Top Four Reasons for Insurance Claim Denials

Posted by Team PracticeForces on Feb 25 2016


Even though physicians want to focus on delivering quality medical care to their patients, they often find themselves plagued by reimbursement hassles from health insurance companies. Without an effective denial management system, these physicians and their practices find themselves mired in frustrating and distracting revenue cycle difficulties.

And they are not alone. Statistics from the American Medical Association (AMA)  and the Medical Group Management Association (MGMA) report that up to 30% of all claims are delayed or denied. This translates to late or worse, no compensation for hard working physicians.

Physicians can avoid these headaches by understanding four reasons why claims are denied, and taking steps to avoid problems before they occur.

1. Incorrect or Missing Information

Minor errors in various aspects of practice management usually don’t impact the overall practice too dramatically. When it comes to insurance claims, however, human error definitely increases the likelihood of a claim denial.

Physicians and medical billing personnel should be vigilant about avoiding typos and data omissions. Verify that the patient’s name, birth date, medical codes, insurance group numbers, and other key data are entered correctly. Error scrubbing software can help by pre-screening claims for mistakes. The extra effort to proofread before submission will almost certainly save you time in the long run.

2. Duplicate claims

Front office personnel often hit the re-submit button on a claim when they don’t get a timely response from insurance payers. What they don’t know is that hitting resubmit actually resets the clock on reimbursement for that particular claim, resulting in a claim delay and eventual denial.

To avoid duplicate claims, don’t hit resubmit. Instead, contact the insurance payer directly to discuss the status of the claim.

3. Imprecise Documentation and Medical Coding

Accurate and precise medical coding is imperative to claims acceptance – especially with the advent of ICD-10-CM/PCS. When you’re dealing with ambiguous, vague, or illegible clinical documentation, it is incredibly easy to select the incorrect code.

Before you code an electronic record, ensure that the clinical documentation contains a fully detailed report of the patient encounter and diagnosis. Then, be sure to code the diagnosis to the maximum number of digits for that code. If you enter a three digit code for a diagnosis that needs five digits for claims acceptance, you will run into denial trouble.

Thorough, clear, and precise medical documentation along with highly specific and accurate coding is the surest way to avoid claim denials.  

4. Insurance Coverage Verification Issues

Insurance coverage verification is a common practice in most medical offices, but if verification is done too far in advance, you can run into billing troubles. Always verify patient insurance coverage twice: before scheduling the visit and before the actual treatment is received.  This protects you if the insurance company drops the patient from coverage and renders them ineligible in the time between scheduling the appointment and the actual visit.


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