Top 10 Reasons for Claim Rejections

US Medical billing can be a complex and time-consuming process, and mistakes can often result in rejected claims and lost revenue. On average 14% -25% of the medical claims are rejected by the clearing house and the payer combined depending on the specialty, and payer. And the rejected claims, on average, cause between 5 – 30 days delay in receiving the payment if not at all. With the staff change, not a small number of rejected claims fall into the “write-off” buckets that cost many provider organizations hundreds of thousands, if not, millions of lost revenues.

However, there are several common issues that can be avoided with careful attention to detail and proper billing procedures. These can range from incorrect patient information and eligibility issues to timeliness and coordination of benefits issues. Here are the details:

1. Patient information and eligibility issues: The front desk/new patient coordinator plays a crucial role in mitigating incorrect or outdated demographic information, insurance policy information, or enrollment status. They should verify eligibility and insurance coverage before submitting a claim appointment and double-check all demographic and insurance information to ensure accuracy. Nothing is too detailed here: even having copies of the front & back of the insurance card helps to ensure claims are sent to the correct payer.
2. Understanding the nuances of the provider’s contract with each payer:  Understanding how each provider is contracted with the payers is a big deal e.g., Is the provider a participating network provider(in network). Further nuances include whether the payer contract is set up under a group NPI or an individual provider NPI. Even the office address, if multiple locations, can affect if a claim is processed.
3. Missing or invalid information: To avoid this type of mistake, all required documentation must be included with the claim, accurate and up-to-date codes should be used, and all necessary signatures should be present.
4. Incorrect or invalid procedure codes: This type of error occurs when outdated or incorrect procedure codes are used. To avoid it, use the most current version of the code set and double-check the accuracy of the codes e.g., verifying proper authorization numbers on file for either E&M visits and/or procedure CPT codes.
5. Incorrect or invalid diagnosis codes: Outdated or incorrect diagnosis codes can cause this error. To avoid it, use the most current version of the code set and double-check the accuracy of the codes.
6. Outdated or invalid insurance policy information: When incorrect policy numbers, expired coverage, or other policy-related issues arise, not only the billing team should verify the patient’s insurance information before submitting the claim and ensure that it is up to date but also the front desk team should verify eligibility BEFORE patient visit when contacting patient before appt. if updated information is needed. This goes back to No. 1.  It all starts with the new patient scheduler and any mistakes can have a snowball effect on how the claim is processed. So this should be one of the training/retraining items for the new patients’ scheduler all the time especially if there is someone new in that position.
7. Billing for non-covered services or procedures: Before providing services, make sure to check the patient’s benefits and coverage to avoid billing for services or procedures that are not covered by the patient’s insurance plan.
8. Services not medically necessary or not deemed appropriate: To avoid billing for services or procedures that are not deemed medically necessary or appropriate, follow evidence-based guidelines and only provide services that are necessary and appropriate for the patient’s condition.
9. Coordination of benefits issues: When multiple insurance plans are involved, it’s essential to understand the patient’s benefits and coverage under each plan and coordinate benefits accordingly to avoid coordination of benefits issues.
10. Timeliness issues: To avoid submitting claims after the deadline or missing important deadlines, submit claims in a timely manner and keep track of all relevant deadlines.

In summary, by ensuring that you double-check all information involving both front office and back office teams, you can help minimize the risk of claim rejection by nibbling the errors in the bud. With the right tools and regular reinforcement review/monitoring and training, you will see the size of A/R reducing significantly or never getting out of control.

Easy said than done: It’s worth noting that each payer has different policies and changes them frequently without notice, making it difficult to keep up with all the changes. To reduce the likelihood of medical claims being rejected and to get paid promptly, more billing resources can help. However, we are also exploring the latest developments in machine learning and AI to detect potential claim rejections before they happen. Stay tuned by subscribing to our newsletter to learn more about the latest billing tips from the field, including technology-based solutions that have been used since before 2000.

Each year, practices lose sizable revenue due to billing errors. To help prevent this, it’s important to have an end-to-end “Attention to details” process. Here are the top 10 reasons why medical claims are rejected and read more in the body of the blog on how to avoid these common issues:

1. Patient information and eligibility issues
2. Understanding the nuances of the provider’s contract with each payer
3. Missing or invalid information
4. Incorrect or invalid procedure codes
5. Incorrect or invalid diagnosis codes
6. Outdated or invalid insurance policy information
7. Billing for non-covered services or procedures
8. Services not medically necessary or not deemed appropriate
9. Coordination of benefits issues
10. Timeliness issues

By double-checking all information involving both front office and back office teams, providers can help minimize the risk of claim rejection and reduce the size of accounts receivable. While payers’ policies can change frequently, regular training and monitoring can help to stay on top of the latest billing tips and technology-based solutions that can prevent claim rejections before they happen. If you are interested in having an assessment on your current billing operation against the above list, please feel free to reach out on this website for a no-obligation taylored discussion.