Finding it difficult to navigate the complicated landscape of dealing with denied claims? Healthcare providers and practices must be aware of the most prevalent scenarios of rejections and understand how to manage them properly. In this blog, we will discuss the top 10 scenarios for claim rejections and the most appropriate course of action to follow for denial management.
From qualification problems to coding errors, we will touch on the most common causes of claim rejections and provide actionable solutions to help facilitate timely, accurate reimbursement. This manual will give you the know-how and resources necessary to meet claim denials head-on and maximize your revenue cycle management. Let's get started and dispel the mystery of denial management!
#1 Claim Denial Due to Exceeded Filing Limit
If a claim is denied for exceeding the filing limit, medical billers need to take the following steps:
- Obtain the denial date, claim ID and call reference ID.
- Check the date on which the insurance company received the claim.
- If the claim has been filed within the filing limit, update it to the insurer and request them to reprocess the claim. Receive the claim number and time duration for reprocessing and calling back.
- If the claim is not filed within the filing limit, add suitable notes for the client to take action. However, if the claim was filed timely, we can appeal this claim or just mail the claim with proof of submission within the filing duration.
#2 Insurer Cannot Identify the Patient
If the insurer cannot identify the patient in the submitted claim, your medical billing team must implement these actions:
- Verify whether the claim has reached the right insurance company.
- Request for patient search with their address, name, date of birth, SSN and other details. If the patient is still not found, billers must look for any other available insurance information in their system. If that is found, they would check with the insurer whether the patient is eligible to be covered to file the claim.
- If the patient was found, fetch the correct insurance details like claim ID number, eligibility and the status of the date of service (DOS) in question.
- If these methods don't work, add appropriate notes for client action.
#3 Claim Denial Due to Medical Records
This means that the medical documentation provided does not support the claim. This can happen due to lack of medical necessity, incorrect or incomplete documentation, not obtaining prior authorization, and if the provider is out-of-network.
To address this, medical billers must take the following steps for denial management:
- Get the date of denial, claim ID number and call reference ID.
- Check the system to determine whether the medical records were sent previously.
- If they were not sent, the records must be submitted, the claim should be reprocessed and followed up after an appropriate date.
- In case the medical records were submitted, update the insurance company about it, reprocess the claim and follow up after a suitable date.
#4 Claim Denial for Pre-Existing Conditions
If the claim is denied for pre-existing conditions, it implies that the insurance company has determined that the medical condition or issue has existed before the insurance coverage officially began. Therefore, they have not accepted the claim.
In this case, medical billers must follow these steps:
- Obtain the denial date, claim ID number and call reference ID.
- If paid for the same code for an earlier Date of Service, update the insurance company and reprocess the claim.
- Verify whether the pre-existing questionnaire was sent to the provider or patient. If not, have the questionnaire filled in and send it to the insurer.
- Ask the representative for the waiting period. If the DOS falls within the waiting period, the claim rejection is valid. In case the DOS falls after the waiting period, reprocess the claim.
#5 Claim Denial Due to Non-Covered Service/ Procedure Not Payable
This indicates that according to the insurer, the rendered service is not included in the patient's insurance plan. The common reasons for that are no coverage for the service provided, lack of prior authorization, services considered to be investigational or experimental, policy exclusions, or the provider being out-of-network.
In these situations, the medical billing company should take the following action:
- Acquire the date of denial, claim ID and call reference number.
- Check the patient's insurance benefits and verify whether payment has already been made against the given code(s).
- If payment has been made, update the insurer about it and reprocess the claim. If the claim can be appealed, obtain the appeal address and repeat the above process. Else obtain the appropriate code for client action.
#6 Claim Rejection for Primary Explanation of Benefits (EOB)
It implies that the insurer has not processed the claim as they require the EOB from the primary insurance company. This usually takes place where more than one insurance policy is involved, for instance, when a patient has both primary and secondary insurance coverage.
In this case, the medical billing company must take these actions for denial management:
- Fetch the denial date, claim ID number and call reference ID.
- Check if the insurance is primary or secondary. If the patient has primary insurance, update the insurance and reprocess the claim, else get the refilling period and the correct address and resubmit the claim with the primary EOB.
#7 Claim Denial Due to Incorrect Modifier
If the insurance claim is rejected because the modifier is incorrect, medical billers must proceed with the listed steps:
- Obtain the claim ID, call reference ID and denial date.
- Verify the modifier details in the system and with the insurance company.
- If the information is correct, update the insurer on the same and reprocess the insurance claim. Otherwise, add the correct modifier and refile the claim or appeal it by getting the correct appeal address and follow up on the claim later.
#8 Claim Rejection Due to Lack of Prior Authorization
If the insurance claim is rejected because there was no prior authorization, medical billers can implement the following measures for denial management:
- Collect the date of denial, claim ID number and call reference ID.
- Verify authorization number in the system. If it is available, update the insurance company and ask them to reprocess the claim.
- Check with the representative whether they have any hospital claim on file for the same DOS, ask them to obtain the authorization ID from the claim and reprocess it.
- Check with the provider for pre-authorization.
- Obtain the turnaround time from the representative to reprocess the claim and follow up accordingly.
#9 Claim Denial Due to Inconsistent Diagnosis Code
This can happen due to data entry mistakes, coding errors, mismatch between diagnosis and procedure codes or if the code is invalid or outdated. To manage this situation, the medical billing team must take the action below:
- Look for the claim ID, denial date and call reference ID.
- If the claim is rejected incorrectly, update the insurer with the right details and reprocess the claim. Fetch the reprocessing time and follow up on a suitable date.
- If the claim is denied due to valid reasons, correct the information and obtain the mailing address and the time frame within which the claim must be reprocessed.
#10 Claim Rejected Because Maximum Benefits Are Met
This means that the patient has reached their insurance coverage limit for a specific service or treatment within a given period. In this scenario, billers must take these steps:
- Obtain the call reference ID, claim ID and date of denial.
- Check with the representative what the maximum dollar amount is, whether this value has been reached in the calendar year or if the total number of visits has been exhausted or not.
- In terms of dollar amount, ask the representative how much dollar amount is issued to the patient and the last date on which the benefit limit has been met.
- In terms of visits, ask the representative the number of visits allowed to the patient in a calendar year.
- Act accordingly, ie, either bill the patient or reprocess the claim.
Effectively managing claim rejections is important to maintain the financial health of healthcare providers. By understanding the top 10 scenarios of claim denials and executing the recommended follow-up steps, providers can majorly reduce the occurrence of rejections and improve their reimbursement rates. Proactive denial management helps ensure timely payments and increases overall operational efficiency. For that, it is a good idea to outsource denial and appeal management to a trusted medical billing company like RCM Workshop . This can help you lower denial rate, enhance patient satisfaction, save costs, focus better on patient care, improve cash flow, and reduce administrative burden.
Top 10 Scenarios of Claim Denials and Steps to Follow Up for Denial Management - RCM Workshop
