8 Revenue Cycle Management Healthcare Challenges and How to Fix Them
Most revenue cycle articles list the same challenges without telling you which ones share a root cause or which ones automation can resolve. This guide maps challenges to the stage of the revenue cycle where they begin, provides benchmarks to gauge severity, and separates the problems that require process and staffing fixes from those that technology solves.
Getting paid for the care your organization provides can still mean weeks of follow-up, rework, and delays.
Revenue cycle management challenges can create that extra work at almost any point in the process. A missed authorization, incomplete documentation, coding delay, denial, or underpayment can slow reimbursement and leave your teams with more follow-up and rework.
And the problem you see isn't always where it started. A denial at the back end may trace all the way back to an eligibility check, authorization, or clinical note.
This guide covers eight common challenges, where they start, the benchmarks that show how you're performing, and the fixes that can move those numbers.
TL;DR: 8 Revenue Cycle Management Healthcare Challenges
If you’re short on time, here are the eight challenges we cover in this guide:
Claim denials and rework costs
Prior authorization delays and CMS-0057-F deadlines
Coding accuracy and documentation gaps
Staffing shortages across coding and billing teams
Payer rule complexity and contract underpayments
Fragmented systems and missing analytics
Patient financial responsibility and collections
Regulatory compliance and audit exposure
The Three Stages of the Revenue Cycle and Where Revenue Leaks
Revenue can start slipping away well before your claim reaches a payer. To find the cause, it helps to look at your revenue cycle in three stages:
1. Front End: Patient Access
The front end covers what happens before and around the time your patient receives care. Your patient access, registration, and financial clearance teams typically handle scheduling, demographics, insurance eligibility, prior authorization, estimates, and pre-service collections.
A few revenue leak points tend to show up at this stage:
Wrong or outdated insurance information
Eligibility not verified before the visit
Missing or late prior authorizations
Copays and other patient balances not collected upfront
These issues don't always cost you revenue right away. A missed authorization, for example, may not show up until weeks later, when the payer denies your claim.
2. Mid-Cycle: Documentation, CDI, and Coding
The mid-cycle starts with the care you provide and continues as the clinical record is completed and coded. Your clinicians document the encounter, while HIM, CDI, coding, and revenue integrity teams make sure the documentation, codes, and charges accurately reflect the care provided.
At this stage, you can lose time and revenue when:
Documentation is incomplete or unclear
A billable service or charge is missed
Your coders have to wait for additional information
Coding backlogs keep encounters from moving forward
You may see these mid-revenue cycle pressures in longer coding turnaround times and more discharged-not-final-billed (DNFB) days. And if the documentation doesn't support the codes billed, the problem can follow the encounter further down the revenue cycle.
3. Back End: Claims and Collections
Once you submit a claim, there’s still plenty of work left to get the full amount you’re owed. At the back end, your teams have to post payments, follow up on unpaid claims, work denials and underpayments, and collect outstanding patient balances.
Here, you can lose revenue through:
Claims that aren't corrected or appealed
Missed timely filing deadlines
Payer underpayments that go unnoticed
Aging payer and patient A/R
Patient balances that remain uncollected
Here’s how the main functions and revenue leak points break down across the three stages:
Stage | Key Functions | Major Revenue Leak |
|---|---|---|
Front end | Scheduling, registration, eligibility verification, prior authorization | Missed prior authorizations |
Mid-cycle | Clinical documentation, CDI, coding, charge capture | Documentation gaps that don’t support the code billed |
Back end | Claim submission, denial management, payment follow-up, collections | Uncontested claim denials |
RCM Benchmarks That Reveal the Size of Your Problem
Your numbers tell you more when you have something to compare them against. Industry benchmarks give you that context, but the right targets will vary based on your organization, payer mix, and revenue cycle operations.
Here are a few example benchmarks you can use as a starting point and adjust based on your organization:
Metric | Benchmark | What a result outside the range may indicate |
|---|---|---|
Denial rate | 5-6% | A higher denial rate may point to recurring issues with eligibility, authorization, documentation, coding, or claim submission. |
Clean claim rate | 95% | A rate below 95% means more claims require intervention before they can move through the payment process. |
Days in A/R | 30-32 days | Higher A/R days signals delays in billing, payer processing, denial resolution, or follow-up on outstanding balances. |
Cost to collect | 2.5-4.5% | A higher percentage may indicate that manual work, rework, or inefficient processes are increasing the cost of collecting revenue. |
8 Revenue Cycle Management Healthcare Challenges and How to Fix Them
Once your benchmarks show where performance needs attention, the next step is to look at the workflows behind those numbers. That means checking where delays, errors, or extra manual work are occurring and addressing the process causing them.
Here are eight revenue cycle management healthcare challenges to look for and what you can do about them:
1. Claim Denials and Rework Costs
Denials take up a lot of your billing team's time. Each one has to be reviewed, corrected or appealed, resubmitted, and followed through to payment. That gets expensive quickly when the same denial reasons keep coming back.
