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Four Simple Steps to Reduce Medical Claim Denials

October 5, 2016

Medical Claim DenialsHow does your practice stack up when it comes to denials? The AMA has been tracking and publishing denial rates for the major carriers, and for most practice administrators, the numbers won’t be a surprise.

Take a look at the table below, which represents the average denial rates since 2008 (just the high-low range is listed):













United Healthcare




It’s obvious that these figures represent an enormous amount of lost revenue—not to mention staff time spent working denials after the fact in an often futile attempt to reduce these losses. 

Especially in an era where profitability rests on the slimmest margins, it’s important to have a plan in place to proactively prevent and reduce your denial rate. Here’s a four-step approach to get you started. 

1. Identify and correct common registration-related denials. 

This is the first place to look for the source of denials—and one of the easiest causes to correct. There are two places to start:

  • Are you verifying eligibility before patients are seen?
  • Are you determining that the services you provide are covered by the insurer?

This should be a routine part of the registration process for your front office staff. From there, data entry issues may be the culprit. An audit of denials will help you identify which registration errors are responsible for more denials so you can develop a plan to correct them. Be sure you’re using claim-scrubbing software to correct common data entry errors.

Related Article: Top 5 Medical Claim Denials in Medical Billing

2. Review your medical coding processes. 

The most common coding errors leading to denials are:

  • Missing or misused modifiers. 
  • Using the wrong procedure code (established versus new patient, inaccurate descriptors in the encounter form, for example).
  • Using outdated CPT codes. 
  • Mismatched procedure and diagnosis codes. 
  • Not coding to the highest level of specificity. 

If you’re billing in-house, consider an outside audit and consultation to identify your coding issues and educate both staff and providers on the documentation requirements to support your frequently used codes. 

3. Implement an authorization management system. 

We discussed the impact of prior authorization in a previous blog post, and offered steps to stay on top of the process. To recap, you can reduce your authorization denials by:

  • Delegating responsibility for authorizations to one or two employees who can develop “specialist”-level knowledge of the process. 
  • Adapting your EHR to capture demographic information and documentation (progress notes, lab results, etc.) that may be required to support a prior authorization request. Make sure your staff is clear about the authorization requirements for each payer. 
  • Using your practice management system to scour daily schedules in advance to identify those patients and/or services that require an authorization and alert schedulers and registration staff to follow through on authorization requirements. 

Monitor and track authorization denials so you can pinpoint the source of the problem and work with staff to correct any deficiencies. Pay special attention to any in-office services you provide that may require a prior authorization.

Related Article: Check the Financial Health of Your Medical Practice

4. Take a proactive approach to clinical documentation improvement (CDI) and medical necessity. 

Medical necessity denials are rapidly becoming one of the most intractable sources of denials, especially for specialty practices. Focus on the following processes to lower your exposure:

  • Embed CDI protocols at every step of the patient encounter, from registration to treatment and ultimately billing. Always seek to answer “why.”
  • Monitor NCDs and LCDs carefully. Harness the power of your EHR to alert you to special documentation and medical necessity requirements. 
  • Know your payer policies, especially in light of changes in processing guidelines under ICD-10. 
  • Track and monitor medical necessity denials and share information with clinicians as well as your coding and billing staff in order to improve compliance. 

Claim denials are more than just a source of frustration for your billing staff—they can be a significant damper on your cash flow. If your denial rates are on the high side, why not schedule a free consultation with the medical billing experts at M-Scribe? 



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