Insurance claim denials and rejections are one of the biggest challenges that affect the healthcare reimbursement tremendously. Every medical coder and biller should have adequate knowledge about the claim denials and rejections to ensure a proper reimbursement to the physicians. Too often the terms “claim rejection” and “claim denial” are used interchangeably in the billing world. This misunderstanding eventually leads to negative impact on the revenue cycle.
Let’s spend a little time on defining the terms and differences between a claim rejection and a claim denial.
What is a rejected claim?
Claim rejections are those claims that are rejected by the insurance due to errors found before the claim was processed or accepted by the payer. It is significant to note that rejected medical claims were never feed into their systems as the data requirements were not met. Therefore it is possible to resubmit the rejected claim after making necessary corrections into it within the specific payer timeline period.
Reasons for a rejected claim:
1. Invalid diagnosis codes.
2. Mismatched procedure and ICD codes.
3. Missing or invalid billing provider National provider identifier (NPI)
4. Missing or invalid payer ID.
Tips to avoid claim rejections:
Scrutinize your claims:
Typographical errors like missing digits or misspelled names quite often occurs in your job as you focus more on the productivity and other target complete assignments. If you spend a little more time to double check your claims, you can easily create a clean claim and avoid unnecessary rejections. This will certainly enhance your work flow process and also the reimbursement.
A proper communication will definitely eliminate the errors at the very initial stage itself. If you are uncertain about any protocols that are being followed in your team while handling the claims, it is better to get clarified rather than making any assumptions at your end. Also, make sure that you communicate regularly and effectively with other personnel in the provider’s office, including the physician to obtain correct and updated information.
Verify Patient coverage:
Make sure you have the correct insurance information to bill the claim by verifying eligibility of coverage at each visit.
Keep abreast of Insurance carrier requirements:
It is essential to update your knowledge with the new insurance requirements before submitting the claims. Lack of knowledge regarding the payer requirements would result in multiple claim rejections.
Preauthorization and Other Numbers:
Make sure that any authorization numbers, CLIA numbers or NDC numbers for medications, vaccines and injectable are submitted with the claim. These are easy to find through many helpful websites, as these numbers are required by the FDA.
What is a denied claim?
Denied claims are those claims that have been received and processed by the payer, but have been marked as “unpayable”. These “unpayable” claims may violate the terms of the payer-patient contract or may consist of significant errors that became flagged only after processing.
A denied claim can’t just be resubmitted. It must require an extensive research in order to determine why the claim was denied by the payer. After making necessary corrections, these claims can be appealed and sent back to the payer for further processing. If a denied claim is resubmitted without an appeal and not as a corrected claim, it will most likely be considered a duplicate claim and denied again.
Reasons for a denied claim:
- Insufficient information.
- Duplicate claims for service.
- Improper or out-dated CPT or ICD-10 codes.
- Non-covered services.
- Unbundling services.
- Modifier issues.
- Requirement of prior authorization.
Denial Management: four-step IMMP process
Working on denial claims require an extensive research which can be corrected, appealed and sent back to the payer for processing. As the appeal process can be time-consuming, expensive and requires a lot of resources, it would be better to develop a team specialised in handling the denied claims. By using the four-step IMMP process- Identify, Manage, Monitor and prevent, you can ensure the denied claims to get paid by the insurer.
The first step is to identify not only that a claim has been denied but also the reason for the denial. The insurer will indicate the reason for the denial using certain codes known as the claims adjustment reason codes (CARC).
Example of claim adjustment reason codes:
4 – The procedure code is inconsistent with the modifier used
5 – The procedure code/type of bill is inconsistent with the place of service
6 – The procedure/revenue code is inconsistent with the patient’s age.
7 – The procedure/revenue code is inconsistent with the patient’s gender
For full list you can check out the link:
Once the denial is identified, an action plan to resolve the denial must begin without any delay. The denied claims are sorted out and routed to appropriate resources, such as coding related denials are routed to coders to ensure that the denial process is conducted in a timely and efficient manner.
Monitoring constitutes an important element in the denial management process. To monitor the work of denial management, first, maintain a log of denials. This log should include the type of denial, date received, date appealed and disposition. Second, audit the work of employees by selecting a sample of their appeals. Third, make sure your employees have the tools, technology and resources to get the job done.
The final step is to launch a prevention campaign. For all the categories of denials, an extensive training is required to prevent the denial problems. For example, coding system used by the medical practices represented by CPT and ICD-10 codes gets updated every year. An efficient training regarding the code changes will help to avoid the use of obsolete codes in the claims.
Though the denial management process is complex, following the IMMP process will definitely bring better outcomes thereby improving internal processes and get paid for the service performed.
Medical claim rejections and denials can be the most significant challenge for a physician’s practice. However, educating yourself and availing proper trainings on the current updates will definitely avoid denials to a greater extent. Give a try for best results!
Happy learning! Happy coding!