A lot of those denials can be prevented earlier in the revenue cycle. Eligibility, prior authorization, documentation, and coding are all common trouble spots.
What to do: Start your denial-prevention efforts with the reasons you see most often, and find out what's causing them. If prior authorization keeps showing up, fix that process. If documentation is the problem, address it before the claim gets to billing. The fewer problems you send downstream, the less rework your billing team has to do.
2. Prior Authorization Delays and CMS-0057-F Deadlines
Prior authorization happens at the front end, when staff checks different payer requirements, gathers documentation, and follows up on pending prior authorization requests. Any delay can push back care and the revenue tied to it.
As per the 2026 guidelines, your team also needs to account for the response timelines established under CMS-0057-F for impacted payers. Expedited prior authorization requests generally need a decision within 72 hours and standard requests within seven calendar days. When a request is denied, your team should also receive a specific reason, which can help staff determine next steps.
What to do: Make authorization requirements easy for staff to find and standardize how requests are prepared and tracked. Automate status checks and follow-up where you can.
3. Coding Accuracy and Documentation Gaps
Missing detail in the clinical record creates more work for your coding team. Coders may have to query the clinician and wait for clarification before they can finish the record. When this happens frequently, more records remain unfinished and coding turnaround times can increase.
Documentation gaps can also lead to undercoding, and coding errors that make it onto the claim may come back as denials.
What to do: Review your query volume and the reasons behind it. Recurring queries can show you where documentation needs work and how coding connects to reimbursement problems you're already seeing. Autonomous coding can take on appropriate cases, giving your coders more time for records that need clarification or judgment.
4. Staffing Shortages Across Coding and Billing Teams
You may see these mid-revenue cycle pressures in longer coding turnaround times and higher DNFB days. And if the documentation doesn't support the codes billed, the problem can follow the encounter further down the revenue cycle.
Contract coders and overtime are common ways to cover the gap, but they can get expensive when you need extra capacity regularly.
What to do: Find the work taking up the most staff time. Routine coding and repetitive administrative tasks are good places to automate, leaving your team more time for complex cases and exceptions.
5. Payer Rule Complexity and Contract Underpayments
Keeping payer requirements in check can get difficult when you're dealing with multiple plans. A service that meets one payer's medical necessity or authorization requirements may need something different for another. And once a policy changes, your team needs to catch it before it starts affecting claims.
Underpayments are particularly easy to overlook because the claim has already been paid. The amount may still be lower than what your contract allows.
What to do: Prioritize the payer rules and contract variances that are costing you the most. Track recurring underpayments and rule-related denials by payer, then use that data to correct internal processes, recover missed reimbursement, or raise recurring issues during payer discussions.
6. Fragmented Systems and Missing Analytics
If your systems aren’t aligned, your team may have to check the EHR for one piece of information, the clearinghouse for another, and the billing system or payer portal for the rest. That takes time, and it makes it harder to figure out why a claim was delayed or denied.
The same problem shows up in reporting. If the data sits in separate systems, you may know denials are increasing without knowing what is causing them.
What to do: Bring the data together so you can break problems down by payer, denial reason, service line, and workflow. Your team needs enough detail to find the source of the problem and decide what needs to change.
7. Patient Financial Responsibility and Collections
Higher deductibles and out-of-pocket costs mean providers have more self-pay balances to collect. Those balances become harder to collect when patients aren't clear about what they may owe before receiving care.
An unclear or late estimate can leave the patient with an unexpected bill and your collections team with more work afterward.
What to do: Verify benefits early and provide a clear estimate when possible. Give patients payment information and options before care so they have a better idea of what to expect.
8. Regulatory Compliance and Audit Exposure
Revenue cycle teams have a growing list of requirements to keep up with. The No Surprises Act affects certain billing situations and patient protections; hospitals have price transparency requirements; and coding documentation needs to support the services billed.
The challenge is ensuring regulatory changes reach the teams and processes they affect. A new requirement may call for changes to patient notices, billing practices, pricing information, or internal procedures.
What to do: Assign clear ownership for monitoring these changes and translating them into specific workflow updates. Review affected processes when requirements change, train the teams involved, and periodically check that the updated process is being followed.
Why Most Revenue Cycle Challenges Trace Back to Documentation
Several of these revenue cycle problems can start with the clinical record.
Say the documentation is missing a detail the coder needs. The record may go back for a query, sit longer in the coding queue, or get coded without the specificity needed. If that issue reaches the claim, you could end up with a denial. Then billing has to work the denial, payment gets pushed out, and the account stays in A/R longer.
You can see the same pattern across the revenue cycle:
Documentation gaps can lead to coding queries, undercoding, and denials.
Missing clinical information can hold up prior authorization or make it harder to support medical necessity.
Coding problems can delay billing and create more work for your denial team.
Manual handoffs can make these issues harder to catch before the claim goes out.
You get more leverage by catching missing or unclear information earlier. Better documentation gives coding, authorization, and billing teams a stronger record to work from and reduces the problems they have to clean up later.
At DeliverHealth, we use healthcare-specific AI to address documentation and coding earlier in the process. InstaNote supports ambient and dictation workflows.
