Definition of claim denial is - “the refusal of an insurance company to honor a request by an individual, or his provider, to pay for a health care services obtained from a practice or a provider". Each year, 5-10% of claims submitted by practices are denied by insurance companies. Denied claims are crucial for hospitals and physicians as it leads to revenue loss. Proper claims denials management is very necessary to prevent denials and revenue loss.
Claims Denials Classification:
Claims denials are classified into three types:
1. Soft Denial:
Non-receipt of medical records, inaccurate information, missing information, coding issues, charge issues etc. resulting into soft denials. This can be corrected with proper follow-up and appeal is not necessary.
2. Hard Denial:
No-preauthorization, uncovered service, bundling and not filing on time resulted into hard denials. It causes lost or written-off revenue and appeals are necessary.
3. Preventable Denial:
Inaccuracies in patient registration, non-eligibility for coverage, incorrect codes, medical necessity, and credentialing are some of the preventable errors which ultimately resulting in hard denials.
4. Clinical Denial:
Reasons on the basis of medical necessity, stay length and level of patient care are some examples of clinical denials.
5. Technical or Administrative Denial:
Reasons on the basis of clarification of coding, requirement for additional documentation, requests for medical records and request for itemized bills are some examples of technical or administrative denials.
6 Tips For Claims Denial Management:
1. Identification Of The Denial Reason:
It is most crucial in managing claim denial is understanding the reason, and its root cause. Payers use specific claim adjustment reason codes (CARC) and understanding CARC is most necessary to know why the claim was denied. Be stay on top of denial codes and insurer communication to identify reasons for claim was not paid.
2. Identify the Source of the Errors:
This can identify where the errors commenced. It is critical to understand the source of the error that led to the denial – human, due to workflows, technology, or data. Claims may also be rejected due to changes in payer policies. Proper monitoring and audits can identify the source of errors which can be corrected as quickly as possible to prevent future denials.
3. Management Of The Denial:
Each type of denial require organized and structured workflow to manage it, that can expedite handling of denial management. Coding-related queries can be sent directly to coders for assessment and rectification. As most payers have specific time limits and requirements for claims resubmission, it should be kept in mind while rectifying errors and resubmitting claims.
4. Payer Contract Management: Management of payer contracts is also crucial for practices or providers as to stay on top of various payer’s specific requirements to avoid errors in claim submission.
5. Proactive Actions:
Perform patient insurance eligibility verification regularly. Patients should be informed about changes in coverage at each visit. Claims scrubbing/ audit is also most important denial prevention strategy. It can eliminate coding or billing errors which can be rectified before submission to payer. Claims scrubbing/ audit can significantly reduce denials and rejections.
6. Obtain Expert Assistance:
Payers rules are constantly changing, and they also implementing most advanced methods to identify inaccuracies to deny claims. These challenges are very difficult for providers to submit accurate claims. Obtaining expert assistance is highly recommended by partnering with medical billing company to win the battle against claims denials.
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