Let’s face it, receiving reimbursements is a critical component in keeping your medical practice up and running. You need these funds to pay staff, purchase supplies, and treat patients. For these reasons and more, it can be frustrating when a claim is rejected or denied. Unfortunately, 30% of claims are not paid the first time—they are either denied, lost, or ignored. Of those, 65% of denied claims, on average, are left unresolved by practices. It’s no wonder why private practices are struggling to keep their doors open.
To assist these practices to stop the internal bleeding, it is essential to understand how much these rejections and denials are affecting your practice.
What’s the difference between Rejection and Denial?
A claim rejection occurs prior to claim processing and is typically related to input errors or invalid data. A denied claim is processed by the payer and determined to be unpayable. In both instances, the payer will return a notification for the reason of rejection or denial.
What are most common reasons for rejections and denials?
Let’s start by running down a list of several well-known reasons claims get rejected.
The first step in reducing your practices rejections and denials is to understand where your practice denials are coming from. Creating a simple spreadsheet to categorize the denial/rejection reason over a period of time. For example, begin with a month to help you start with a more broad understanding.
The next step is to identify the top reason to determine the culprit of why this is occurring. Instead of looking at merely number of claims, it is important to add up the total charge amounts as well. You might have 100 claims denied for one reason with a total charge amount of $15,000 compared to a different denial reason comprising of 50 claims worth $50,000.
Once the main reasons are identified, create a proactive solution to mitigate future occurrences.
6 Tips to Help Reduce Claim Rejections
Once you have identified the top reasons, now review that with some tips below.
1. The process starts BEFORE the patient is even seen!
Ninety of preventable denials are the result of practices not focusing enough attention on the front-end revenue cycle process. This means the front desk plays an important role when each patient appointment is scheduled. That is a critical step to capture and or update insurance info when patients schedule their appointments.
2. Has anything changed?
This is a common intake question upon check-in. “Has anything changed?” If the patient writes NO, that gives a clear indication that the front desk doesn’t need to re-verify their insurance coverage. It is important that patient’s insurance coverage should be re-verified with EVERY appointment.
3. The amount of information collected
Often when the task of verifying insurance is needed to be complete, merely active or non-active is confirmed. All pertinent information should be verified, such as amount of deductible being met, what coverages are included, etc. Are pre-authorizations required? Verify the proper EDI payer ID when verifying coverage. Verify the services covered or any medical necessity LCD, NCD requirements. Are referrals needed?
4. File Claims Within 24 Hours
Avoid timely filing issues and file claims immediately. You may have to put a claim on hold to obtain correct billing information or ask the doctor about a code, but don’t forget about it. It’s also important that you work the claim rejections right away, as time is of the essence in both cases.
5. Have access to updated codes
Medical codes change very frequently, it is important to make sure you have access to all of the updated codes including ICD-10, HCPS, CPTS, Modifiers, POS, etc.
6. Insurance Participation
A Provider that is not participating with insurance may also cause your claim to be rejected. All your rendering providers need to be listed under the billing providers contracts to be processed in network. This could be verified prior to claim being filed.
Use of Technology: Good Billing/PM Software & Clearinghouse
Not all billing software is created equal. Look for these services and features that help automate and reduce errors in the claims process:
To assist these practices to stop the internal bleeding, it is essential to understand how much these rejections and denials are affecting your practice.
What’s the difference between Rejection and Denial?
A claim rejection occurs prior to claim processing and is typically related to input errors or invalid data. A denied claim is processed by the payer and determined to be unpayable. In both instances, the payer will return a notification for the reason of rejection or denial.
What are most common reasons for rejections and denials?
Let’s start by running down a list of several well-known reasons claims get rejected.
- Incorrect Patient Demographics - This can include using a nickname instead of the name on file with the insurance company, an incorrect date of birth, the wrong insurance ID, missing information, or submitting to the wrong insurance.
- Missing or Incorrect Information- We are all human and we all make mistakes. That is why it is important to double and triple check information on the claims. At times, a claim may be denied because it is missing information, such as a service code. However, it is also common for claims to be denied because the information was entered incorrectly. Such as a birth year of 1984 being entered as 1948 as an example.
