Claim denials are one of the most critical barriers to effective revenue cycle management. Claim denials not only necessitate additional time and resources for reprocessing but also reduce your practice’s cash flow. Medical insurance claim denial is one of the most disappointing things a medical billing manager can go through. Not only does it consume the time of the physician, administrator, and patient, but it can also be costly. Denials continue to be an issue for both physician practices and hospitals. Providers must collaborate closely with their in-house or outsourced medical billing and coding professionals to ensure correct documentation of patient information and timely filing of claims. This blog aims to target the most common reasons for medical claim denials to overcome them.
What Is A Denied Claim?
A denied claim has passed through the adjudication system—that is, it has been received and evaluated by the insurance company or third-party payer. However, the claim for services received from the healthcare professional has been considered unpayable. Payers will send you an EOB or Electronic Remittance Advice (ERA) describing why your claim was denied. Even if a payer denies a claim, it does not imply that the claim is invalid or that you cannot appeal it. Before submitting the claim, you must decide why it was denied and correct any errors.
Common Reasons For Claim Denials In Medical Billing
Claim denials are severe obstacles to receiving timely payments for your medical practice. Reworking claim denials means additional tasks for your office staff. Many factors contribute to claim denials in the healthcare management system. Denials are evident due to the complexity of the medical coding and billing system, whether the provider or payer is at fault. Recognizing the top causes of claim denials is the first step toward reducing claim denials.
The top reasons for claim denials in medical billing are listed below.
Filing claim on time
Even if a claim is correctly filled out, the insurer will deny it if submitted after the filing deadline.
Incorrect insurance identification number
Before the visit, confirm the patient’s insurance ID number to prevent the claim from being denied.
Non-covered services
In some cases, claims for uncovered processes such as cosmetic surgery, acupuncture, or chiropractic services are denied.
Not a medical necessity
The claim is denied if a medical service is considered unnecessary. This frequently occurs because the medical billing staff did not correctly document the provider’s medical diagnosis in the submitted claim.
Services inaccurately bundled
Medical procedures coded or billed together because a single provider performed them may lead to claim denial. Follow the medical billing regulations for bundled medical services.
Services that should have been bundled together have been charged separately (unbundling), or the code used is for a higher-paying service than the one conducted (upcoding). Either of these will result in the claim being denied.
Use of inaccurate modifiers
The use of inaccurate modifiers for services provided on the same day and separate days is a standard error in claim submissions. Modifier 25 is used for E/M services performed on the same day, whereas modifier 59 is used for services performed on different days.
Duplicate claim submission
Billing staff may accept a duplicate claim before the insurance company responds, or they may file a new claim instead of resolving the old one, resulting in claim denial.
Patient deductible
Failure to meet the patient’s deductible value is a common cause for claim denial.
Prior authorization not attached
Your practice’s medical billing staff may have neglected the requirement for preauthorization. This also leads to claim denials.
Typing errors in patient information
Typing errors in patient information can result in claim denials. For example, a patient’s name may be misspelt, or the date of birth may be incorrect.
Out-of-network (OON) provider
If the selected OON provider is the only one who can provide this service, make sure you have prior authorization before the medical service is rendered. Otherwise, it may lead to claim denials.
Strategies To Prevent Claim Denials
Even though most medical billing denials are avoidable, the problem still exists. According to Medical Economics, the factors causing the increase in claim denials are “a lack of denials resources, such as expertise to assist appeals and information for root cause analysis as well as staff losses and training, an increasing denials backlog, and legacy technology.”
Implementing a denials-prevention approach including the following elements can help lower the risk of claim denials:
- Understand various types of denials that your practice receives.
- Track denials and determine their source and root cause.
- Maintain a clean claim ratio.
- Prioritize medical billing and coding duties. Evaluate what corrective actions to take and where they will impact most.
- Choose comprehensive revenue cycle management software.
- Take advantage of advanced analytics and artificial intelligence.
Common Medical Claim Denials Codes
Let’s examine some standard claim denial codes, reasons, and actions. There are also suggestions for avoiding them in the first place and correcting them for resubmission.
CO 4: Inconsistent modifier or missing required modifier
A modifier is a two-character code that can be numeric or alpha-numeric. It’s used in conjunction with CPT codes to demonstrate that a specific service was executed differently. Despite this change, neither its code nor its definition has been modified. Prevent claim denial by guaranteeing that the modifier used is both required and code-compliant.
CO 11: Diagnosis Inconsistent with the procedure
To use the appropriate diagnosis code, the coder compares medical reports to the ICD-10 codes. The resulting diagnosis code is representative of the disease’s explanation. Check to see if payment has already been submitted and received for the identical diagnosis code and processed on the same service date (DOS).
CO 16: Inadequate service and claim information
If a claim contains missing or inaccurate information, this denial code is frequently accompanied by a remarks code. The remarks code will illustrate the specific information that is lacking and required to correct the claim.
Here are some examples of remarks codes:
MA27: This code deals with a claim that has a missing, invalid, or inadequate name or entitlement number.
N245: It encompasses insufficient or incorrect plan information for other insurance
MA112: This code is for insufficient, invalid, or missing group practice information
N286 is related to insufficient, invalid, or missing primary identifiers for referring providers.
CO 18: Duplicate Service or Claim
It occurs multiple times when a healthcare professional or billing team submits the same service or claim to the patient’s insurance company. The insurance company typically processes the initial claim while rejecting all successive claims.
CO 22: Care may be covered by another payer due to the coordination of benefits
COB rules define which payer is the primary, secondary, and so on for a specific patient with more than one insurance. The patient is responsible for keeping their insurance policy information up to date so that the appropriate payer order is described. To prevent the CO-22 denial code, ensure that the claim is submitted to the proper insurance in the correct sequence.
CO 29: The filing time limit has expired
Every insurance type and company establishes claim submission deadlines. If the claim is not received by that date, it will be constantly denied. An appeal can be made to the relevant insurance claims department if there is evidence that the claim was submitted by the filing deadline.
CO 50: Service that the payer does not consider medically necessary
The claim is denied when the procedure and diagnosis codes are incompatible according to local coverage determination (LCD) and national coverage determination (NCD) regulations. Some reasons why an insurance company might deny a claim with this denial code include, but are not restricted to:
- Physical therapy procedure that surpasses the insurance company’s limit.
- Prescription drugs are used for cosmetic purposes.
- Treatment provided by the hospital or provider could have been provided in a less costly setting.
The list above is only a small portion of insurance companies’ medical claims denial codes. As previously stated, many of these can be avoided simply by ensuring that the proper documentation is reviewed before submitting the claim. Others are the result of simple human error.
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