The Top 5 Reasons Claims Are Denied


The Top 5 Reasons Claims Are Denied

The revenue cycle management process in medical billing is complicated, and it can be difficult for organizations to understand why they aren’t seeing the results they’re expecting.

As we explore in our article Reverse Engineering Denials Management, denial management is the process of systematically investigating each denial, performing root cause analysis of why each claim was denied, analyzing denial trends, and redesigning or re-engineering the process to prevent or reduce the risk of future claim denials.

But in this article, we’ll be looking at one significant part of the denials management puzzle in more detail, the top five reasons why claims are denied in the first place.

Patient Eligibility

Generally this means that patient information was not gathered at preregistration, the information gathered at preregistration was inaccurate, or there were coverage changes during treatment.

To many different types of practices and organizations, patient eligibility may be a bit odd to list first. But at Medical Practice Success, we see again and again that eligibility is a huge issue for any type of Emergent Care or Urgent Care / Walk In care type facilities in particular.. So much so that it has brought this issue to the forefront of denials in general.

Denials that stem from eligibility often come from accurate patient information not being obtained at pre-registration or during registration. However, they can also stem from coverage changes as well. In either case, patient eligibility issues typically result in hard denials, which means regardless of your type of practice, they should be high on your list to look out for.

Missing or Incorrect Data

A catch-all for anything from missing information fields or incorrect plan codes all the way to technical errors like invalid data in the remittance advice information.

According to Rob Stucker, Senior Vice President at Experian Health, “These issues begin upstream from the claims process during registration or pre-registration when the patient information that’s collected is either inaccurate or incomplete. It may be as simple as a patient giving their name as Rob instead of Robert, or the registration staff selecting Medicaid as the payer, instead of Medicaid Managed Care. If the eligibility information is even slightly off, the claim will come back as denied.”

Duplicate or Late Submissions

Claims paid across more than one claim number for the same beneficiary, CPT/HCPCS code and service state by the same provider. Claims filed beyond the payer’s days of service window.

An important factor that these two issues have in common is they typically result from human error. In terms of duplicate billing, these often derive from an organization that does repeat services or bills more than once per visit. For late submissions, the issue is usually a lack of time to create, process and submit the claim within the filing deadline.

Improper or Outdated CPT or ICD-10 Codes

Either intentional or unintentional errors in coding.

Regardless of the reason, incorrect coding can not only cause valid claims to be under-compensated, delayed, or rejected and denied, they can also cause a backlog of paperwork for your staff that can lead to greater errors going forward. To that end, repeat errors in coding over time, particularly for upcoding, can result in penalties under the False Claims Act.

Missing or Incomplete Prior Authorization

Incomplete or insufficient clinical documentation submitted with prior authorization request.

Prior authorization is an area where a number of factors can affect success. In some cases, particularly for urgent and emergency care, it may not be possible to receive authorization before the treatment is administered. Sometimes only part of a treatment receives prior authorization. In other cases it can be an issue with data communication between the payer’s and the provider’s systems.

Build a Foundation to Reduce Claims Denials

Many organizations forgo thousands (to millions) of dollars annually in revenue through denied healthcare claims. These denials typically stem from a lack of strong denial management policies and procedures.

A great place to start on the path to improvement is brushing up on the top reasons claims are denied and identifying which are most critical to your organization. If you want to dig deeper into denials management, read our article Reverse Engineering Denials Management.

If you’d like to get started solving the root causes of your claims denials and building a Denial Prevention and Management strategy that protects and grows your revenue, reach out to Medical Practice Success today.

We understand the intricacies of financial processes in the healthcare industry, and we’re to provide revenue cycle management (RCM) solutions as a strategic partner.