The process of medical billing is not easy, and a ton of work goes into submitting medical claims. You need to implement important pre-submission steps such as insurance eligibility verification, keeping patient information accurate and up to date, claim scrubbing, and finally sending it to the clearinghouse.
Also, let’s not forget about the post-submission steps that include, claim tracking and reaching out to the insurance companies to know the status of your medical claim.
With all these steps, the medical claim you submitted can still come back to you as a denial or rejection.
Frustrating right?
But, understanding the reasons behind claim rejections can help avoid them and ensure you are well compensated for the service you provide.
In this article, Unify Medicraft will explore the different types of medical claim rejections and provide you with valuable tips on how to avoid them. We will also cover all the common pitfalls that can lead to claim denials.
What are Claims Rejections?
Before we delve into all the other details, we need to first define the meaning of claim rejections. Many people believe claim rejections in medical billing are when a claim is denied. That’s simply not true because claim rejection comes from a clearinghouse or the payor due to incorrect or invalid information provided. It is then returned to the billing team for correction before sending it to the insurance payers.
Types of Rejection in Medical Billing
Hard Denials
A hard denial in medical billing is a claim rejection that cannot be easily reversed or overturned. But maybe appeal if the denial is caused by errors in documentation or coding. This type of denial often leads to a loss of reimbursement and revenue.
Examples of hard denials include the following :
- Medical claims for non-covered services
- Duplicate claims
- Coding error
- Claims submitted after the timely filing limit
- Clinical denials due to medical necessity or level of care
Soft Denials
Soft denial is one of the types of rejection in medical billing that can be reversed if the healthcare provider takes the right follow-up action. The reasons for soft denials can be due to administrative errors such as missing or incorrect information, outdated codes.
Preventable Denials
Preventable denials are hard denials that could have been avoided through better coding, pre-authorization, accurate documentation, and insurance verification.
Clinical Denials
Clinical denials are made by insurance companies or payers based on clinical reasons such as unnecessary medical treatment or it is not covered under the patient’s plan.
Common Reasons for Claims Rejection and Denial in Medical Billing
Incorrect or Missing Information on the Claim Form
One of the most common reasons for claims rejection in medical billing is simple mistakes made on the claim form such as missing or incorrect information. Insurance companies provide complex requirements and specific details in order to process claims accurately.
Missing information can happen in the form of the following :
- Incorrect diagnostic code
- Wrong date of birth
- Incorrect National Provider Identifier numbers
- Inaccurate insurance details
- Incorrect social security numbers
- Other technical error
Therefore, every form has to be carefully double-checked before it is sent to the insurance company to avoid missing or incorrect information. Furthermore, ensure your patient's records are up to date and always ask if they have made any recent changes to their information to avoid rejections in medical billing.
Errors in Billing and Coding
Coding and billing errors are very common occurrences in medical claims. Insurance companies use specific coding systems, such as ICD-10 for diagnoses and CPT when evaluating medical claims. If the code is wrong due to missing details or errors, the claim will not be processed and denied.
Here are some billing and coding errors :
- Missing codes
- Wrong codes
- Using the wrong coding system
- Under coding or over coding
- Not updated with the latest coding guidelines
It is important to be aware of the latest coding guidelines to ensure the correct medical codes are used on claims forms. Also, the billing team should be regularly trained to minimize errors.
Not Covered by Insurance
Insurance coverage is a very complex process that needs to be fully understood to avoid any rejection. There are treatments that are considered non-covered or are not in the patient’s insurance plan which can lead to denials if they are done by healthcare providers.
To avoid all this stress, it is important to talk to your patients about their insurance coverage. Administrative staff should cross check the insurance eligibility of the patient you are going to treat.
Prior Authorization and Referral Issues
There are some medical procedures and treatments that need pre-authorization and approval from insurance companies. Failure to get the necessary approval will result in claim denial.
