’s first review and cuts rework for the billing team.

5. Strengthen the prior authorization process

Prior authorization must be treated as a mandatory step in the care workflow, not as a parallel administrative task. This means assigning clear owners for the request process, setting internal lead times and creating alerts for authorizations about to expire.

For elective procedures, the authorization workflow must be completed before the admission date. For emergencies, a specific protocol is needed to ensure the retroactive request is recorded immediately, within the deadlines set by the contract and by ANS (Brazil’s National Supplementary Health Agency) normative resolutions.

6. Structure denial appeals systematically

A denial appeal cannot depend on a billing specialist’s memory or occasional availability. It needs a defined process: filing deadline, an appeal template for each type of denial, standard supporting documentation and a record of every appeal opened and its outcome.

This historical record is strategic: it shows which payers repeatedly deny certain items, which types of denial have the highest reversal rate and where it is worth investing appeal effort. The article Denial appeals: how to control and recover amounts presents a step-by-step guide to structuring this process.

7. Monitor denial patterns by payer

Each payer has its own audit criteria, tables and behaviors. A recurring denial from payer A on a given procedure may indicate a specific contractual discrepancy, an unmet documentation requirement or an audit practice that needs to be discussed formally.

Monitoring by payer turns scattered data into management intelligence. With this mapping, the hospital can anticipate each payer’s requirements, adjust billing processes in a segmented way and prioritize the contract negotiations that most affect the revenue cycle.

Technical, clinical and administrative denials: different strategies for each type

Prevention strategies vary according to the origin of the denial. The table below summarizes the differences between the three types and points to the most effective preventive action for each one.

Clinical denials tend to be the hardest to reverse because they involve a judgment on the merits of the care provided, not just the correction of a data point. That is why prevention, through robust clinical documentation and concurrent audit, is more effective than a later appeal.

Administrative denials, on the other hand, have a high potential for reversal when the hospital keeps its contracts up to date and the billing team knows each payer’s specific rules. In many cases, presenting the relevant contract clause is enough to reverse the denial.

Technical denials are avoidable with standardization and reversible with documentary evidence. The greatest risk lies in their silent accumulation on lower-value claims, which go unappealed for lack of prioritization.

How AI helps prevent denials

The trajectory of denials in the Brazilian hospital sector shows that waiting to appeal after billing is an increasingly expensive strategy. The strategies in this article share one principle: shifting effort from correction to prevention. Standardizing coding, strengthening prior authorization, implementing concurrent audit and monitoring patterns by payer reduce denials at the source, without relying on a later appeal.

Rivio was founded to transform hospital management through artificial intelligence. In a landscape under growing pressure from costs, regulatory complexity and operational inefficiencies, we believe technology is the way to bring financial predictability, scale and intelligence back to healthcare’s administrative processes.

Our vision is clear: to build the best operating system for healthcare in Latin America, starting with the hospital revenue cycle. By automating analysis, reducing rework and supporting decisions with reliable data, we help hospitals operate more efficiently, free up their teams’ time and create the conditions to focus on what really matters: quality of care and the patient experience.

Frequently asked questions about reducing hospital claim denials

What is an acceptable denial rate for a hospital?

Historically, the market benchmark for Brazilian private hospitals was between 3% and 5% of initial denials over gross billing. That level has been consistently exceeded since 2022, which makes it increasingly important for each institution to set its own target, monitored by payer and by type of procedure, not just in aggregate.

How do you appeal a health plan denial?

The dispute process, called a denial appeal, must be filed within the deadlines set by the contract and accompanied by documentation proving the charge is correct: the code of the procedure performed, a valid authorization, a medical report or clinical justification, depending on the type of denial. A structured appeal process, with a record of each dispute and its outcome, increases the recovery rate.

What are the deadlines for a denial appeal?

Deadlines vary according to the contract between the hospital and each payer. In general, they range from 30 to 90 days from the denial notice.

How does concurrent audit help reduce denials?

Concurrent audit takes place during the patient’s hospital stay, before the claim is closed. It makes it possible to identify and correct inconsistencies in the recording of procedures, materials and medications while the patient is still admitted, when the documentation is accessible and the professionals involved can add information. This reduces technical and clinical denials preventively, without relying on a later appeal.