5 Common Reasons for Health Claim Denials

Health Claim

Owners or managers of medical clinics and private practices know the importance of health claims, as they are largely responsible for the financial health of your business. When there are many claim denials, the red light turns on, and it’s necessary to identify what is causing this situation as quickly as possible.

The reasons are the most diverse, and it is not always your fault – sometimes your patient just reported incorrect data, for example. What’s always important is that in the face of such a complex system, the most trivial errors can lead to denials, a ton of bureaucracy, and time spent solving the problem.

According to the American Academy of Family Physicians (AAFP), preventing denials can save $4,500 per year only on the costs associated with correcting the rejected claims. 

Let’s take a look at the five most common reasons so you can easily prevent them.

Expired Referrals or Pre-Authorization

Although the patient needs to select a primary care physician (PCP), this professional can provide referrals whenever it is necessary to visit a specialist. If patients do not have a referral from their PCPs, the service of another doctor or specialist will not be covered by insurance.

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On the other hand, pre-authorization is an approval from the patients’ health plan that they need to arrange before getting a service or filling a prescription. Insurance companies work with strict deadlines that their clients sometimes forget to keep. Because of this, expired referrals/pre-authorizations are the most common causes for your insurance claim to be denied.

Incorrect Patient Information

Another elementary mistake happens just before the patient’s appointment. It’s essential to check all their personal and insurance details, but sometimes your staff forgets one information or another.

Manual errors such as missing subscriber numbers, incorrectly spelled names, or incomplete patient information can trigger a claim denial later. Worse: an overloaded reception staff often makes a lot of mistakes like that or forgets to collect/check important information.

The best solution is to retire all paperwork and invest in a robust electronic health records (EHR) system with built-in eligibility checking. It can significantly reduce administrative mistakes, making sure your practice gets paid faster. In short, it’s exactly what revenue cycle management is all about – the ability to track and collect incoming payments accurately.

Improper Use of Modifiers

Modifiers are numeric or alphanumeric codes used to report or indicate that a service or procedure has been performed in your hospital or clinic but later altered by some specific circumstance.

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These codes can also be used to indicate when a service has been performed more than once. For example, a “Modifier 51” is used for billing for multiple procedures offered by the same provider during the same surgical operation, including diagnostic imaging services.

If modifiers do not appear or are indicated incorrectly during the billing process, claims can be denied or rejected right away. Considering how easy it is to make mistakes, this is another step to keep an eye on.

Services That Aren’t Covered by Insurance

Some health plans do not cover expenses with services such as dental treatment, venereal diseases, infertility treatments, and many others.

Each patient needs to review the terms of their plan, but your staff also needs to ensure that services to be provided at your hospital or clinic are covered before they are performed.

If this is not done beforehand, the result is a claim denial and the frustration of patients having to pay for services excluded from their coverage. They will likely judge you to be the culprit and never return.

Claim Was Filed Too Late

As expired referrals or pre-authorizations are a common problem, you must follow Medicare guidelines when filing claims. A healthcare provider has 12 months after the date of the service for a claim to be processed (paid, denied, or rejected).

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There’s also a specific deadline to submit reworked claims after they were originally denied. Your team needs to strictly observe all deadlines so that claims aren’t lost because of delays. This can be challenging when they need to process many claims at once and re-submit the ones with a problem. You can invest in digital systems to help your workers with the paperwork.

A Denial Can Be Expensive

Whenever you see an increase in the number of claim denials, sit down with your billing team to try to understand what happened. The five reasons presented above are the most common, but there are many others – such as incorrect coding or even duplicate claims.

Once you identify the problem, tackle it directly in the best way possible: digitizing processes, investing in staff training, and changing the way services are done, among others.

At the same time, study those claims that are never rejected and get paid without any delay. You can find elements that allow you to give feedback to your team on where and how to improve.

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