To avoid this, healthcare providers must ensure that their billing team has in-depth knowledge of the requirement of pre-authorization. They should know the treatments that require pre-approval, obtain the necessary documentation and receive approval before rendering services.
Duplicate Billing
When you send a duplicate billing whether intentionally or accidentally, it leads to claim denials. So, cross-check every medical claim to identify and prevent duplicate claims.
Carrying out regular audits of billing records can help in ensuring there is no duplicate billing. Also, using advanced claim management processing tools that have the ability to review and detect duplicate billings is important.
Timeliness of Filing
Each insurance company has a required and specified time frame for the filing of medical claims. Failure to follow this regulation or submit a claim after the filling time elapsed will automatically lead to rejection. So, healthcare providers must ensure their medical billing team follows the required filing window.
Difference Between a Claim Denial and a Claim Rejection
Insurance claim denial and rejections are some of the biggest problems faced by healthcare providers which also affect their revenue cycle.
Medical claim rejections are caused by administrative errors that can often be corrected and resubmitted. Claim denial on the other hand is a more complex review process done by insurance companies.
It happens when insurance companies have processed your medical claim and determined it does not qualify for payment.
Common Types of Claim Denials
After learning about rejections in medical billing, it is time to talk about some common types of claim denials. Understanding these categories helps healthcare providers know why their medical claim is denied.
Medical claim denials can be divided into three types which include:
Clinical Denial
A clinical denial happens when the insurance company decide the services rendered by the healthcare provider are not medically necessary or appropriate.
Technical Denial
Technical denial is the denial of a medical claim because of a mistake or omission on the claim form. These include incorrect procedure codes or missing documentation.
Administrative Denial
Administrative denial is the rejection of a medical claim by an insurance company due to documentation or processing errors. These include patient insurance eligibility, pre-authorization issues, duplicate billing and many more.
What to do If a Claim Denial or Rejection Happens?
Here is a step-by-step process on what to do if your medical claim is denied or rejected.
Review the Claims
The first step to finding a solution is to understand why the claim was denied. Carefully review the claim you received from the insurance company to know the reason for the denial.
Make Necessary Correction
Once you know the reason for the claim denial, make necessary corrections and get any supporting documentation that may help overturn the decision. This can be additional medical records, test results, or documentation of the patient's progress.
Appeal the Denial
File an appeal to the insurance company to reconsider your rejected claim. It is important to also provide additional information such as recommended treatment plans and evidence to support them.
How to Improve Claim Rejections and Denial Rates?
- Verify patient insurance eligibility
- Collect accurate and complete patient information
- Educate your staff on how to have medical billing and denial
- Stay up to date with every trend and billing regulations
- Schedule routine audits on documentation quality to identify problems before claims are sent to the payer
- Use automated software to optimize claim management
- Perform predictive analysis to flag potential denials before claims are submitted.
- Submit the claim on time.
Frequently Asked Questions (FAQs)
What is the Most Common Rejection in Medical Billing?
- Medical billing and coding error
- Neglecting prior authorization
- Duplicate billing
- Timeliness of filing
- Inaccurate patient information
- Non-covered or excluded charges
How Does a Medical Billing Company Reduce Claim Denials?
- Accurate patient data entry
- Obtain necessary authorizations
- Conduct regular audits
- Continuous staff training on billing practices
What Are the Types of Denials in Medical Billing?
- Soft denials
- Hard denials
- Eligibility denials
- Preventable denials
- Clinical denials
Can I Resubmit a Rejected Claim?
Yes, you can resubmit a rejected claim, but you have to correct the error or provide any missing documents.
The Bottom Line
Medical claim denials and rejections are the most challenging problems for many healthcare providers because they have a negative impact on their revenue and the efficiency of their billing department.
Educate your medical billing department on how to properly interpret claims data and pay attention to every detail. Also, use the right billing software to prevent rejections and denials.
Are you experiencing denials and need help in resolving the issue? Unify Medicraft will get your practice back on track. Our software has proven to be effective, and we guarantee a revenue increase for our clients.