InstaCode supports AI-assisted and autonomous coding, using confidence-based routing to automate appropriate cases while sending others to human coders for review. A built-in audit system also keeps the coding process traceable.
Contact our team to see how we support documentation and coding across the mid-revenue cycle.
Which Revenue Cycle Challenges Automation Can Solve
Automation makes the most sense for work that is repetitive, rules-based, and high volume. Eligibility verification, authorization submission and monitoring, coding, claim preparation, and coordination across systems are good examples.
Other revenue cycle problems need a different fix. A broken authorization process won't improve just because one step is automated. Staffing shortages may improve when automation takes routine work off the queue, but complex cases still need experienced people. And payer contract disputes still need someone to review the terms and negotiate.
Here’s how automation can help address each of the eight challenges:
Challenge | Where Automation Can Help | Metric It Should Move |
|---|---|---|
Claim denials and rework | Automated claim checks and preparation | Denial rate |
Prior authorization delays | Automated authorization submission and status monitoring | Authorization turnaround time |
Coding and documentation gaps | AI-assisted documentation and coding | Coding turnaround time, query volume |
Staffing shortages | Automation of routine, high-volume work | DNFB, productivity |
Payer rule complexity and underpayments | Contract analytics and automated payment variance detection | Underpayment recovery |
Fragmented systems and analytics | Automated coordination across systems | A/R days, denial root-cause visibility |
Patient collections | Automated eligibility verification | Patient collection rate |
Compliance and audit exposure | Automated compliance checks and monitoring | Audit findings, coding accuracy |
How to Build the Business Case for Revenue Cycle Investment
Before you talk to a vendor, clarify what the problem costs you and what you expect the investment to change.
Start with these numbers:
Current denial rate: Look at how many claims are being denied and the revenue tied to them.
Rework hours: Estimate the staff time spent correcting claims, working denials, and handling appeals.
Cost to collect: See how much you're spending to collect revenue today and where manual work is adding to that cost.
Once you have your baseline, define the improvement you expect from the investment. For example, estimate how much revenue you could recover by reducing denials or how many staff hours you could save by automating manual work.
Then put a dollar value against those improvements and compare it with the full cost of the solution, including implementation and ongoing costs. This gives you a clearer view of the expected ROI and how long it could take to recover the investment.
From there, check whether the assumptions behind that ROI are realistic. Consider the expected workflow and productivity improvements, integration requirements, and how the investment will affect the teams doing the work. This gives you a more practical view of what the investment can actually deliver.
Frequently Asked Questions (FAQs)
Here are the questions revenue cycle leaders ask most often when they start scoping this work:
How Long Does It Take to Reduce A/R Days?
You may see improvement within a few months, depending on what's driving your A/R. Unworked claims and denial backlogs may improve faster once the workflow is fixed, while older balances, documentation issues, and payer delays can take longer.
Your A/R aging and root causes will give you the best sense of the timeline.
Should a Health System Outsource Revenue Cycle Management?
Outsourcing can make sense when you have persistent vacancies, need specialized expertise, or need more capacity quickly. Building internally may work better if you already have the right expertise and the bigger problem is process or technology.
You can also outsource specific functions, such as coding or denial follow-up, without outsourcing the entire revenue cycle.
Does CMS-0057-F Apply to All Payers?
No. CMS-0057-F covers Medicare Advantage organizations, state Medicaid and CHIP programs, Medicaid and CHIP managed care plans, and Qualified Health Plan issuers on federally facilitated exchanges.
However, QHP issuers on federally facilitated exchanges are excluded from the 72-hour and seven-calendar-day decision timeframes discussed above. It doesn't apply to every commercial payer, and its prior authorization provisions don't cover drugs.
Who Should Own Revenue Cycle Performance in a Health System?
Finance typically owns the financial results, HIM oversees areas such as coding and health information, and patient access handles front-end functions such as registration, eligibility, and authorization.
Each metric and workflow still needs a clear owner. Otherwise, cross-team problems can sit unresolved because no one is responsible for fixing them.
Can Small Practices Fix Revenue Cycle Problems Without New Software?
Yes. Small practices can often improve revenue cycle performance by tightening the processes they already have, such as verifying eligibility before visits, staying on top of prior authorizations, and working recurring denials and older A/R.
If workload is the issue, adjusting staff responsibilities or setting aside time for follow-up may be enough to make progress before investing in new software.
Conclusion
Revenue cycle improvement works best when you know exactly what you’re trying to fix. Look at where your teams are losing time, where manual work is piling up, and which workflows have the clearest opportunity for automation. From there, you can make more focused decisions about where technology belongs and where your teams still need to stay involved.
We at DeliverHealth help healthcare organizations address documentation and coding earlier with healthcare-specific AI. InstaNote supports ambient and dictation workflows and surfaces coding suggestions, while InstaCode uses confidence-based routing to automate appropriate cases and send others to human coders.
Explore InstaCode to see how DeliverHealth connects clinical documentation with AI-assisted and autonomous coding.
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