Claim Denials Management in Medical Billing

how to prevent medical claim denials

Claim Denials in Medical Billing

  • Claim denials have been rising for the past years and insurance companies are continuously updating their policies, especially during the pandemic, causing some confusion to the medical billers, healthcare providers, and patients.
  • Most denial roots are seen in the front-end medical billing flow, particularly in patient registration and coverage verification.
  • 86% (52% situationally avoidable, 34% avoidable) of the denials are potentially avoidable while 14% are totally unavoidable
  • Of the 34% of the unequivocally avoidable denials, nearly 48% are unrecoverable.

The health industry is struggling as it already is in handling its operational costs, inflation rates, and let alone the impact of the pandemic in 2020. With the continuous demands on healthcare, the insurance companies are also continuously changing their policies to adapt to these changes which cause confusion to medical billers and patients. Updating policies can make claims submissions difficult, piling up the accounts receivable and in the worst-case scenarios, claims rejections and denials. Since the start of the pandemic, the medical claims denials have risen to 11% with cases, mostly seen in the Pacific Coast and in the North East; the areas in the US where Covid 19 had hit the hardest.

According to the research published by Change Healthcare (The Change Healthcare 2020 Revenue Cycle Index), the root of most denials has been the same for the past 8 years. These include 1). Registration and Eligibility 2). =[”Missing or Invalid Claim Data 3). Authorization and Pre-Certification 4). Service not covered and 5). A request for Medical Documentation.

medical claim management

Half of these denials are seen in the front-end revenue cycle issues. Front–end medical billing pertains to an encounter when the patient will walk into the office clinic or book an appointment or in other words, the non-emergency, pre-registered flow of the cycle. The administrative staff will facilitate the data collection and eligibility checking of the patient. The medical billers will see to it that all information is correct and verify this with the participating payers prior to the consultation. Any concerns about the patient’s insurance coverage should be laid out here, especially the copayments for the parts that are not covered by the insurance.

86% of these denials are potentially avoidable and nearly 48% of this is unfortunately unrecoverable already and will become a loss to the hospital and provider.

The Rise in Medical Claims Denials and How to Avoid Them

medical billing claims denial
how to prevent medical claim denials

Since most of the problems can be seen in the front-end revenue cycle, particularly in the registration and eligibility, mitigating these losses can be avoided by preventing them from happening in the first place. The Medical Group Management Association identifies the causes of these denials and recommends avoiding and coming up with solutions immediately once identified.

  1. Prior authorization not conducted. A claim may be denied if pre-authorization is not done or faulty.
  2. Incorrect patient Data. A claim may be denied if the information does not match with that of the insurance company or is lacking. Practice management software is intuitive nowadays and will alert a medical biller if a wrong demographic profile, medical billing codes, and procedural codes were placed.
  3. Medical necessity is not met. The need for medical intervention is covered by the insurance but in cases where it is proven that it is not, the former has the right to say “No”.
  4. Medical Procedure is not covered. This is something that should have been caught already in the pre-registration procedure and is one of the reasons why a medical biller needs to verify patient coverage prior to moving on to the next steps.
  5. The provider is out-of-network. A patient can easily avoid this since he is prescreened and most consultations are scheduled. The problem lies in cases of emergency where the patient cannot and does not know if the provider and hospital handling his care is within his network. This is an issue called Surprise Billing that puts a patient in the dark. Thankfully the No Surprise Act, a federal law, protects patients from this kind of situation.
  6. Duplicate Claims. A claim was submitted for the same patient, by the same provider and on the same day. This will double the payment of the insurance to the provider and being a business entity, they do not like that.
  7. Benefits coordination. This happens when a patient is covered by more than one health plan and can potentially cause delays. An update on his insurance status can be a solution to this.
  8. Bundling. This happens when two separate payable services are grouped into one for a smaller amount
  9. Filing time exceeded. This happens when claims are filed outside the payer’s required days of service; this should be factored into the time it takes to rework rejected claims.

Medical billers, coders, front desk managers, and medical assistants should establish a good relationship with one another and develop an effective system that they can work with. Cross-training of these staff members is a good idea so that everyone can have an idea as to what each and everyone does and can handle a problem themselves minimizing referrals to their coworkers. It can also instill a better understanding of when one’s mistake was made.

In other cases, there are times when a payer keeps on denying claims regardless of how efficient a medical billing team is. Talking to a denial representative can be a move on the medical billing’s part and discuss what could be done to avoid these continuous denials. Tracking these issues will not only streamline your billing processes and increase reimbursement but will also help you identify where you need to focus your staff training.

References: The Change Healthcare 2020 Revenue Cycle Denials Index | Strategies for avoiding common insurance denials (mgma.com) | Exploring the Fundamentals of Medical Billing and Coding (revcycleintelligence.com)

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