Denying Denials: Best Practices for Avoiding Claim Denials

March 4, 2021 by Antonio Arias, MBA, CHBME

Topics: Medical Billing, Revenue Cycle Management, Practice Management

insurance claim denials

The start of a new year is a wise time to revisit some of your practice’s most important metrics around financial health. Your practice’s health insurance denial rates are some of the most significant indicators of your medical billing success – but unfortunately, they are also one of the most difficult elements of your billing operation to improve. The only way to keep your practice afloat is to make sure your revenue stream stays steady. If you’re not paying close attention to your denial rate – and making headway toward improving it – you’re putting your practice at risk.

By following these best practices guidelines, you can avoid insurance claim denials and achieve your medical practice’s overall revenue potential. 

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What are Insurance Claim Denials?

The medical billing process is integral for practices to receive reimbursements from health insurance companies. When patients have insurance to pay for treatments, healthcare providers have to submit claims so they can be paid for their specific services from the insurance companies. While medical billing ensures that medical practices receive their due payments for treatments, it’s also a complex process.

If claims are missing information or filled out inaccurately, then they can be denied by the insurance companies. Insurance claim denials are frustrating to any medical practice; not only is the payment completely denied or delayed, but the time it takes for reimbursements can extend to weeks or longer. For the most timely and full reimbursements, medical practices must keep denials in medical billing as minimal as possible. 

What Could Cause an Insurance Claim Denial?

For strong revenue cycle management, medical practices should aim for a 95% clean claims rate. Any rate above a 5% claims rate is costing your business money and time. By maintaining a high clean claims rate, you can increase your medical practice’s efficiency and overall profitability.  

So, how can your practice avoid insurance claim denials and maintain a strong clean claims rate? Below are the top reasons for denials in medical billing; by staying on top of these procedures, you can better manage your denials. 

Lack of Coding Specificity

Especially in our now ICD-10-only landscape, claims that aren’t coded to the fullest level of specificity possible are ripe for denial by both public and private payers. That means that all identifiers and modifiers must be included on every claim, every time, covering concerns as granular as possible.

Billing Duplicate Claims

Even in well-organized operations, it’s surprisingly easy for practices to submit claims for the same encounter to the same payer more than once. It may happen when a team member resubmits a claim before hearing back from the insurance company on the initial submission, or fails to check on existing documentation as to whether the claim was submitted from the get-go. Either way, it’s an easy ticket to an unnecessary denial.

Inaccurate or Missing Information

If you’re not ‘scrubbing’ your claims prior to submittal – that is, using technology to auto-validate that all necessary information is included in the claim and was input properly – then you’re likely losing revenue. Use a practice management system with built-in eligibility checks and automated business rules to lessen the risk of error.

Lack of Documentation

In cases where a payer is unsure of the veracity or medical necessity of an encounter or procedure, they’ll request back-up intel that should always be available. Practices should be prepared to follow up on these denials with proper documentation, as they go commonly un-appealed but can be easily reimbursed on resubmission.

Upcoding or Undercoding

Whether accidental or deliberate, upcoding and undercoding are both illegal and can result in fines or criminal prosecution. While upcoding occurs when codes are entered into a patient’s bill for services that were not received to inflate the total amount owed to a provider, undercoding is when codes are left out of a patient’s bill. When this occurs accidentally, it’s usually the result of an internal team inexperienced or overwhelmed with the medical billing and coding process.

Timely Filing

Organizations often see unnecessary denials for failing to submit claims within the payer’s filing window. Why do practices wait? While reasons vary, the issue usually comes down to bandwidth and time: If your staff is stretched too thin, it’s impossible to address all of your front-office and back-office responsibilities in a timely manner. Contracting with a medical billing company is a smart way to keep filing deadlines from slipping past you.

Unverified Insurance

Insurance claim denials can be the byproduct of established patients updating their insurance without letting your practice know. Staff members may assume that regular patients have not had any changes to their insurance. However, if there have been changes to their insurance and no one checks their eligibility, then you will be headed straight for denials. Verifying your patient’s insurance at every visit can ensure there are no insurance-related issues during the billing process. 

Health Insurance Claim Denial Statistics You Should Know About

If there’s one metric most likely to drag down your medical practice’s income stream, it’s your claims denial rate. If you’re like most providers, you’re no stranger to the consequences. 

In 2019, about 17% of claims were denied by HealthCare.gov issuers in 2019  - up from 14% of claims denied in 2018. While a 95% clean claims rate is ideal, studies have found that approximately 35 percent of all claims have errors that need correction before they can be accepted and reimbursed by insurance companies. Additional research has found that between 50- 65 percent of all denied claims are never reworked - leaving that revenue and profit untouched. This delayed or lost reimbursement results in upwards of $20 billion per year in the U.S. alone. 

