Health insurance claims are denied by payers for a number of reasons. Whatever be the reason for denial, when the money spent on healthcare is not reimbursed it becomes a major challenge. As any medical claim review company knows, insurers deny claims that are filed out erroneously and those which contain missing information. When a claim is denied, providers can submit a rebuttal or appeal to the insurance company. However, around 65 percent of all denials are not resubmitted, according to the Healthcare Financial Management Association. This is said to be a consequence of providers not having an organized process to effectively manage claim denials.
theranest.com, in one of their blog posts, categorizes the types of denials as follows.
- Hard Denial: This results mostly in written-off or lost revenue. Examples of this type of denial are “not a covered service,” “bundling,” “untimely filing,” and “no pre-authorization obtained.” These can be appealed, nevertheless.
- Soft Denial: This type is a temporary or interim denial – there is the potential to receive reimbursement if corrective action is taken. Denied due to erroneous or missing information, pending receipt of invoice, pending itemized bill, coding or charge issues, etc. are examples of this type of denial. Soft denials don’t need an appeal. You need to correct and submit the claim once again.
- Technical/Administrative Denial: The payer will request additional information, and provide remittance advice. E.g. request for itemized bills, medical records, and coding clarifications.
- Clinical Denial: This denial arises due to length of stay, question of medical necessity, or level of care. One example of clinical denial is where further clarification may be required.
Let us look at the most common reasons for health insurance denial:
- Patient information such as name, date of birth, etc. is wrongly entered
- Insurance coverage has been terminated
- No pre-authorization secured
- Service not covered under insurance
- Late filing after the service has been provided
- Lack of coding specificity/invalid ICD-10 and CPT codes
- Billing duplicate claims
- Required information missing
- Lack of documentation regarding medical necessity of a procedure or encounter
- Undercoding and upcoding – in the former case, codes are entered on the claim for services that were never provided. The latter is when relevant codes are left out of the medical bill.
How to reduce claim denials? Here are some best practices to consider.
- Find out Why the Claim was Denied: This is important to ensure maximized revenue collection, better patient satisfaction, and prevent future claim denials. It is best to review all denial notices for a fixed period of time and record the reasons for the denial. Typically, denials are due to the reasons discussed above.
- Keep Track of Every Denied Claim: It is important that no claim gets lost. Claims should be handled quickly and ensure that your medical coders are coding every encounter on the same day as the date-of-service.
- Follow up on Every Denial: Once a claim is denied, prepare a rebuttal, resubmit the claim corrected, or appeal the claim. Most denials can be corrected and resubmitted within a set time frame.
- Automate Eligibility Checking: A large percentage of denials occur from ineligibility for the service. Implement a reliable software tool that can check patient eligibility in a structured, sophisticated, pre-scheduled, automated way.
- Improve Documentation Standards: Poorly managed documentation processes can result in claim denials and delays. Ensure that your documentation is clear so that the coders can select the right codes for every encounter.
- Keep a Claims Denial Log: This will help spot early trends and taking the right action opportunely. The basic components of a claim denial log include the following:
- Service date
- Total amount claimed
- Correspondence from the insurer
- The medical code (s) which were denied
- Individual claim numbers
- Whether the claim was resubmitted, appealed, or charge adjusted
- File a Rebuttal or Appeal within a Week: Claims must be handled properly and an appeal resubmitted quickly, ideally within a week of receiving the denial.
- Understand Common Claims Denial Trends: Typically, claims being denied show a specific trend. Once the trend is identified, it becomes easier to set up an efficient system to prevent similar frequent denials. You can set up a task force to review and prioritize denial trends, and determine what resources may be required to implement the right solutions as well as to track and report progress.
- Measure and Categorize Claim Denials: This is to be done by tracking, measuring and reporting trends by provider, department, procedure and insurer. For this, the latest advanced technology and analytics can be employed.
- Develop a Denials Prevention Approach in all Phases of the Revenue Cycle: This approach should be there in patient accounting, medical records, coding, case management, contracting, patient access, compliance and so on.
- Use the best Reliable Claims Management Software: This will help ensure that everything is functioning, and up-to-date so that your claims are clean and error-free.
- Work Closely with Health Insurers: Build a rapport with the insurance companies you are dealing with. This will help ensure compliance and prevent denials and other unnecessary hassles. Identify any problematic areas and negotiate with the payers for the best results.
Healthcare providers will find the service of a medical claim review company very supportive in this regard to ensure clean claims, minimum denials, and maximum reimbursement. The claim review company can also help with rebuttal preparation in case of a denial. The above-mentioned best practices could help minimize claim denials and ensure increased patient satisfaction and improved revenue.