The Most Common Reasons For Health Insurance Claim Denials

claim denialsHealth insurance claim denials are on the rise, and some experts believe the Affordable Care Act (ACA) will be responsible for increasing the frequency of denied claims in the future. Physician practices are losing a significant amount of administrative time and revenue due to denied insurance claims. The American Medical Association (AMA) estimates that more than $43 billion could have been saved since 2010 if insurers had consistently paid claims correctly.

One way physicians can increase their income is to decrease the number of denied claims their practice generates.

Five common reasons for claim denials are:

  • The claim form is missing a modifier or modifiers, or the modifier(s) are invalid for the procedure code (as in the case of bilateral codes billed on both sides).
  • Errors or typos were made while collecting information from the patient or during the data entry process for a claim. Something as minor as a missing hyphen, as in the case of a hyphenated name, is reason enough for the claim to be denied.
  • The claim is deficient in information, such as missing prior authorization or the effective period of time within which the pre-approved service must be provided for reimbursement to occur.
  • The patient isn’t eligible for services because his or her health plan has expired, and the patient hasn’t displayed proof of new insurance.
  • A particular service isn’t covered under the plan’s benefits, or there appears to be lack of medical necessity. Additionally, there could be a mismatch between the actual diagnosis and the service performed.

Physician practices can decrease claim denials by analyzing on a monthly or quarterly basis the main causes for denials per insurer and determining whether the errors were made by the physician’s staff or insurance company. Next, organize denials by payer explanation of benefit reason and remark codes; these identify the reason for the denial. Group the remark codes into workflows, such as claims data issues, patient responsibility, and claims that may require an appeal. This process helps the practice make any appeals in a timely fashion and helps determine whether appealing or dropping the carrier is the best option.

When the patient visits the practice, the receptionist should scan the patient’s insurance card into the patient’s electronic health record (EHR) and ensure the card matches the patient and is valid on the appointment date. Practices should send insurers an electronic eligibility request to determine if the patient is eligible before receiving the services. The patient should be informed of which services are covered and which services he or she is responsible for paying.

“You’re looking at five percent of claims denied every year for an average family practice, that’s about $30,000 walking out the door every year,” stated Ryann Philpot, manager of revenue cycle management at e-MDs, a certified practice management software and solutions provider in Austin, Texas.

This is a good enough reason for physicians to overhaul their claims policies and procedures.

Clay J. Cockerell, MD

See also: Financial Pressures Facing Physicians Today

References

American Medical News (2013).   Claims Analysis Shows Doctors The Way To Fight Insurer Denials. Retrieved September 24, 2015, from http://www.amednews.com/article/20130715/business/130719992/5/

Medical Economics (2015). Top 15 Challenges Facing Physicians In 2015. Retrieved September 24, 2015, from http://medicaleconomics.modernmedicine.com/medical-economics/news/top-15-challenges-facing-physicians-2015?page=full

Medical Economics (2015). Top 5 Challenges Facing Physicians In 2015. Retrieved September 24, 2015, from http://medicaleconomics.modernmedicine.com/medical-economics/news/top-5-financial-challenges-facing-physicians-2015?page=full