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How to Handle Medical Billing Claim Denials Effectively

July 8, 2013

Medicare Denials1Learning the basics of denial management is essential to running an effective practice. Practices that perform well generally have denial rates below 5%. Payers have increased the sophistication of their computer systems so they can define different payment algorithms which mimic the contract requirements. For some payers, it seems that the algorithm is skewed to effect denial whenever anything is unclear. In addition, most payers expect only a fraction of medical practices will follow up on claim and resubmit a corrected version. Clearly denying your claims saves payers money.

The basics of handling denials effectively are:

  • Counting the number of denied claims
  • Identifying the cause of the denial
  • Creating a tracking/reporting process to measure your performance over time

Tracking and reporting your denied claims means that you need to fully understand your billing management system. If you post your payments electronically, billing information should be immediately accessible. Identifying the primary denial reason is essential.

The most frequent reasons for denial are:

Registration Issues – These include Insurance Verification, Patient Information and Payor Information.

Charge Entry Validation – Examples are Invalid Procedure or Diagnosis Codes.

An extended list of denial reasons includes:

  • Referral and Pre-authorization Issues
  • Invalid Patient Information
  • Duplicate Information
  • Failure to Meet Medical Necessity Requirements
  • Missing Documentation
  • Bundled or Non-covered Issues
  • Failure to Meet Credentialing Requirements
  • Failure to file in a timely manner

Over time you may add additional denial categories.

Remediation of Denials

Develop a tracking/reporting system for use in ongoing analysis. Try to collect data that you can act upon in order to facilitate procedural improvements. For example if you have several office locations and one has significantly lower denial rates for invalid diagnosis codes than other locations, examine their process in order to improve performance at other locations.

Sometimes claims are denied because of timely filing rather than for an actual deficiency. Some filing must be made in 30 days while other claims having a filing period as long as two years. Here are some guidelines for filing claims on time:

Determine why timely filing did not occur. Some claims that were filed in a timely manner were never received by the insurance carrier. Other claims are denied for timely filing because there were mistakes in the paperwork causing delays. Even when claims are denied for timely filing reasons, you may still receive payment. Creating a practice procedure to ensure timely filing and follow up is the best way to receive payments more promptly.

It’s important to keep proof of your document submissions and changes. When you submit a claim electronically you can print a copy of the report to indicate resubmitted data. Claims denied for timely filing and never submitted in the permissible timeframe are more difficult to appeal. An appeal may be possible based on a valid reason for not submitting the claim.

Filing claims as quickly as possible is best practice. When you have good systems in place, you will be able to appeal medical billing claim denials effectively and will eventually get paid in most cases. M-Scribe Technologies offers you the opportunity to learn how to decrease denials. Take a look at their 12 Tips to Increase Practice Profitability by 30%. With excellent denials management in place, effective accounts receivable tips and collections reductions, you will be well on your way to creating a highly effective back room process for your practice.


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