Naomi ran Utilization Management at a hospital that had just seen a sharp spike in denials from one of its largest national payers, almost all tied to late inpatient notifications. Her team was following the same notification process they'd used for two years. What they didn't know was that the payer had updated its notification window as part of the latest contract renewal, and the contracting team that negotiated that change had never told UM about it. The denials weren't a clinical failure. They were a communication failure between two departments that had every reason to be talking regularly and weren't.
Naomi's team spent the next quarter appealing denials that a single conversation, months earlier, would have prevented entirely.
Why this gap costs more than it should
Utilization management and managed care contracting sit closer to each other operationally than almost any other two departments in a hospital, since UM lives inside the exact notification and medical necessity requirements that contracting negotiates. And yet these two teams often operate in near-total isolation from each other, each assuming the other has the information it needs.
The external problem is real: contract terms change regularly, payer policies shift even more often, and neither department has a natural, built-in reason to loop the other in on every update. But the internal problem is what actually drives the denial rate up. It's treating UM and contracting as separate functions with separate concerns, when a notification requirement or a medical necessity criterion is exactly the kind of detail that has to travel between them the moment it changes. Naomi's team wasn't undertrained. They were uninformed, through no fault of their own.
I sit on my organization's contract performance evaluation team alongside our UM executive counterpart specifically because this collaboration only works when it's structural, not occasional.
Five (5) ways to close the gap
Start with a shared, current understanding of contract terms. UM needs to know the specifics of medical necessity criteria and notification requirements for every active contract, and that's a two-way responsibility: contracting has to push that information out clearly, and UM has to flag questions or friction points as they come up, not after a denial pattern emerges.
Build joint training between the two teams. Shared sessions on industry standards, regulatory changes, and documentation best practices close the knowledge gap before it turns into a denial, and the learning should run in both directions, since UM often spots operational friction before contracting ever sees it in the numbers.
Design integrated workflows with real compliance checkpoints built in, so payer notification requirements and medical necessity documentation get captured consistently and leave a clear trail if a denial needs to be contested. Some payers deserve particular attention here. National payers with especially complex notification requirements are worth a dedicated process review on their own, since a generic workflow often isn't tight enough to catch their specific triggers.
Set a real communication cadence between UM and contracting, not an occasional one. Regular meetings, a shared platform for updates, and a fast path for flagging payer policy changes keep both teams current instead of finding out about a change after it's already cost money. Monthly, at minimum, with more frequent contact whenever something specific comes up, is what actually keeps pace with how often payer terms shift.
And review denial data together. A joint look at medical necessity and notification denials surfaces the trends and root causes that neither department sees clearly on its own, and that shared analysis is exactly what should inform documentation improvements, targeted training, and even renegotiation of contract terms that no longer match clinical reality.
What changes when the two teams actually operate as one
Skip this collaboration, and every payer policy change becomes a discovery process, usually made through a spike in denials rather than a heads-up before it ever became a problem, the way Naomi's team learned about that notification window change.
Naomi's organization built a monthly standing meeting between UM and contracting after that experience, with a shared tracker for any payer requirement change as soon as it surfaced. The next time that same national payer updated its notification terms, contracting flagged it in the tracker within a week, UM adjusted its process before the new terms took effect, and the denial rate for that payer dropped by more than half over the following two quarters.
Set a standing monthly meeting between your UM and contracting leadership if one doesn't already exist, and build a shared way to flag payer requirement changes the moment either team learns about them.
Denials for medical necessity and notification failures rarely start as clinical problems. Most of them start as information that never made it from one department to the other in time.
Call to Action: If closer collaboration between UM and contracting has reduced denials at your organization, tell me what worked in the comments. I'll reply to every one.
Send this to whoever leads Utilization Management or contracting at your organization, whichever one you're not.
About the Author: Kevin W. Barron, MBA, FHFMA, FACHE is a nationally recognized healthcare contracting and payer relations executive with over 30 years of experience in healthcare finance. He is an author, speaker, and mentor to emerging leaders in healthcare finance. Follow Kevin on LinkedIn or subscribe to his weekly newsletter at https://www.KevinWatsonBarron.com
Disclaimer: This article is provided for general informational and educational purposes only. It reflects my personal views and observations based on professional experience in healthcare finance, managed care, payer relations, and revenue cycle operations. It should not be interpreted as legal, financial, regulatory, actuarial, or reimbursement advice. The content is not intended to represent the official position of my employer, any payer, provider, professional association, or other organization with which I may be affiliated. Readers should consult their own legal, financial, compliance, actuarial, or operational advisors before making decisions based on the issues discussed. Any references to payers, providers, regulations, market trends, or reimbursement practices are intended for discussion and education only and should not be construed as a statement about any specific contract, negotiation, patient matter, or confidential business arrangement.