There's a number most practice managers don't know — and when they find out, it's jarring. The average US healthcare practice loses $50,000 or more per year to unworked denials. Not to clinical write-offs. Not to contractual adjustments. To denied claims that were never followed up on.
Here's how it happens, why it's so hard to see, and what you can do about it this week.
How the $50,000 Adds Up
Let's run the math on a mid-size practice billing $1.5M per year:
Step 1: Calculate denied claims. Industry average denial rate: 8%. On $1.5M billed, that's $120,000 in denied claims per year.
Step 2: Factor in what's actually worked. Research consistently shows that 40–50% of denied claims in the average practice are never worked — they expire, get written off, or simply fall through the cracks of a manual follow-up process.
At 40% unworked: $120,000 × 40% = $48,000 written off annually.
Step 3: Account for rework costs on what IS worked. Each denial that gets worked costs approximately $25–$50 in staff time (identify, review, correct, resubmit, follow up). At 200 worked denials per month, that's another $5,000–$10,000/year in labor costs — on top of the write-offs.
Total annual impact: $55,000–$60,000. For a practice billing $1.5M, that's 3.5–4% of revenue — enough to cover a full-time employee's salary, or a significant equipment purchase.
Why Denials Go Unworked
The real culprit isn't laziness or incompetence. It's a system problem.
Volume overwhelm. A practice billing $1.5M might receive 1,200–1,500 claims per month. At an 8% denial rate, that's 96–120 denied claims monthly. Managing that manually — pulling each claim, identifying the CARC, finding the right fix, resubmitting — takes more hours than most billing teams have.
No prioritization system. When every denial looks the same in the queue, teams naturally work what's easiest or most recent. Small-dollar denials get systematically deprioritized until they expire.
CARC unfamiliarity. Many billing coordinators know the codes they see every day but struggle with less common CARCs. If they can't quickly identify the fix, the claim goes to the bottom of the pile.
No appeal tracking. Without a system to track appeal deadlines by payer, windows close before anyone notices. CARC 29 (timely filing) denials often appear because an earlier denial was never followed up on within the appeal window.
Payer complexity. Delta Dental has 39 independent companies. UnitedHealthcare has dozens of plan types with different rules. Each payer may have different timely filing windows, appeal processes, and documentation requirements for the same CARC code.
The Compounding Problem
Here's what makes unworked denials especially damaging: they compound.
A claim denied for CARC 16 (missing information) is recoverable — correct the error, resubmit, get paid. But if no one touches it for 90 days, that claim may now trigger CARC 29 (timely filing expired). Now it's genuinely unrecoverable.
The longer a denial sits, the more it decays. A 30-day-old denial with a 70% recovery rate becomes a 90-day-old denial with a 15% recovery rate. Waiting is literally destroying value every day.
5 Steps to Stop the Bleeding
These five actions will meaningfully reduce your unworked denial rate within 30 days.
Step 1: Know your true denial rate
Pull a report from your PM system: total claims submitted in the last 90 days vs. total claims denied. If your system can't produce this, escalate — you're flying blind. Most modern PM systems (Dentrix, Eaglesoft, Open Dental, Curve) have denial or claim status reports under the insurance module.
Once you have the number, segment it: by CARC code, by payer, and by date range. You're looking for patterns, not individual outliers.
Step 2: Establish a daily denial work queue
Denials should be assigned and worked daily, not weekly. A daily queue — even 30 minutes per morning — beats a weekly cleanup session every time. The claims are fresher, the clinical records are more accessible, and staff remember the context.
Sort the queue by: (1) claim age descending, (2) dollar amount descending. Work old, high-dollar first.
Step 3: Map your top 10 CARCs to their action type
Most practices see the same 10–15 CARC codes repeatedly. For each one, define:
- Is this recoverable? (Yes/No/Maybe)
- Who is responsible? (Billing, coding, front desk, clinician)
- What's the specific action? (Correct and resubmit / Appeal with documentation / Bill patient / Write off)
- What's the deadline? (Payer-specific timely filing or appeal window)
Post this as a reference sheet. When a biller sees CARC 16, they shouldn't have to think — they should have a pre-defined action.
Step 4: Track every appeal by payer deadline
Create a simple tracker — even a spreadsheet — with: Claim #, CARC, Appeal Deadline, Action Taken, Status. Review it every Monday. Any appeal within 14 days of its deadline gets escalated immediately.
This is tedious manually. But it's the difference between systematic recovery and reactive scrambling.
Step 5: Set a minimum dollar threshold for appeals
Not every denial is worth appealing. A $12 denial that takes 45 minutes to appeal is a net loss. Set a minimum appeal threshold (typically $50–$100) and batch-write off anything below it. Put your energy where it generates positive ROI.
For claims above threshold, document your appeal outcomes. Over time, you'll identify which CARC + payer combinations have the best recovery rate and which are consistently futile — this data drives smarter triage.
Automation Changes the Math
The practices that have solved the unworked denial problem at scale have one thing in common: they stopped trying to manage it manually.
Automated denial management tools can:
- Parse every ERA/835 automatically and categorize denials by CARC
- Prioritize the work queue by dollar amount, age, and recovery probability
- Surface the correct action for each denial type without requiring staff to look it up
- Track appeal deadlines across all payers simultaneously
- Flag claims approaching expiration before they become write-offs
The ROI is straightforward: if automation costs $500/month and recovers $5,000/month in previously unworked denials, it pays for itself 10x. The real question isn't whether to automate — it's which platform does it right.
That's what we're building at Arceum. Join the waitlist → to get early access.
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You don't need new software to start recovering more. You need a daily denial work habit, a CARC action map, and an appeal deadline tracker. Those three things, done consistently, will cut your unworked denial rate by 30–50% within 60 days.
The math is simple. The execution is the hard part.
Want to know what your specific denial backlog is costing you? Use our free calculator →