Strategies for Dealing with Denied Claims

Some of the most common reasons include:

• Missing Information – The claim is missing crucial information like diagnosis codes, procedure codes, patient or provider information, pre-authorization numbers, or details about other insurance coverage. This omitted information makes it impossible for insurers to process the claim.
• Incorrect Coding – The codes on the claim don’t accurately describe the patient’s condition, the procedures performed, or the services rendered. Errors can include typos, outdated codes, improper sequencing, unbundling, and upcoding.
• Coverage Limitations – The service billed is not covered under the patient’s policy or has exceeded coverage limits. This includes exclusions like non-covered services, conditions present before coverage began (pre-existing conditions), and benefits that have run out.
• Medical Necessity – The payer does not deem the procedures medically necessary based on the patient’s condition and policy guidelines. Most payers require pre-authorization for services like imaging, surgery, and high-cost procedures.
• Timely Filing Limit – The claim was submitted past the timely filing deadline set by the payer, which is usually 90-180 days from the date of service depending on state laws.
• Eligibility Issues – The patient was not eligible for coverage on the date of service due to termination of policy, non-payment of premiums, change in employment status, or other reasons.
• Bundling Guidelines – Services that should have been bundled together according to payer guidelines were billed separately. This makes it appear that duplicate or excessive services were provided.
• Reimbursement Rates – The payer’s fee schedule will only allow a certain dollar amount for the codes billed, which is lower than the amount charged. They deny payment above their allowed amount.

Having a strong foundational knowledge of the most frequent denial causes will help billing staff know how to resolve denials when they occur.

Some key denial prevention strategies include:

Verify Eligibility and Benefits Upfront

One of the best ways to avoid denials is confirming the patient’s eligibility for coverage and their benefits for the scheduled services at the time of appointment booking or preregistration. This allows any eligibility issues or non-covered services to be addressed before claims submission. Confirm a patient’s deductible amounts and visit limits have not been exceeded as well.

Obtain Precertification for Major Services

For surgeries, expensive tests, and other major services requiring preauthorization, obtain a precertification from the insurer as early as possible. This will reduce the likelihood of medical necessity denials. Keep the preauth number handy when submitting the claim.

Review Payer Policies and Updates Frequently

Insurer guidelines regarding covered codes, medical policies, and reimbursement rates can change frequently. By regularly checking payer websites and bulletins, billing staff can stay up to date on policies and modify procedures to ensure compliance. This helps avoid outdated or incorrect coding.

Provide Complete Documentation to Coders

Ensure coders have the full details they need, like procedure notes, test results, and diagnosis details, to assign comprehensive codes that accurately reflect each unique case. Incomplete documentation is a major cause of incorrect coding denials.

Audit Codes Before Submitting Claims

An extra review of codes for accuracy – checking medical necessity, bundling rules, sequencing, modifiers, units billed, and comparing to payer policies – can catch many coding errors before claims go out. This prevents denials upfront rather than appealing them after the fact.

Address Claim Edits During Billing

Many electronic billing software programs have built-in claim edits that alert staff if certain required elements are missing or potentially problematic codes are used. Resolve any edits before submitting the claim.

Meet Timely Filing Deadlines

Put tracking procedures in place to ensure all claims are submitted to payers within their specified timely filing periods. Verify claim receipt, and appeal claims initially rejected for timely filing issues. This avoids leaving money on the table.

Provide Billing and Coding Training

Keep billing staff and coders up to date on insurance guidelines, coding updates, regulations, and denial trends through regular training. This improves staff knowledge and helps minimize errors leading to denials.

An organized approach includes these best practices:

Designate Staff to Handle Denials

Rather than everyone addressing denials in a disjointed manner, assign certain staff members who will become specialists in denial management and take ownership of the process from start to finish. These denial coordinators gain expertise to work denials accurately and efficiently.

Categorize and Prioritize Denials

Group denials by reason, payer, dollar amount, or other logical categories. This allows staff to focus first on addressing high dollar claims and common, quick-to-reverse denials. Denials requiring more lengthy appeals can be worked less urgently.

Develop Appeal Templates

Creating denial reason-specific appeal templates staff can populate with claim details saves significant time. Essential appeal information and verbiage will be consistent and readily available in each template.

Gather All Documentation Early

Before beginning the appeals process, compile all documentation relevant to the denied claim such as previous claims, call logs, precerts, provider notes, coding details, and payer guidelines. This prevents delay later searching for necessary info.

Contact Payers for Guidance

If it is not obvious why a claim denied or the best way to appeal, call the payer directly for guidance from their experts. This insight can prove invaluable for efficiently resolving the denial accurately.

Appeal Initially, Don’t Resubmit Right Away

When claims deny incorrectly, appeal the original claim rather than immediately resubmitting a new one. Resubmitting resets the payer’s adjudication system, further delaying correct payment.

Meet Deadlines for Appeals and Reconsiderations

If appealing to multiple stages, keep track of strict payer time limits for each level of appeal. Submitting appeals late can cause them to be rejected and delay the process even more.

