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JotPsych Notes
JotPsych Notes

Two ways a payer says no

A denial happens before a payer pays a claim. A recoupment happens after, sometimes years later, and it can start from a handful of sample claims instead of the practice's real ones.

One demand, one denial rate: two practices, both real An extrapolated audit demand, before and after a written appeal 75% 25% Cut by the written appeal Still owed One practice, a full year of claims 534 claims submitted, one full year 99.4% paid outright (531 of 534) 0.6% denied outright (3 of 534) One practice's complete record; a small sample, shown as observed.
Left: one practice's audit demand, built from a sample of its claims and projected across a billing code, before and after the practice answered it in a 21-page written rebuttal. Right: the same practice's complete claims record for one year. Source: JotPsych market research interviews with practice owners, anonymized. A practice denied on 0.6 percent of its own claims still received a demand projected off a handful of them; a clean record does not exempt a practice from extrapolation, it just makes the demand easier to fight.

A denial and a recoupment feel like the same problem from a practice's side: money it expected and did not get. They start in different places. A denial happens before the payer pays: the claim goes out, the payer reviews it against its own rules, and it comes back refused. A recoupment happens after the payer already paid: the payer reopens a claim it settled, decides the payment was wrong, and pulls the money back out of a future payment. A denial shows up inside the normal claim cycle, 30 to 50 days after filing. A recoupment can show up years after that cycle closed.

Outright denials are less common than most practices assume. In the fullest single claims history available for this piece, one practice's complete record of 534 submitted claims, 3 came back denied: about 0.6%. A number that low is easy to read as safety. It is not, because a payer's review of a claim does not end on the day it pays.

A recoupment can start from a review of the practice's actual claims, one at a time. It can also start from a sample. A payer can extrapolate a finding: it pulls a small sample of a practice's claims, calculates an error rate inside that sample, then applies that same rate to every claim the practice billed under the matching code, and demands the difference back on all of them, including the ones it never reviewed. A finding against 10 sampled claims can turn into a bill covering a thousand.

One practice owner, facing exactly that kind of demand, did not simply contest the disputed notes. A rebuttal aimed at an extrapolated demand has to answer the sample and the math built on it, not only the individual claims, because the projection is what turned a handful of findings into a bill covering an entire billing code. The practice owner wrote one: 21 pages, built and mailed by hand.

The demand fell by roughly 75%. Nothing about the underlying claims changed between the original letter and the rebuttal. What changed was whether the sample and the projection built on it could stand up to a specific, written answer. The number printed on an extrapolated demand letter is the payer's opening position, not a bill.

The move when a letter like that arrives: read past the total. Find the sample size, the error rate calculated from it, and the code it was projected across, then answer each of those three numbers specifically, instead of re-arguing only the handful of claims the payer actually looked at. A rebuttal that defends the sample defends 10 claims. A rebuttal that challenges the projection defends all of them.

JotPsych tracks denials by code and payer, so a pattern shows up before it costs months of revenue.

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Sources: JotPsych market research interviews with practice owners, anonymized, including one practice's complete claims history (534 submitted claims, 3 denied) and one practice's written appeal of an extrapolated audit demand (21 pages, roughly a 75% reduction).