Claim denials occur when insurance service providers or carriers refuse to pay the fee of professional healthcare services given to an individual. Denials can be caused by a variety of factors. Unfortunately, they are very common in medical billing practices. In addition to being frustrating, they adversely affect the operational efficiency and practice revenue of healthcare setups.
According to the American Health Information Management Association (AHIMA), claim denial rates have increased by 20% in the last five years averaging at 10% or more. In fact, reappealing denials can cost medical organizations up to $181, severely impacting their bottom line. And if that isn’t enough, hospitals have to bear $5 million worth in average annual losses pertaining to unresolved claims.
Fortunately, it is possible to manage claim denials. In this blog, we share reasons for top denials in medical billing and ways to handle them.
Top Denials in Medical Billing – The Most Common Reasons
Claim denials can be categorized as soft denials or hard denials. Soft denials result in irreversible losses and written off revenue, while hard denials are temporary and have the potential to be paid off by correcting the claim application.
Below, you’ll find the top 5 denials in medical billing according to the American Medical Association’s National Insurer Report Card 2013.
Missing Or Incomplete Details
Blank fields or missing information in claim forms are among the top denials in medical billing. Missing social security numbers, incorrect demographic/technical details like missing modifiers, or wrong plan codes are reasons for 61% of soft denials and 42% of claim write-offs.
Duplicate Bill Claims
The second most common reason for denials is bill resubmission by a single service provider, for the same service, availed by same beneficiary on the same date. Such errors lead to 32% of claim denials.
Pre-adjudicated services are one of the top denials in medical billing It means a specific service benefit can already be included in the payment for another adjudicated service leading to claim application rejection.
Uncovered Procedures & Benefits
The third most common reason of denial is the inclusion of procedures not covered under the current benefit plan. Such denials can be easily avoided by pre-checking eligibility with the insurer.
Overdue Claim Submission
Insurance claims must be submitted to insurance providers within the stipulated period. This includes the time frame needed to rework denials, whether automated (incorrect coding and other technical faults) or complex (uncovered bills or benefits).
Reappealing claim denials is a vital step of revenue cycle management which helps maintain a healthy cashflow. For this reason, it becomes important to assess and manage the reasons behind denials.
Read on to uncover some tips on handling claim denials.
How to Handle Denials in Medical Billing?
In some instances, healthcare setups do not have the money, time, or energy to recruit additional people for managing claim denials. In addition to finding errors in process/process inefficiencies, lenders must be able to track down the most common reasons for denials.
Below are all the steps that should be a part of any practical claim denial handling strategy.
- Count and categorize reasons: Study rejection trends and bifurcate them into departments, procedures, payers and doctors. Invest in technology and analytics to track, measure and report trends.
- Analyze trends and implement solutions: Analyze trends to identify, prioritize and manage reasons behind denials. Implement solutions that can rectify errors and report progress.
- Improve data capturing quality: Avoid errors while you capture patient data during initial registration. It can help minimize denials.
- Let go of assumptions: Do not depend on assumptions while ascertaining the true reason for denials. Thoroughly analyze the root cause by probing beyond generic, coding- related reasons.
- Adopt a denial management approach at all stages: The revenue cycle includes several stages, such as medical records, case management, coding, etc. Each of these are equally prone to error, which can result in claim denials. It is vital to scrutinize all these stages thoroughly for denial management.
- Optimize claim management solutions: Your claim management software should regularly update you with the clean claim rates. It will determine the efficacy of corrective actions for denial management. The software should also be able to flag possible denials so that you may address them before submission.
- Collaborate with payers: Claim appeals can often be overturned because of contractual restrictions. Integrating data analytics in processes can help identify such possibilities. Subsequently, you can collaborate with payers to uphold negotiations.
Denial rates are a direct reflection of all the profits you are losing out on.
At HelioNext, we understand that claim denial management demands a lot of dedicated focus, hardwork, time and resources. That’s why we’ve dedicated time and effort into building extensive experience in denial management and revenue cycle management. Partner with us to reduce the rate of insurance denials without affecting your steady cash flow.