Top 5 Reasons Why Claims Are Rejected

When a patient’s insurance claim is rejected, it can harm not just your cash flow but also your relationship with the patient. Even when an appeal is successful, certain claim denials can temporarily put the status of the claims in doubt, which is something that both your clinic and your patient would like to avoid by outsourcing revenue cycle management companies.

The key to preventing claim denials is understanding the common reasons for them. It’s crucial that you are aware of and make use of the software tools that the insurers your practice deals with may provide to assist you in preventing claim rejections (which are claims that aren’t processed because of clerical errors) and claim denials (where claims are considered but payment is denied).

5 Reasons For Claim Denials

Here are the top 5 reasons why claims are rejected, along with advice on how to prevent them.

5 Reasons For Claim Denials

1. Prior certification or authorization was necessary but was not obtained

Pre-certification (or pre-authorization, or whatever name the specific insurer uses) should never be neglected as it can cost your practice and your patient’s money and significantly lower patient satisfaction. It is crucial to understand which insurance and for what pre-authorization is required.

Your medical billing software may occasionally be able to help by highlighting specific procedures and insurance so you’ll know what to do. Furthermore, it is preferable to obtain pre-authorization for an operation before it is actually carried out rather than carrying it out and attempting to obtain retroactive authorization.

2. Patient Data or Diagnosis/Procedure Code Errors on Claim Forms

Simple clerical errors, such as a patient’s name being spelled incorrectly or numbers in an ID number being transposed, are frequently to blame for claim rejections, which typically don’t result in payment denials. Although these are fast remedies, the revenue cycle is lengthened as a result, therefore you should avoid them at all costs. Claims can be denied if the diagnostic and/or procedure codes are incorrect. Even though these cases frequently succeed on appeal, preventive is still preferable. There is no replacement for skilled coders and the usage of robust medical billing software.

3. Claim Was Made Past Insurance Company’s Deadline

Varying insurers have different dates for filing claims, and they also have different restrictions regarding what you can do if a deadline is missed. You can sometimes resolve issues over the phone, but in other situations, you might need to provide more documents.

Claim Was Made Past Insurance Company's Deadline

Your medical billing software could be able to alert you to deadlines for submitting claims and the steps to take if you miss one. However, in order to prevent your revenue cycle from slowing down, it’s generally ideal to submit claims as soon as possible after services are provided.

4. Insufficient Need for Medical Care

An insurance may refuse to cover a procedure if it deems it to be unnecessary from a medical standpoint. Although you might be able to prevent them, these circumstances can be challenging for everyone involved. Good communication between clinicians, medical billing personnel, insurers, and patients is crucial in any situation when medical necessity isn’t obvious so that everyone makes informed judgments.

Your business may be compelled to bear the cost of the services if a claim is rejected on the grounds of medical necessity or try to collect the full amount from the patient, neither of which are desirable options.

5. Using a provider outside of your network

Patients may not be aware that insurance networks can change from year to year or that switching insurance providers may alter the medical providers they can see and still receive their full benefits.

Your billing team can assess whether your practice is a part of a patient’s insurer network and, if not, what benefits (if any) the patient can expect, by getting information about the patient’s insurer as soon as possible (during appointment booking or registration). Once more, your medical billing software can help with this by informing you of the networks to which your clinic belongs.

Conclusion

Denied claims increase the time it takes to get compensated for your services, which is something nobody loves to deal with. Fortunately, there are numerous actions you may do to reduce the likelihood of this occurring. You can avoid claim denials and the hassles they cause by having excellent front desk workers, coding professionals, and team members, as well as by having excellent medical billing procedures in place.