Are claim denials and rejections overwhelming you? Is your denial rate higher than the industry standard of 5-10%? If so, it’s time to take action and reduce your denial rate. To achieve this, healthcare organizations must proactively implement claims denial avoidance processes. Revenue integrity can be improved by accurately collecting and reporting patient and insurance information at the front end, before or at the point of service. Don’t wait for claim denials; take action now and build a strategy to prevent them.
Understanding Claim Denials in Healthcare
Healthcare providers face challenges with insurance claim denials, despite taking steps to prevent them. Managing denied claims can be frustrating for practitioners and their staff. It’s crucial to have a claim denial management strategy in place that recognizes, solves, recovers, and avoids denied claims. Delaying the resubmission of denied claims increases the risk of not receiving full or no payment.
When a claim is denied, it’s crucial to understand the reason and take prompt action to resolve it. This may involve appealing the decision, submitting additional documentation, or seeking assistance from patient advocacy resources or healthcare providers. First, understand the denied claims and the difference between denied and rejected claims.
What is a Denied Claim?
A denied claim refers to a claim that has been reviewed and processed by the payer but needs to be approved for payment. The denial can occur for several reasons, including incomplete or incorrect information, insufficient documentation, medical necessity, and policy limitations. Denied claims can significantly impact healthcare providers’ revenue cycle, affecting cash flow, revenue, and patient satisfaction. Managing and preventing denied claims requires a proactive approach to identifying, resolving, and avoiding potential denials.
Difference between Rejected and Denied Claims
Although used interchangeably, there is a difference between medical claim rejections and denials. A rejected claim refers to one or more errors that do not meet specific formatting, billing, coding criteria, or data requirements. The payer has not processed rejected claims due to formatting, billing, coding criteria, or data requirements errors. The claim is treated as not received and can be resubmitted once the mistakes are corrected.
On the other hand, denied claims have been processed by the payer but deemed unpayable. The denial results in lost or deferred revenue and payors send an Explanation of Benefits (EOB) or Electronic Remittance Advance (ERA) detailing why the claim was denied.
Understanding the difference between rejected and denied claims is essential in developing a successful claim denial management strategy.
Understanding Reasons for Claim Denials
Denials can be classified into two categories: hard denials and soft denials. Hard denials cannot be corrected and result in lost revenue, while soft denials can be reversed if the provider amends the claim or provides additional information.
Top Reasons for Claim Denials
According to the American Medical Association National Health Insurer Report Card, the top reasons for medical billing denials are:
Missing or Inaccurate Information
Leaving out crucial information on a claim form, such as patient demographic details, can result in denial. This accounts for over 40% of all claim denial write-offs.
Duplicate Claims
Submitting multiple claims for the same patient, provider, and service on the same service date can lead to denials. This is a prevalent reason for Medicare Part B claim denials.
Incorrect Coding
Coding errors, such as incorrect modifiers, plan codes, or no Social Security number, can lead to denial. These errors account for nearly 60% of all medical billing denials.
Non-Covered Services by the payor
It is essential to check the patient’s eligibility and benefits before providing services to avoid medical billing denials.
Limit for filing
Submitting medical claims within the required timeframe is crucial to avoid denials due to missed deadlines.
Lack of medical necessity
Claims can be denied if the payor does not deem the service or procedure medically necessary.
Coordination of Benefits issues
Claims can be denied due to issues with the Coordination of Benefits between multiple insurance providers.
Tips To Reduce Claim Denials And Rejections
Here are some tips to reduce claim denials and rejections
Set standards
Establish clear standards for your staff to follow and hold them accountable for preventing front-end denials. Encourage collaboration between front-end staff and medical billing teams to address patient demographics and insurance coverage errors. Hire competent staff members to capture accurate information before a patient’s visit. Implement a strict policy for timely claim submission and prompt resolution of rejections and denials. Set targets for staff to immediately act on denials, such as appealing or requesting reconsideration, within 48 hours.
Conduct Audit
Regular staff audits help identify common errors such as incorrect modifier applications or incomplete authorization entries. Chart audits should be conducted routinely to maintain quality documentation and data. Reporting monthly audit results is a proactive approach to cleaner claims and fewer payor denials. Eliminate recurring errors in the revenue cycle by assessing all charge processes.
Use Technology
Maximize your use of technology by investing in updated software or outsourcing to a third-party vendor to help prevent claim denials. By utilizing auditing software, you can automatically flag potential errors that may lead to claim denials, freeing resources to prioritize submitting cleaner claims.
Analyze Your Data
Use state-of-the-art analytical solutions to drill down into your system options and obtain detailed information on denial reasons, allowing you to identify the root cause of claim errors. Utilize your billing data to understand top denial reasons and communicate resolution strategies to staff. Hold management accountable for denial avoidance by setting monthly targets and implementing dashboards for review.
Review Clearinghouse Options
Evaluate different clearinghouse options to find solutions that reduce claim rejections and lead to quicker payment processing. Conduct research to identify quick fixes that can be implemented immediately to avoid further delays. Communicate payor updates to all staff through meetings, webinars, newsletters, and organizational notices. Utilize various communication channels and insurance liaisons to keep staff up-to-date.
Train and Educate
Establish a comprehensive training program to apply lessons and improve staff performance. Promote super users within departments to support new and existing staff with insurance and demographic questions. These individuals should possess robust departmental workflows, system knowledge, and comprehensive revenue cycle knowledge. Update workflows, policies, procedures, and processes for all staff to prevent reoccurrences of claim denials and rejections are resolved. Educate new and existing staff on resolving claim issues, conduct audits, and perform annual competency evaluations to enhance knowledge for resolving denials and rejections.
Verifying Eligibility Before Scheduling
Before scheduling any procedures or appointments, verifying the patient’s insurance eligibility and coverage is essential. This can help avoid any potential denials and allow you to inform the patient of their options beforehand. Insurance eligibility can be verified in advance without causing any delay for the patient. Obtaining all prior authorizations before the scheduled appointment is crucial to ensure a smooth claim review process.
However, it’s important to note that prior authorizations have a validity period, and confirming that the scheduled appointment falls within that timeframe is vital.
Be Proactive
Take a proactive approach to reduce denials and appeals by working with insurance companies to revise or eliminate contract requirements that can lead to these issues. Consider partnering with a third-party vendor to help lower denial rates if you do not have the resources to manage it. Waiting for denials or rejections to address errors will negatively impact cash flow, so a proactive denial avoidance strategy is crucial.
Identify the root causes of your highest denials and rejections immediately and resolve them promptly. Healthcare organizations should continuously pursue reimbursement for their services, and a proactive approach to cleaner claims will lead to higher and timelier claims reimbursement.
Final Thoughts
In today’s constantly evolving healthcare industry, providers face decreasing margins and must do more with less. Any mistake on claims can significantly impact this margin. Therefore, managing denials and taking corrective action can save time and keep your business afloat.
I-Med Claims is a top medical services provider specializing in revenue cycle management. Our expert team offers high-quality medical billing and denial management services at affordable rates. Contact our billing specialist today to learn more about how we can help improve your practice’s financial performance and ensure compliance.
