A Data-Driven Fix For Orthopedic Practices Losing To Claim Denials

Forbes

7 days ago

Sally Ragab, Founder & CEO @ Neunetix.
Ask any orthopedic group what keeps their CFO up at night, and one answer dominates: denied claims. National surveys show that orthopedics now sees 9% to 11% of all claims rejected. In dollar terms, a 12-surgeon group billing $85 million a year could watch $8 to $10 million slip away before a single appeal is filed.
In a recent article, I explored why the problem is worsening across healthcare. Building on this, a multisite analysis conducted by my company suggests that most leakage is preventable—and faster to plug than many administrators think.
What We Studied
Between April 2024 and March 2025, my company partnered with 12 independent orthopedic practices (across California, Texas, Florida and New York), which collectively submitted 1.26 million claims. We captured every rejection code, payer response time and downstream appeal outcome. Three findings stood out:
1. The overall claim denial rate dropped from 10.4% in the 12 months before the intervention to 6.7% during the six-month intervention period.
2. Preventable denials—such as those caused by missing claim modifiers or lapses in prior authorizations—fell from 64% to 28%.
3. Additionally, the average number of days that claims remained unpaid in accounts receivable decreased from 46 days to 38 days.
To achieve this, all practices followed the same three-step process, which I will outline below. There was no need to hire additional full-time staff or change their electronic health record systems.
Why Orthopedics Gets Hit Harder
1. High-Ticket Procedures: Hip- and knee-replacement bundles average between $30,000 and $32,000. One denial can wipe out the revenue from hundreds of physical therapy sessions—more than a year of visits for the average patient.
2. Modifier Complexity: Orthopedic procedures often involve complex coding and modifier usage, and many of the most frequently flagged CPT codes for CO-4 and PR-22 edits stem from this specialty—especially when modifiers are missing or missequenced.
3. Authorization Churn: Payers continue to ratchet up pre‑service checks. CMS now requires prior authorization for all hospital outpatient cervical spinal‑fusion procedures with disc removal, and insurance policies, like UnitedHealthcare's 2024 commercial policy, list every major arthroscopy CPT code as "prior authorization required." As a result, authorization‑related denials for outpatient claims jumped 16% in the past three years (registration required).
The Three-Step Denial-Prevention Playbook
Run a scrape and review electronic claims and payment files (known as ANSI 835/837 files) to identify which billing modifiers are most commonly linked to denials. In our cohort, simple left/right side coding errors (using -RT for right or -LT for left) accounted for 21% of preventable rejections. A one-hour meeting with the coding team to flag and prevent these errors led to a 2.3% point drop in the denial rate within just one month.
Add a simple yes/no binary check to the scheduling system so that surgeries can't be booked unless a valid prior authorization ID is included. Clinics that enforced this safeguard reduced their authorization-related denials from 3.7% to 0.9% in just 90 days.
A simple predictive model, trained on about 150,000 past claims, was used to flag new claims that were at high risk of denial. Only claims with a risk score of 0.70 or higher were sent to coders for review—everything else moved through automatically. This reduced the average coder workload by 41%, allowing staff to focus more on higher-value appeals.
Financial Impact
Across the 12 practices, net collections rose $6.4 million in the first six months—roughly $0.75 million per practice—while denial-related write-offs fell 52%. The average site reached cash-flow breakeven on the project in 51 days. Those numbers align with industry surveys, indicating that 65% of orthopedic denials are preventable and that 30% are never reworked at all.
Quick Wins Orthopedic Leaders Can Implement Today
As a summary, a focused audit of common billing modifier errors—followed by a short retraining session for coding staff—can lead to a 1.5 to 3 percentage-point drop in overall denials. This typically requires no more than two weeks.
Next, adding a mandatory prior authorization field to the surgical scheduling system ensures that procedures can't be booked without a valid authorization ID. Clinics that adopted this safeguard saw authorization-related denials fall by 1 to 2.5 percentage points, with rollout taking about 30 days, including staff training.
Finally, integrating a simple AI-based risk scoring tool into the claims submission process can further reduce denials by 2 to 4 percentage points. The tool should flag only the highest-risk claims for manual review, cutting coder workload by about 40% and letting teams focus on appeals and other high-value tasks. In my experience, most practices can launch this model within 60 days.
Collectively, these steps can push denial rates below the 7.66% improper payment benchmark CMS reports for 2024.
Why Act Now
• Payer scrutiny is rising. The "State of Claims 2024" report notes a steady climb in authorization-related denials across all specialties, with orthopedics singled out for high-cost implant cases.
• Providers feel the pinch. In Experian's 2024 survey, 73% said denials are rising and 67% said payments are taking longer to arrive.
• CMS audits are looming. Improper payment probes increasingly target spinal and total-joint bundles; denial records factor into audit risk scores.
The Bottom Line
Denied claims shouldn't simply be a cost of doing business—they're a solvable data problem. Our field data proves that taking steps like a disciplined five-day audit, a hard scheduling gate and a modest machine-learning layer can slash orthopedic denial rates by one-third and return millions to the bottom line within a quarter.
Your implants are cutting-edge—your denial-defense strategy should be too.
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