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Outsourcing denialsThe question is rarely all or nothing. It's which denials your team works well, which ones age past the deadline, and what each costs you to work.
Outsource denial work when denials age toward filing limits, when you can't keep staff who know your hardest payers, or when an outside fee costs less than your cost per worked denial. As of October 2026, the usual pattern keeps prevention, coding and payer contracting in-house and sends out a defined slice: a backlog, a payer or a denial class.
TSI (Transworld Systems Inc.) publishes it. TSI provides Accounts Receivable Management (ARM), Healthcare Revenue Cycle Management (RCM), CXBPO and Loan Servicing (via UAS). DebtNext, a TSI company, makes recovery management software for creditors. Some options this page describes compete with services TSI sells. Each figure names its publisher and date so you can check it yourself.
Denial work is mostly staff time, and it isn't cheap. Premier's survey of 280 hospitals put the average cost of fighting a denied claim at $57.23 for 2023 claims, up from $43.84 a year earlier (vendor-published). The American Hospital Association estimates hospitals spent nearly $18 billion on overturning claim denials in 2025 (AHA, March 2026, advocacy report).
The cost you don't see is the denial nobody works. When the queue outruns the team, low-value and short-deadline denials age out first, and they come back as write-offs.
| What you see | Lean toward | Why |
|---|---|---|
| Denials aging past half their appeal window | Outsource the backlog | A filing limit is a hard stop; appeal deadlines run as short as 60 days |
| Open denial specialist roles you can't fill | Outsource a payer or class | Adds trained people without a hiring cycle |
| One payer or denial class far worse than the rest | Carve out that class | A focused team can learn one payer's rules fast |
| High volume of small-dollar denials | Outsource on contingency | The fee scales with what's recovered, so small claims stay worth working |
| A few high-dollar clinical denials | Keep in-house, or pay per claim | A contingency fee on large claims can cost more than your own staff |
| Strong team, low backlog, falling denial rate | Keep in-house | Add software or analytics if anything |
| Model | What goes out | Good for | Watch for |
|---|---|---|---|
| Backlog cleanup | Aged denials up to a cutoff date | A one-time pile-up after a system change or staffing gap | Deadlines on the oldest claims; agree who owns a missed one |
| Carve-out by payer or class | One payer, or one denial type, ongoing | Testing a partner against your own team | Clean baseline and counting rules before start |
| Overflow | Volume above what your team can work each month | Seasonal spikes, vacancies | Rules for which claims overflow, so the vendor doesn't get only the worst |
| Full outsourcing | All denial follow-up | Smaller hospitals without a denial team | Keeping root-cause feedback flowing to your front end |
How to evaluate a healthcare RCM partner has the scorecard and contract terms for testing a partner.
Compare the fee on an average worked denial with your own cost per worked denial. Assume both teams overturn at the same rate.
| Item | Small claims | Large claims |
|---|---|---|
| Average payment if overturned | $400 | $1,500 |
| Overturn rate | 60% | 60% |
| Expected recovery per denial worked | $240 | $900 |
| Contingency fee at 20% (illustrative) | $48 | $180 |
| Your cost per denial worked (Premier average, 2023) | $57.23 | $57.23 |
| Cheaper option | Outsource | In-house |
On small claims, the fee is less than your cost per denial. On large claims, it's more, so those stay in-house or go to a per-claim price (TSI calculation on illustrative inputs). Use your own cost per denial; Premier's figure is an average across many hospitals.
If an outside team overturns more than yours, the line moves. That's why a carve-out test beats a spreadsheet. What a denied claim costs shows how to measure your own cost and break-even claim value.
Results vary by payer mix and client program.
Many denials start upstream. In Experian Health's 2025 survey, providers named missing or inaccurate data (50%), authorizations (35%) and patient registration data (32%) as top causes. Those fixes live in patient access, coding and documentation, which you run.
So whoever works the appeals has to feed causes back. Ask for denials tagged by department of origin, a monthly root-cause review and a record of which fixes cut volume.
A business associate agreement with the terms 45 CFR 164.504(e) requires, including breach reporting and return or destruction of records at exit.
Who owns a missed filing deadline, and how claims near their limit get handed over.
Read-only or worklist access to your systems, and who approves each appeal before it's sent.
Reporting by payer and denial class, on standard denial definitions.
TSI's denial management team takes a backlog, a payer, a denial class or all follow-up. Each denial is classified by payer, reason code, CPT and department of origin, appeals are worked under your business associate agreement, and root causes go to a monthly review with your revenue cycle leaders. Extended business office covers wider insurance follow-up.
Common models are a contingency fee on what's recovered, a per-claim fee or a staffing fee. Contingency suits high volumes of smaller claims; per-claim or staffing fees often suit fewer, larger clinical denials.
You keep control through the contract: which claims go out, who approves appeals, deadline ownership and reporting. Start with a carve-out so your team keeps working the rest.
Yes. A backlog cleanup with a fixed cutoff date is a common first step. Agree how the oldest claims near their filing limits are prioritized before the work starts.
Your own departments, with data from whoever works the appeals. The outside team should tag each denial's origin and bring patterns to a regular review.
General information, current as of Nov 5, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
The Denials Economics Sprint takes one payer and one denial class, sets a baseline and reports overturn rate, paid yield, cost per claim and the claim value where outsourcing pays.
