how to reduce claim denials

How to Reduce Claim Denials

by Medical Billing

Claim denials are a significant source of frustration and financial strain for healthcare providers, highlighting the need for reliable medical billing services.

Recent analyses confirm that claim denials are steadily increasing

In December 2023, Fierce Healthcare reported on two analyses which found an increase in denial rates.

One study found that initial denial rates rose from 10.15% in 2020 to 11.2% in 2022, and to 11.99% by Q3 2023.

Denied claims mean delayed payments, increased administrative work, and potential revenue loss for your practice.

The good news is that there are proactive steps you can take to minimize claim denials and streamline your medical billing processes.

From ensuring accurate patient information to optimizing your coding and documentation, let’s explore some effective techniques that can get your claims paid faster and improve your overall financial performance.

Understand the Reason for Claim Denial

The first step to reducing denials is understanding why they occur. Here are the common reasons for claim denial:

  • Incorrect demographic information: Errors in patient name, subscriber/referral number, or date of birth can lead to denied claims.
  • Lapsed or terminated insurance coverage: Expired or withdrawn patient insurance can result in claim denials.
  • Diagnosis-procedure mismatch: Procedures not medically necessary per the diagnosis may be denied.
  • Incorrect coding: Using incorrect procedure or diagnosis codes.
  • Non-covered benefits: Claims for benefits not included in the patient’s policy will be denied.
  • Lack of prior authorization: Insurers often require prior authorization before services are rendered.
  • Missed filing deadlines: Claims filed after the stipulated timeframe will be denied.

Payers use specific claim adjustment reason codes (CARC), and understanding them is critical to know why the claim was denied.

For example, CO-4 indicates: “the procedure code is inconsistent with the modifier used or a required modifier is missing.

Resubmit the claim with the appropriate modifier for the procedure.” It’s crucial to stay updated on denial codes, insurer communications, and statements to identify why a claim was not paid.

Proactive Strategies to Manage Claim Denials

Analyze data to identify the source of the error: 

It’s essential to track denials by volume, type, payer, and reason to understand the trigger points by frequency.

Track details such as the percentage of claims denied on initial submission, the time lag between the date of denial received and the date the appeal was sent out, and the percentage and dollars of reworked claims that are paid and those that are written off.

This can help identify whether the denial was due to human error, workflow inefficiencies, technology, or data issues. Claims can also be rejected due to changes in payer policies.

Continuous monitoring and audits can identify the source of the errors so that they can be corrected quickly to prevent future denials.

Denial management:

Have proper denial management strategies in place. Maintain a log of denied claims to identify patterns and common issues.

Create a structured, organized workflow to manage each type of denial. It can speed up the handling of denial management.

For instance, all coding-related queries can be routed directly to medical coders for assessment and action.

As most payers have specific requirements and time limits for claims resubmission, it is important to keep these aspects in mind while resolving issues and resubmitting claims.

Depending on the payer’s rules, the rationale for payment may have to be submitted in writing.

Proper documentation of the service rendered, pertinent medical literature and sections from the CPT code book can be submitted to support resubmitted claims.

Appeal:

Develop a structured process for appealing denied claims promptly. There are three options to respond to a claim denial:

  • It is recommended to develop appeal letter templates for the most common denial reasons. Attach supporting documents such as operative reports and office notes to the appeal letter.
  • Respond to the payer’s request by supplying additional information or correcting invalid entries.
  • Bill the next responsible party, the second insurer or the patient or guarantor.

Optimize billing practices:

Submit claims promptly to avoid delays.

Establish a follow-up procedure for pending claims and overdue payments. Take proactive steps to prevent denials.

Ensure that all claims contain complete and accurate patient information.

Verify insurance coverage to confirm patient insurance details and coverage before the office visit.

This requires checking demographic information and insurance details.

Therefore, To ensure up-to-date information, patients should be asked about changes in coverage and other relevant details at each visit.

Regular audits and reviews:

Claims scrubbing or auditing is a crucial denial prevention strategy.

Audits can detect and eliminate coding and billing errors so that they can be addressed before they are submitted to the payer.

Therefore, Conduct regular internal audits to identify and correct common errors. Another option is to have a medical billing company provide an objective review of your claims processes.

Communicate with payers:

Stay updated on payer-specific guidelines and policies to avoid errors in claim submission.

For appealing claim denials, it is critical to know the payer contracts as well as the patient’s coverage-benefit plan design.

However, schedule regular meetings with payer representatives to address issues and stay informed about changes.

Leverage Big Data Analytics:

According to reports, hospitals are already using AI applications and big data analysis in the areas of insurance pre-certifications, denial prediction, and ICD-10 billing code verification.

Big data analytics can:

  • Simplify and improve accuracy in the medical billing process by identifying medically necessary and completed procedures.

Find data patterns such as causes of insurance claim rejections as well as strategies to follow.

  • Help reduce incorrect insurance claims filed and increase practice revenue.
  • Reduce medical errors and eliminate duplication of tests or procedures, leading to reduced claim rejections.
  • Additionally, data analytics can also help identify margins for ancillary services, help the provider make and execute better, data-driven decisions, and analyze which value-based contracts will yield the best returns.