Submit Appeals Electronically When Possible

Electronic claim appeals are processed faster than those sent by mail. Utilizing payers’ online portals or clearinghouses’ electronic appeal functions equips staff to submit appeals quickly.

Track and Analyze Denial Data

Record denial reason details and gather metrics on volumes and trends over time. Analyzing this data reveals problem areas to focus on, identifies revenue opportunities, and helps measure denial prevention success.

Here are best practices for appealing some of the top denial categories:

Missing Information Denials

• Review the claim to identify what information is missing – common omissions include codes, ID numbers, and physician signatures
• Gather the missing details from coding resources, patient records, EHR system, etc.
• Resubmit a corrected new claim rather than an appeal

Incorrect Coding Denials

• Consult coding books, payer policies, the provider, and specialty coding groups to verify if the original codes were incorrect
• If incorrect, submit appeal with updated codes and clear documentation supporting new code choices

Coverage Limitation Denials

• Check benefits to confirm if policy exclusions, preexisting condition limits, or frequency caps apply
• Consider whether an exception is warranted based on medical need and justify with documentation
• Appeal to secondary and tertiary payers if necessary

Medical Necessity Denials

• Obtain letter of support from ordering provider explaining medical necessity
• Send relevant medical records, imaging results, lab tests, treatment history, and any other documentation proving necessity
• Appeal through all stages – external reviewers often overturn lack of medical necessity denials

Timely Filing Denials

• Reference payer timely filing policies – appeal if claim was initially submitted within their window
• Provide documentation showing original submission date falls within deadline
• Cite exception reasons like coordination of benefits delays or lack of insurance info from patient

Bundling Denials

• Review CMS and payer bundling rules to check if billing separately was incorrect
• If procedures and services should have been bundled, submit corrected claim
• If not, highlight relevant policies proving unbundling was appropriate in appeal letter

Eligibility or Benefit Denials

• Check eligibility records – contact payer to confirm status if uncertain
• Consider eligibility exceptions – some cases allow claims payment retroactively
• For non-covered services, have patient pay and suggest alternative treatments covered

Here is guidance on when and how to take it to the next level:

Payer Reconsiderations

Most health plans offer a process for reconsideration following the initial denial appeal.

Reasons to request reconsideration include:

• Claim was denied improperly based on paid claims history, obvious medical necessity, or clear policy misinterpretation
• Significant dollar amount makes further appeal worthwhile
• Initial appeal denial gave specific next step instructing reconsideration request

Reconsiderations may need to be reviewed by a medical director within the payer before determining to overturn or uphold the denial.

External Independent Reviews

For denials upheld after internal payer appeals are exhausted, involving an independent third party can potentially prompt payment.

Independent reviews are useful when:

• Denial hinges on medical necessity interpretation differences between provider and payer
• An objective specialist’s clinical perspective could influence the outcome
• State insurance department rulings have power to enforce claims payment

Independent reviewers have the authority to override payers’ denial decisions, so this option becomes very important after internal appeals fail.

Patient Advocacy and Assistance

Another avenue if facing difficulty resolving claim denials is engaging patient advocacy groups who can offer guidance and even legal assistance submitting appeals or registering complaints against payers. These groups have knowledge of insurer policies and regulatory processes to advise or intervene when denial disputes arise.

Some examples of software and systems that streamline processes include:

Automated Denial Tracking

Specialized software that automatically records denial details, categorizes them, creates appeal letters, and generates reports significantly cuts down on manual work.

Customizable Appeal Templates

Utilizing industry-specific templates personalized for the practice eliminates starting appeal letters and rebuttals from scratch every time.

Electronic Submission and Tracking

Online portals allow electronic claim submission and provide status updates that facilitate monitoring appeals progress and meeting filing limits.

Real-Time Eligibility Verification

Technology integrated with practice management or EHR systems checks patient coverage in real time to avoid claims rejections and easily resolves eligibility issues.

Code Auditing Software

Programs that automatically scrub claims for errors like outdated codes, improper sequencing, cloning, and bundling improves coding accuracy before submission.

Data Analytics

Robust reporting quantifies denial rates by reason, payer, provider, value, and other variables, arming staff to focus improvement initiatives effectively.

Some key strategies include:

Identify Trends and Target Problem Areas

Analytics highlighting spikes in certain denial types or sources signals where to dedicate focus on reducing those denials through training, policy review, and corrective action.

Update Payer Policy Knowledge Regularly

Staying current on changing payer requirements, preauthorization procedures, reimbursement rules, and covered codes minimizes related denials. Frequent staff training on policy updates is key.

Improve Internal Quality Control and Auditing

Stepped up auditing procedures on the front end such as internal claim audits and stronger coding validation processes promote accuracy and compliance, lowering denial rates.

Enhance Documentation Practices

Capture detailed clinical documentation that supports codes billed and provides a clear picture of medical necessity to avoid denials and prepare solid appeals.

Maintain Open Communication Across Departments

Foster collaboration between billing, clinical, and utilization management teams to ensure all have access to pertinent information impacting claims submission accuracy and denial prevention.