Common Reasons for Insurance Claim Denials and How to Avoid Them
It can be a frustrating experience for everyone involved when a patient’s insurance claim is denied. In addition to being stressful for you and your patients, it can negatively impact the business cash flow too.
Although some claim denials can be successfully appealed, they can nonetheless temporarily leave claim status up in the air, which is undesirable for both your practice and your patients. In a CMS report published by the Kaiser Family Foundation, it was found that 18% of in-network claims were denied on average during the reporting period, though some plans reached as high as 80%. The key to preventing claim denials is understanding their common reasons. Depending on your practice’s insurer, you can use software tools to reduce claims rejections (which are denied because of clerical errors) and denials (in cases where claims are accepted but payment is not made). Taking advantage of these tools is essential for your practice. In this article, we will discuss how to avoid the top 5 reasons why claims are denied.
- Patient’s Insurance Eligibility Verification
Sometimes you may have been unaware that a patient was not eligible for the services you had previously rendered, and as a result, their insurance company denies your claim. Claims are frequently denied because a patient’s insurance does not cover the service you provide. These disputes may arise because the patient’s insurance policy has been updated or because the coverage has expired. This necessitates the need to confirm an individual’s insurance eligibility prior to providing service. As a provider, either you can suggest that the patient gets in touch with the insurer to check any recent policy changes, or you can invest in billing software like expEDIum, which promptly validates the patient’s eligibility real time based on the insurance details.
- Entering incorrect codes and other details
There is a chance that this situation can occur if you enter an incorrect place of service, modifiers, ICD, CPT, or HCPCS code. Compared to ICD-9 codes that were used in the past, ICD-10 codes today offer more detail and complexity. Therefore, in the event of a rejection, you might be able to appeal if you have the documentation to back up your codes. Also, if you consider EMR systems today, they can automatically suggest relevant ICD codes based on common diagnosis or treatment terms.
- Payer rejection
There are times when providers and billers neglect to check with the insurance company/payer whether the patient is eligible. Most EDI claim rejections are caused by incorrect patient information, which occurs because of skipping this step. As a result of failing eligibility verification, claims are rejected with descriptors such as insured or subscriber-entity contract number, entity not eligible for benefits for submitted dates, patient relationship with insured must be self-interested (Medicare and Medicaid), and subscriber ID not found/invalid. If claims are rejected due to issues related to subscribers’ eligibility, the biller must enter accurate data, verify insurance status, and obtain copies of documents like the patient’s insurance card and dates of eligibility. It is also possible that these rejections can occur due to lack of providing medical necessity document or missing prior authorizations.
- Lack of Coordination of Benefits (COB)
It is possible for some patients to have multiple insurance coverages. In most cases, a patient’s primary insurance pays the first claim, and then the secondary and tertiary insurances pay the remaining amount. The reasons why coordination of benefits is denied include the following:
- There is missing or incorrect Coordination of benefits (COB)
- An additional insurance policy is considered primary
- The member has not updated their additional insurance information
Coordination of benefits is essential to determine which payer is the primary, secondary, and tertiary insurance to avoid duplication of payments.
- Provider number issues
The denial of services and procedures is often caused by incorrectly entered data on a claim. It is essential that the staff knows how to enter the provider number in the correct box. A software-based alert system will prevent claims from being processed or denied if errors are detected, which will save time and money for providers. Here are some tips that will help you avoid denying claims due to provider number issues:
- In box 33, include the correct billing provider National Provider Identifier (NPI).
- In box 31/24J, include the correct rendering provider NPI.
- In box 32, make sure the facility details are valid.
At the end of the day, claim denials are something that is mostly unavoidable. What you can control, however, is how your medical practice and staff mitigate the issue by following our tips and advice listed above. Also, if you take into consideration a recent study conducted using our software, you can see how we were able to identify 76 denied claims out of 50000+ claims within a specific period of time. Among the most common errors, 43.42% accounted for entering incorrect codes and other details, while 27.63% for insurance eligibility verification.
Therefore, an excellent communication strategy between the office and patients, well-trained coding professionals and front desk staff, outstanding medical billing processes, and a robust, secure cloud-based software can all contribute to preventing claim denials and the problems that come along. If you have any questions about this blog or what we do, feel free to visit https://www.expedium.us/ or contact us here!