Conclusion

  • Whether you’re a small private practice or a large healthcare organization, these tips can help you navigate the complex world of medical billing and maximize reimbursement for your services.
  • However, there’s much more to this challenging process of preventing denials.
  • Complex criteria and varying requirements in payer contracts complicate prevention even further.
  • Payers are also implementing advanced methods to identify inaccuracies and reject claims.
  • These challenges complicate the process of accurate claim submission for providers.
  • This is why partnering with expert billing professionals is strongly advised to win the battle against claims denials.
  • Partnering with an experienced medical billing company is the best option when it comes to claims management.
  • Their professional team stays up to date on payer rules to ensure accurate claim submission.
  • Therefore, With timely review of denial and audit data and ongoing communication with payers, an expert can help you minimize errors that lead to denials.

 

 

 

22

10 Common Reasons for Medical Claim Denials

by Prior Authorization

Dealing with medical claim denials can be frustrating for both patients and healthcare providers. Whether it’s due to a simple typo or complex insurance policies, denials can delay payments and disrupt workflows. But don’t worry—understanding the common reasons behind these denials and knowing how to prevent them can save you from the hassle.

Let’s dive into the top 10 reasons for medical claim denials and explore practical steps to prevent them.

1. Incorrect Patient Information 

One of the most common reasons for medical claim denials is incorrect or incomplete patient information. Even a small mistake, like a misspelled name or wrong insurance ID number, can lead to rejection.

Prevention:

  • Double-check patient details during registration.
  • Efficient denial management
  • Train staff to verify information accurately and confirm details with the patient.
  • Use automated systems to validate entries before submission.\

2. Coding Errors

Medical coding mistakes, such as incorrect diagnosis codes or mismatched procedure codes, can cause claims to be denied. Coding errors often happen due to lack of knowledge or oversight.

Prevention:

  • Hire certified medical coders and provide regular training.
  • Use advanced coding software to reduce manual errors.
  • Conduct regular audits to ensure coding accuracy.

3. Lack of Pre-Authorization

Certain medical procedures or treatments require prior authorization from the insurance company. Skipping this step can lead to automatic denial.

Prevention:

  • Create a checklist of services that require pre-authorization.
  • Train staff to handle pre-authorization requests promptly.
  • Follow up with insurance companies to confirm approvals before proceeding.

4. Non-Covered Services

Sometimes, a service may not be covered under the patient’s insurance plan, leading to a denial. This often happens with elective or out-of-network treatments.

Prevention:

  • Verify insurance coverage details before scheduling the service.
  • Inform patients about out-of-pocket costs for non-covered services upfront.

5. Missing Documentation

Insurance companies require detailed documentation to process claims. Missing or incomplete documents, like medical records or physician notes, can result in a denial.

Prevention:

  • Maintain thorough documentation for every patient encounter.
  • Review claims to ensure all required documents are attached.
  • Invest in electronic health record (EHR) systems to organize documentation efficiently.

 

6. Timely Filing Issues

Every insurance company has a filing deadline for claims. Submitting a claim after the deadline is a guaranteed way to get it denied.

Prevention:

  • Keep track of filing deadlines for each insurer.
  • Use billing software with built-in reminders for due dates.
  • Submit claims as soon as possible to avoid missing deadlines.

7. Duplicate Claims

Submitting the same claim multiple times can lead to confusion and denials. This often happens due to system errors or human mistakes.

Prevention:

  • Use billing software that flags duplicate entries.
  • Train staff to check the claim status before resubmitting.
  • Regularly audit claims to spot and correct duplicates.

8. Incorrect Insurance Information

Claims can be denied if the patient’s insurance details are outdated or invalid. This is especially common with patients who switch insurance plans without notifying the provider.

Prevention:

  • Verify insurance details at every visit.
  • Update records immediately if the patient’s insurance changes.
  • Use tools to validate active coverage in realtime.

9. Coordination of Benefits (COB) Issues

For patients with multiple insurance plans, claims can be denied if the coordination of benefits is unclear. This often happens when primary and secondary insurance details aren’t properly updated.

Prevention:

  • Verify COB information during patient registration.
  • Update insurance details regularly to reflect changes.
  • Work closely with insurers to resolve COB conflicts.

 

10. Medical Necessity Denials

Insurance companies may deny claims if they believe a treatment or procedure wasn’t medically necessary. This is often based on the insurer’s interpretation of medical guidelines.

Prevention:

  • Provide clear documentation that justifies the necessity of the treatment.
  • Stay updated on the insurance company’s medical necessity policies.
  • Appeal denials with additional supporting evidence, if needed.

Tips for Handling Denied Claims

Even with preventive measures in place, denials can still happen. Here are a few tips for managing them effectively:

  • Analyze the Denial: Understand the reason behind the denial and identify if it’s fixable.
  • Appeal Quickly: Submit an appeal with all the required documentation and corrections.
  • Educate Your Team: Regularly train your billing staff to minimize recurring issues.
  • Leverage Technology: Use billing software with denial management features to streamline the process.

Conclusion

Medical claim denials are frustrating, but they’re not inevitable. By understanding the reasons for medical claim denials and taking proactive steps, you can significantly reduce them and ensure smoother payment processes. Whether it’s improving data accuracy, staying on top of deadlines, or investing in better technology, every little effort adds up to big results. XyberMed offers robust medical billing assistance to help you prevent denial claims. Let the professionals handle the administration while you focus on important things like care.

Remember, prevention is always better than correction when it comes to medical billing! So, take the time to review your processes, fix the gaps, and stay ahead of the game.