A claims denial rate below four percent should be the goal of every provider group – if only for the lessened administrative burden it places on your in-office office team. Dealing with appeals processes and resubmitting denied claims increases administrative costs while decreasing cash flow, which is a lose-lose situation for everyone involved (except the payer, of course). Every claim that is not paid on the first submittal wastes your practice’s valuable time and money. The total cost to submit, correct, and resubmit a claim can range anywhere between $31 - $124.50

If your practice has about 100 claims each month that require rework, then it could cost your practice anywhere between $30,000 to $37,000 annually. For hospitals, this cost is even higher. 

Keep your practice’s revenue lifeline pumping by protecting yourself against unnecessary denials. Working with a trusted medical billing service can not only lower the costs associated with your revenue cycle management process at large, but it can also keep the most common denial causes from happening at all.

Insurance Claim Denials Management Best Practices

insurance claim form

For optimal insurance denial management in medical billing, avoiding any of the reasons for common causes in denials is key. But, how can a busy medical practice keep up with medical billing? Try the following denial management tactics, then measure the results they reap at your practice.

Track Every Claim

No claims should ever get “lost” in your practice management system. If that’s happening to you, it’s imperative to implement a more comprehensive process for tracking where claims stand throughout the entire revenue cycle. 

In many cases, claims slip through the cracks because they’re not handled fast enough by the team at your practice. Make sure your coders are coding every encounter on the same day as the date-of-service (one day later, at most) then upgrade your technology to a system that scrubs, submits, and monitors claims with minimal employee effort.

Identify the Why In Your Insurance Claim Denials

Simply put, you can’t lower your denial rate if you lack an understanding of why your claims are being denied! Review all of your denial notices from a set period of time – say, three or six months – and log the associated reasons for the denial. 

The most common reasons for denials relate to registration (insurance verification, incorrect payer, cannot identify patient) or charge entry (invalid or incorrect procedure or diagnosis codes). The good thing about those kinds of denials is that they can be traced back to the party responsible. Look for patterns, then talk it out with the staff members who are repeat offenders.

Follow Up in Time

Only a small percentage of medical practices actually follow up on claim denials and resubmit them corrected or as appealed. If you’re not part of that subset, you’re saving payers money at your own expense! 

Most denials can be corrected and resubmitted within a given time frame, which varies from payer to payer. Find out what the window is for each of your major payers, and make sure it never slips past you. Better yet, create a window of your own – five to ten days – during which it is your billing team’s top priority to follow up on each and every denial and correct or appeal when appropriate.

Automate Eligibility Checking

Ineligibility accounts for a large percentage of denials and rejections for some medical practices, yet many practices still handle eligibility checks in an unstructured, unsophisticated way – heavy on last-minute calls to payers in advance of a patient appointment (or sometimes even after services have been rendered).

Neglecting eligibility checks or managing them in an outdated way is a disservice to your patients and practice. Investing in a low-cost software tool that can check eligibility in a pre-scheduled, automated fashion can lower a practice’s denials so much (and so easily) that it can pay for itself over the course of a year. Alternatively, outsourcing verification and other elements of the revenue cycle to a trusted medical billing service can eliminate unnecessary eligibility issues altogether.

Enhance Your Documentation Standards

Does your documentation lay the groundwork for streamlined claim submission later on? For many practices, the answer is no: Incomplete documentation and poorly managed documentation processes can create bottlenecks in the revenue cycle process.

Your coders should always have access to clear documentation to help them select the right codes for every encounter. Does your coding team have to consult multiple IT systems to acquire the right information? Are they often contacting your physicians or nurses for more information? As the year gets underway, make sure your clinical staff members are providing comprehensive information that clearly supports the right codes without demanding extra effort from your back-office team.

Revisit Your Processes for Remits & EOBs

How long does it take you to incorporate the information from remittance advice notices (aka ‘remits’) into your medical billing process? What about explanations of benefits – do you still rely on paper EOBs? How long do they linger on your billing team members’ desks before you reconcile them with your software?

You can’t work a denial until you know it’s there, and if you consistently allow for delays, you’re undoubtedly missing opportunities for timely resubmittals and follow-ups. Embrace electronic EOBs and streamline remit management so that you’re aware of every denial as soon as it happens and can eliminate the opportunity for human error from the process overall.

Reduce Your Health Insurance Denial Rates with NCG Medical!

With these insurance denial management best practices, your medical practice should experience the clean claims ratio you’re aiming for. By optimizing your billing processes, you can minimize insurance claim denials while  enhancing your revenue cycle management and profitability.

Partnering with an experienced billing services vendor for outsourcing your medical billing is often the best way to ensure your healthcare practice’s claims and collections processes are up to date and incorporating all best practices. With four decades of experience helping medical offices streamline their revenue cycle management and improve their clean claims ratios, NCG Medical has the knowledge and resources to implement customized solutions to drive your revenue goals. Contact us today to learn how to leverage our experience to transform your healthcare practice.

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