Overcoming Claim Rejections and Insurance Denials

Are your staff’s efforts overcoming claim rejections costing your practice money?

According to a recent study by the Medical Group Management Association (MGMA), reworking a rejection or denial claim averages a cost of $25. When you multiply that $25 by multiple claims every year and figure in another startling fact—that 50 to 65 percent of rejected claims are never reworked—there’s a significant possibility that your billing practices are leaving money on the table.

The good news is: strategies for overcoming claim rejections and insurance denials are readily available. With the help of two experts in the medical billing and practice revenue fields, you’ll learn why insurance company deny or reject claims. You’ll also learn about steps you can take to help increase your clean claims ratio.

You’ll be on your way to an improved revenue stream and more efficient billing practices in no time.

Common reasons for claim rejection and denial

Needing to overcome claim rejections and insurance denials often begins at a practice’s administrative level. Errors in submission, coding, and verification lead to many avoidable claim challenges.

To get to the root of why insurance companies typically reject and deny claims, our two experts weigh in below. Madeline Silva, CEO of Freedom Switch, a firm specializing in strategies that help physicians improve their collection rates; and Nancy Rowe, CEO of Practice Provider, a revenue cycle management, consulting and software development company for the medical industry both share their perspectives from over 20 years in their fields.

Top reasons for claim rejections:

1. Submission errors

“One-third of all claims are not received by the insurance companies,” says Silva. Even if a practice has an electronic record for a claim submission, the carrier’s system loses many claims. “If you’re not consistently following-up on claims, you’ll never get paid on these claims.”

2. Invalid Medicare numbers

“Medicare recently moved away from using patient social security numbers and instead chose to use 11 randomly chosen alphanumeric characters which are often entered incorrectly,” says Rowe.

3. Coding errors

If your practice performs procedures that aren’t approved for a specific diagnosis, Silva says your practice could have the claim rejected. As well, many claim rejections come down to a missing modifier on a procedure code—an easily avoidable mistake.

4. Termination of coverage

“This most often occurs at the beginning of the year when patients opt-out of their current plan and enroll in another,” says Rowe.

5. Smart edits

“The carrier will automatically reject claims that contain certain procedures (CPT codes) combinations or procedure/diagnosis (ICD 10 code) combinations,” Rowe says.

Top reasons for insurance denials:

1. Inexperienced billers

Being a certified coder or biller is a start, but Silva says that training still leaves room for errors. “The real experience comes from doing the work day-out-and-day-in,” she says.

2. Authorization

“The most common denial I see in practices is for failing to obtain authorization [for a procedure] from an insurance carrier,” says Rowe. Staff members handling claims submissions are often not adequately trained and up-to-date on carrier requirements.

3. Lack of follow-up

“Follow-up on past due claims is essential for getting paid on those claims and learning what you need to do to reduce denials,” says Silva.

4. Medical necessity

Rowe often sees practices with denied claims for in-office procedures such as echocardiograms, ultrasounds, and minor surgical procedures. As each insurance carrier has written guidelines for which procedures are allowed for a specific diagnosis, practices that don’t follow those guidelines can find themselves stuck for payment.

5. Lack of in-practice checks and balances

Silva says that many practices lack a system of internal accountability which ensures that in-house and outsourced teams are proactively approaching billing challenges.

And, If your practice is in a cash crunch because you’re waiting for payment on claims, you could be putting the longevity of your practice at risk.

“Smaller independent practices have a higher percentage of overhead as compared to revenue,” says Rowe. “This makes it difficult to sustain themselves if faced with having to wait several additional weeks to be paid while claims are resubmitted and appealed.”

According to Silva, $120 billion in insurance claims goes uncollected every year. Odds are, your practice has a rightful claim to many of those dollars.

Now that you know the most common reasons for claim rejections and denials, you need to be proactive in the steps you take to help overcome claim rejections. It’s high time you enjoyed a practice with a higher clean claim ratio.

Actionable strategies for overcoming claim rejections

The bottom line is: doctors don’t want to handle billing for their practice themselves. However, that doesn’t mean that a practice should silo billing without physician involvement.

The most beneficial steps that a practice can take toward overcoming claim rejections and increasing its clean claims rate are those that integrate multiple areas of the practice.

Here are the areas in your practice where you can take immediate action to improve your billing practices and decrease the likelihood of claim rejections for the long haul:

Obtain prior authorizations

“A properly trained staff person who is responsible for obtaining authorizations will be familiar with the requirements of each insurance plan and be kept updated when a carrier changes their authorization requirements,” Rowe says. “Having software designed to initiate and track authorizations is key to reducing these types of denials.”

Hire a dedicated billing team

“Having a team member who runs your front desk do your billing on the side is a really bad idea. You need a dedicated billing team experienced with your specialty, ” says Silva.

Essentially, your billing team controls how fast money flows into your practice. You deserve to have a team dedicated to tracking claims and payments full-time.

Train your front desk staff

“Front desk staff need to be very diligent in asking for updated insurance information and should also use the eligibility functionality within their PM/EMR software to verify eligibility at the time appointments are made to avoid these rejections,” says Rowe. As your front desk staff is your first line of defense, make sure they have the tools and education to set your billing team up for success.

Focus 60 percent of efforts on follow-up

“If your team is not spending the majority of their efforts on the follow-up – they’re either not billing for all of the services provided, writing off balances as uncollectable instead of following-up, or simply letting your accounts receivables climb without care – all of it will lose you money,” Silva says.

Invest in technology

“Purchase a card scanner with OCR capabilities to automatically capture patient ID numbers. [This] helps avoid data entry-related claim rejections,” Rowe says.

Reject smart edits

“I advise practices to reference the list of smart edits and build coding rules in their practice management software to proactively avoid specific coding combinations,” says Rowe.

Request reports

“The right billing cycle reports will give you predictable collections month-after-month,” says Silva. “This is how you track your billing team without micromanaging.” Rowe also advocates for regular reporting. “The best way for practices to see where their revenue shortfalls or delays are is to regularly look at their outstanding claims reports by carrier,” she says. “It will be easy to see denial trends and quickly react to them.”

Set regular review meetings

“Set times to review your reports with your billing team,” Silva says. “Ask questions, delegate projects, and hunt down payments for every claim billed. Showing that you care will make your team care.”

Delegate

“Carriers are constantly updating their policies regarding authorization requirements and medical necessity. Appoint someone in the practice to read quarterly carrier update documents and troll websites for new information,” says Rowe. “Local coding chapters are also great resources for those working in smaller practices.”

Now you have the tools to start conversations with key members of your practice about strategies for decreasing claim rejections and insurance denials. Knowing where your practice falls short will help you establish a plan for actionable change. From there, you can build a strategy that’s equal parts education, accountability, and tenacity.

Your days of increased revenue and more clean claims are on the horizon.

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