- Incorrect Coding – Using the wrong CPT code, an ICD-10 code that does not match the CPT code, or the wrong modifier are all cause for a rejection.
- Incorrect Place of Service – Was the service performed in the office, at the hospital, inpatient or outpatient, emergency room or nursing home? Each place has a different two-digit code that must match the CPT code.
- Out of Date Information – Using patient information that is out of date or an old CPT or diagnosis code.
- Duplicate Claim – Submitting the same claim again whether by accident or on purpose.
- Eligibility - Patient is not eligible or has no insurance coverage.
- Prior Authorization Was Required- At times, a claim may be denied because prior authorization from the insurance company was required. In certain cases, procedures like MRIs and CT Scans are included on the pre-authorization list.
- Outdated Insurance Information- Claims can be denied due to outdated insurance information, such as sending the claim to the wrong insurance company.
- Claim Was Filed Too Late- Let’s face it, you are busy. It is not uncommon for items to slip through the cracks. However, when it comes to submitting claims, it is important to get them submitted in a timely manner. Most insurance companies have a window of time where they will accept claims. If you wait too long and miss the window, your claim is likely to be denied.
- Services Not Covered-When it comes to medical insurance, there can be exclusions. Many times patients are unsure of what their plan covers and will rely on your office to get these questions answered.
The first step in reducing your practices rejections and denials is to understand where your practice denials are coming from. Creating a simple spreadsheet to categorize the denial/rejection reason over a period of time. For example, begin with a month to help you start with a more broad understanding.
The next step is to identify the top reason to determine the culprit of why this is occurring. Instead of looking at merely number of claims, it is important to add up the total charge amounts as well. You might have 100 claims denied for one reason with a total charge amount of $15,000 compared to a different denial reason comprising of 50 claims worth $50,000.
Once the main reasons are identified, create a proactive solution to mitigate future occurrences.
6 Tips to Help Reduce Claim Rejections
Once you have identified the top reasons, now review that with some tips below.
1. The process starts BEFORE the patient is even seen!
Ninety of preventable denials are the result of practices not focusing enough attention on the front-end revenue cycle process. This means the front desk plays an important role when each patient appointment is scheduled. That is a critical step to capture and or update insurance info when patients schedule their appointments.
2. Has anything changed?
This is a common intake question upon check-in. “Has anything changed?” If the patient writes NO, that gives a clear indication that the front desk doesn’t need to re-verify their insurance coverage. It is important that patient’s insurance coverage should be re-verified with EVERY appointment.
3. The amount of information collected
Often when the task of verifying insurance is needed to be complete, merely active or non-active is confirmed. All pertinent information should be verified, such as amount of deductible being met, what coverages are included, etc. Are pre-authorizations required? Verify the proper EDI payer ID when verifying coverage. Verify the services covered or any medical necessity LCD, NCD requirements. Are referrals needed?
4. File Claims Within 24 Hours
Avoid timely filing issues and file claims immediately. You may have to put a claim on hold to obtain correct billing information or ask the doctor about a code, but don’t forget about it. It’s also important that you work the claim rejections right away, as time is of the essence in both cases.
5. Have access to updated codes
Medical codes change very frequently, it is important to make sure you have access to all of the updated codes including ICD-10, HCPS, CPTS, Modifiers, POS, etc.
6. Insurance Participation
A Provider that is not participating with insurance may also cause your claim to be rejected. All your rendering providers need to be listed under the billing providers contracts to be processed in network. This could be verified prior to claim being filed.
Use of Technology: Good Billing/PM Software & Clearinghouse
Not all billing software is created equal. Look for these services and features that help automate and reduce errors in the claims process:
- Electronic patient intake to reduce manual data entry and errors
- Integrated clearinghouse to automatically verify eligibility to reduce workload
- Claim scrubbing to eliminate errors before the clearinghouse
- Easy and quick eligibility checks within the software
- PM that has automatic clearinghouse updates with new payer guidelines
- EHR with automatic coding update
- Billing analytics to manage and improve insurance reimbursements
- Built-in EHR for streamlined integration between patient care and billing data
