According to some sources, $262 billion in claims are originally denied each year. By resolving billing mistakes, 63% of the claims were receivable. However, such recoveries come at a cost of around $118 each claim, for a total of about $8.6 billion in administrative expenditures.
It's simple to understand how rejections cost a huge hospital system millions of dollars in missed income and a medical practice tens of thousands. This is a significant disturbance to the revenue cycle of any healthcare business. The good news is that most of that may be recovered or, better yet, prevented in the first place, rather than being written off.
When an insurance claim of a patient is denied, not only does your cash flow suffer, but your relationship with the patient suffers as well. Some claim denials can be successfully challenged, but even when they are successful, they might temporarily leave claim status up in the air, something both your clinic and your patient would want to avoid.
Understanding the most prevalent causes for claim denials is essential for avoiding them. The insurers with whom your practice works may provide software tools to assist you in preventing claim rejections (claims that are not processed owing to clerical errors) and claim denials (claims that are considered but payment is rejected), thus it is critical that you are aware of and use these resources. Here are the top five reasons why claims are refused, as well as how to avoid them.
Pre-certification was needed but could not obtained
Failure to get pre-certification (or pre-authorization, or whatever terminology the specific insurance uses) can cost your clinic and your patients money, as well as significantly reduce patient satisfaction. It is critical to understand which insurance demands pre-authorization and for what.
In certain circumstances, medical billing software might help by highlighting specific treatments and insurance so you know what to do. Furthermore, it is preferable to get pre-authorization for a surgery that will not be performed than to do the procedure and then seek retroactive authorisation for any of it.
Errors on Claim Forms: Patient information or Diagnosis / Procedural Codes
Claim rejections (which do not normally result in payment denials) are frequently the result of trivial clerical errors, such as the patient's name getting misspelt or numbers in an ID number being transposed. These are short cures, but they extend the revenue cycle, so avoid them at all costs. Claims might be denied if the diagnostic and/or procedure codes are incorrect. While these circumstances can frequently be successfully contested, prevention is always preferable. Coders that are well-trained and the usage of strong medical billing software are essential.
Claim was submitted after the insurer's deadline.
Different insurers have varied dates for submitting claims, and they have different regulations about what you may do if you miss a deadline. In some circumstances, a phone call may suffice, but in others, further papers will be required.
You might be able to utilise the medical billing software to remind you of deadlines regarding claim submission and the steps to follow if one is missed. In general, however, it is important to file claims as quickly as possible after services are delivered in order to keep your revenue cycle moving.
Inadequate Medical Necessity
An insurance may refuse to pay for a surgery that it deems is medically unnecessary. These can be terrible circumstances for all people involved, but they may be avoidable. In any scenario when medical necessity is unclear, effective communication among physicians, medical billing staff, insurers, and patients is critical to ensuring that everyone makes educated decisions.
When a claim gets denied because of medical necessity, your practise may be required to absorb the expense of the services or recover the complete payment from the patient, neither of which is an acceptable choice.
Utilization of an Out-of-Network Provider
Patients may be unaware that insurer networks vary from year to year, or that switching insurance carriers may affect which medical providers they might see and get full benefits from.
Obtaining patient insurer information as soon as possible (during appointment booking or registration) allows your billing team to establish whether your practice is part of an insurer network of the patient, and if not, what kind of benefits (if any) the patient may expect. Again, the medical billing software you have may help with this by informing you of which networks your practice is a member of.
Conclusion
Nobody enjoys having to go through denied claims, which lengthens the time it takes to receive compensated for services. Fortunately, there are several things you may do to reduce the likelihood of this occurring. Excellent communication with patients and insurers, as well as highly-trained coding professionals and front-desk employees, may all help you avoid claim denials and the problems that come with them.
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