The denial of an insurance claim can be a major headache for your practice, having a negative impact on cash flow and practice efficiency. According to the Medical Billing Advocates of America, across the healthcare industry 1 in 7 claims is denied, often for a variety of reasons ranging from technical errors to simple administrative mistakes.
Preventing denials before they leave your practice accelerates your revenue cycle and improves practice profitability. Dealing with an appeal process or denied claims increases administrative costs and decreases cash flow, while finding solutions to minimize denial rates can have a positive effect on a provider’s bottom line.
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Here are a few of the most common reasons why an insurance claim may be denied:
- Duplicate Claims
Healthcare Finance News found that one of the most frequent sources of a claim denial has nothing to do with medical conditions or policies, but instead is the result of administrative mishaps by providers. Often a front office employee may accidentally resubmit a claim before giving an insurance company enough time to respond, or resubmit a claim instead of following up on an existing instance. Having a well-established workflow for submitting insurance claims and a practice management solution with robust claims tracking and reporting capabilities can help to reduce denials and improve billing efficiency.
- Improper Coding or Issues with ICD-10
Although the latest iteration of coding language gives doctors and providers more precision when it comes to cataloging treatments, errors may still be common as physicians and billing staff continue to become more familiar with the latest guidelines.Investing in a modern PM solution with built in automated billing rules can flag potential coding issues before the claim is even submitted, helping to improve collections and reduce administrative costs. Embedded directly within your PM solution, the clinical coding knowledge base makes the billing process more efficient by notifying you of potential issues before the claim even leaves your system. Your staff can now process more claims, spend less time chasing down payments and get paid on the first attempt.
- Incorrect or Missing Patient Information
Many claim denials start at the front desk. Manual errors and patient data oversights such as missing or incorrect patient subscriber number, missing date of birth and insurance ineligibility can cause a claim to be denied. An easy-to-use PM system with built in eligibility checking streamlines the check-in process and reduces administrative mistakes, ensuring your claims goes out clean and your practice gets paid faster.
- Lack of Documentation to Support Necessity
In some cases, a claim maybe denied if the payer is unsure of the medical necessity of the encounter or procedure. In these instances, the payer may require additional documentation to support the level of service and determine medical necessity. Having an integrated EHR and PM platform that allows for easy and efficient charting ensures quick access to the documentation you need to support medical necessity and avoid claims denials.
Avoiding claims denials is not an easy task. But, a properly trained staff and a robust PM solution can make it easier to simplify the billing process and avoid costly coding and administrative errors that lead to most claim denials.
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Medical claim rejections and denials can stand in the way of reimbursements, and ultimately, practice revenue. Why do claims get rejected or denied? To know the answer is to appreciate the difference between rejections and denials. By understanding the most common reasons, you can learn to anticipate and take steps to avoid them.
What’s the difference between a rejected claim and a denied claim?
A claim rejection happens before a claim is processed, most often due to incorrect data. A denied claim, meanwhile, has been processed but found to be unpayable, possibly because of the terms of the patient-payer contract, or for other reasons detected during processing.
The Greenway Clearinghouse Services Portal processes more than 270,000 claims per day. Although nearly 98% of those claims are accepted by payers for adjudication at first pass, we’ve come across a wide range of rejection and denial reasons. These are the most common.
Rejection reason: duplicate claims
To avoid duplicate claims, always check the status of a claim before resending. Also, check ERA for previously posted claims, and verify the initial denial reason. You may submit an appeal for denied claims, providing documentation with a redetermination request, but do not resubmit claims while identical claims are still pending, or when a partial payment has been made. Also, avoid automatic rebilling.
Rejection and denials reason: eligibility
Greenway’s eligibility feature allows you to verify the patient’s information prior to the visit. Look out for these common rejection descriptions:
- Entity’s contract/member number
- Subscriber and subscriber ID not found
- Entity not eligible for benefits for submitted dates
- Patient relationship to the insured must be self [if using Medicare and Medicaid]
To avoid eligibility rejections or denials, ensure the patient provides accurate information before or during registration and scheduling, obtain copies of the patient’s insurance card, and try to avoid data entry errors. Also, verify dates of eligibility and benefit coverage, and obtain authorization when needed.
Rejection reason: payer ID missing or invalid
Check the payer ID. Is it missing or invalid? You can search our list of connected payers, which is also accessible through the Greenway Clearinghouse Services portal, for up-to-date payer IDs. Always make sure to use the correct payer ID for the type of claim — whether it’s institutional, professional, or dental. Also, include a secondary payer ID if necessary.
Rejection reason: billing provider National Provider Identifier [NPI] missing or invalid
First, be sure Greenway has the most up-to-date tax ID and provider information for your practice. Consider these common rejection descriptions:
- Submitter not approved for electronic claim submissions on behalf of this entity
- Entity's national provider identifier [NPI]
- Provider is not enrolled/approved for EDI claims with this payer
To avoid billing provider “missing or invalid” rejections, confirm the billing provider is credentialed with the payer or payers and enrolled with the clearinghouse to submit electronic claims. Confirm the correct group or individual NPI is credentialed, and make sure the correct tax ID is credentialed as well.
Rejection reason: diagnosis code
To get the most revenue per service, make sure you’re using the most updated codes and coding at the highest level per procedure. Codes must be as specific as possible. Common rejection descriptions include:
- Invalid or not effective on service date
- Invalid diagnosis code or principal diagnosis code
- Must be valid ICD-10-CM diagnosis code
To avoid rejections due to a missing or invalid diagnosis code, be sure to verify the diagnosis is active for the date of service. Also, make sure the diagnosis is consistent with procedure being performed.
Applying these suggestions, you can identify the most common reasons for claim rejections and denials, update your processes, and improve your clean claim rate.
“Denials and rejections have gone down, and the Claim Control option makes it so easy to stay on top of it.”
Carla Farrell, Billing Manager with Bridging Community with Health Care
Looking for further information?
Greenway Clearinghouse Services is the go-to clearinghouse for Greenway Health customers, providing a holistic view of claim and financial data to help them manage the full claim cycle.
Watch this webinar recording to learn how to identify and fix these common medical billing errors before submission.
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Denial management is an area of focus for Greenway Revenue Services, along with data analysis and outstanding A/R follow-up. Check out our Revenue Cycle Management page to learn more.
“I believe that our clean claim rate has drastically improved,” said Carla Farrell, Billing Manager with Bridging Community with Health Care. “Denials and rejections have gone down, and the Claim Control option makes it so easy to stay on top of it.”
For more information, CLICK HERE to schedule a conversation with a Greenway representative. Or watch our 3-minute overview video HERE.