Claim denials in medical billing are quite common. They occur when insurance service providers or carriers refuse to pay the fee of professional healthcare services availed by a patient. Denials can be caused by a variety of factors and can adversely affect operational efficiency and practice revenue.
According to the American Health Information Management Association (AHIMA), between 2017 to 2022, claim denial rates increased by 20% averaging at 10% or more. In fact, reappealing denials can cost healthcare organizations up to $181, severely impacting your bottom line. And if that isn’t enough, hospitals have to bear annual losses worth $5 million, on average, because of unresolved claims.
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Claim denials in medical billing are quite common. They occur when insurance service providers or carriers refuse to pay the fee of professional healthcare services availed by a patient. Denials can be caused by a variety of factors and can adversely affect operational efficiency and practice revenue.
According to the American Health Information Management Association (AHIMA), between 2017 to 2022, claim denial rates increased by 20% averaging at 10% or more. In fact, reappealing denials can cost healthcare organizations up to $181, severely impacting your bottom line. And if that isn’t enough, hospitals have to bear annual losses worth $5 million, on average, because of unresolved claims.
Types of Denials in Medical Billing
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.
According to the American Medical Association’s National Insurer Report Card 2013, the following are the top five denials in medical billing.
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
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 effective revenue cycle management and so it becomes important to assess and manage the reasons behind denials.
Read on to learn different ways of handling common denials in medical billing.
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 the latest tools to track, measure and report trends so you can make data-driven decisions
- 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 determining 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 and auditing. Each of these are equally prone to error, which can result in claim denials. It is important carefully assess the data at every stage to reduce denials
- Optimize claim management solutions: Your claim management software should regularly update you with the clean claim rates. It will determine the efficiency 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. The good news is that it is possible to reduce your denial rate and streamline your revenue cycle.
Valerion Health brings decades of experience in effectively managing denials and other revenue cycle management solutions. Partner with us for tailored solutions that will help you create meaningful impact and drive business growth.
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