4 Steps To Improve Claim Denial Management In Healthcare

Claim denials are a significant issue faced in healthcare, which affects healthcare providers. The average claim denial rate is estimated to be around 5% – 10%. To overcome this denial,  healthcare organizations must implement an effective strategy for denial management. 

In this blog, we’ll explore the key steps to reduce claims denials and how to improve the revenue cycle that helps in your practice.

What Is A Claim Denial

Claim denials occur when the insurance claim submitted fails to meet the specific needs, like coding measures and necessary information for the insurance. When a provider submits a claim to an insurance company for reimbursement, the insurer rejects it means that they won’t pay for the services provided.

Claim Denials can be partial or full due to reasons like coding errors, patient eligibility, or the insurance coverage doesn’t cover the specific service. 

A denied claim cannot be processed by a clearinghouse, insurance payor, or the Centers for Medicare & Medicaid Services, the claim is not considered as not received. 

After identifying the errors, you can correct and resubmit the claim once again. The claim received will be processed by the insurance company. Payors will send you an EOB or ERA that will clarify why the claim was denied.

Common Reasons for Claim Denials

1. Incorrect or Duplicate Information

Claims denials often occur due to incomplete information. It might be a missing document or any errors in your submission. Review your claim before submission.

Always ensure that mandatory information is filled correctly. When a claim is filed more than once leads to rejection. Keep track of your claim to avoid this problem. 

2. Services Not Covered by Insurance

Claims are rejected due to services not covered in your policy. Understanding your insurance coverage is an important thing. Make your claim covering the service before proceeding with submission.

3. Late submission of the Claim

When a claim is submitted too late is also a reason for claim denial. Make sure you file the claim before the deadline given. Set reminders so that they can be helpful and prevent you from late submission.

4. Billing or Coding Errors

Sometimes denials happen due to incorrect coding or billing errors. In billing a single digit can change the claim, ensuring correct codes are mentioned for the billing information. Checking twice will save you from claim denial.

5. Authorization Issues

Lack of pre-authorization is also a reason for denials. Approval from your insurance provider is necessary in certain cases. It can prevent you from claiming rejection.

Related: The Common Behavioral Health Claim Denials You Need to Know

How to proceed if your claim is rejected

First and foremost read the claim denial letter and know the reason why your claim is rejected. Understanding is a key step to clearing your claim again.

1. If the claim is denied due to a simple error

Resubmit your claim after correction of error. Fix the issue by submitting proper documents or correcting the form. It helps your claim in getting approval.

2. If the reason for denial is unclear

Contact your insurance provider and get a clear explanation of why the claim was rejected. Having direct contact can clarify your doubts easily. 

3. If you don’t agree with the denial

Most of the insurance policies provide another chance for appealing denials. This can help your claim getting approved if it has a valid reason. Strictly follow the guidelines for the submission.

Collect all the documents related to supporting your appeal, like medical records, policy documents. Present clear documentation and evidence that gives you a chance for a successful appeal.

4. If you need additional help

Seek help from professionals if needed. It includes legal advice from a claims specialist. Experts can provide you with information about the guidelines and support you need to solve your denial.

You can contact your state’s insurance commissioner if your insurer is not responding they can help you solve your problem.

4 Steps to Improve Claim Denial Management

1. Identify the Mistake

The first step is to identify the reason behind the claim denial. Payors will explain benefits. CPT codes are the hints to submit a corrected claim. These codes are of alpha-numeric form, also it has 2-letter alpha-codes to indicate who is responsible for the denied amount.

It is PR, which is patient responsibility, and CO is for contractual obligation. Understand the payor’s denial codes to avoid claim rejection.

2. Managing the Denial

Once the rejection is identified, prepare a plan for claim resubmission. Understand the reasons for denials.  Create a workflow for each type of claim rejection. 

Always plan before submitting the claim once again. Keep updated with denial codes associated with the claim rejection. 

Start working as soon as you identify the problem. Avoid automatic rebilling that produces a duplicate number. Make sure you meet the requirements of the payor and appeal for claims. Analyse the patterns and issues that help you to prevent denials in the future.

3. Monitoring the Process

After submission, closely monitor the process to avoid claim rejection once again. Maintain a log for denials, which consists of service date, requested amount, medical code which was denied, documents received from the insurance company, claim number, and the final status like resubmitted, appealed, charge adjusted.

4. Prevention of Claim Denial

To prevent claim denials, implement an advanced EHR system that helps verify patient eligibility in real-time. As the eligibility is confirmed before the patient’s first appointment, they get more time to have their insurance coverage-related questions cleared up.  

The EHR system also helps to track the claim denials and immediately resubmit them.

Related: How to Utilize AI in Denial Management to Transform Practice Revenue

Vozo Revenue Management Cycle Service

At Vozo, we understand your struggle navigating through all the revenue cycle processes such as regulations, medical coding, and reimbursements. 

That’s why we bring the best cutting-edge service to optimize your revenue cycle management from start to finish. Here’s how Vozo can help you transform your practice’s financial performance.

• Automated tools for error-free coding and faster reimbursements
• User-friendly billing to keep patients satisfied and payments flowing
• Robust data security and compliance protocols to protect your practice
• Detailed reporting and analytics for smarter business decisions
• Solutions that grow alongside your evolving needs

With Vozo RCM service, you can reduce the headaches associated with revenue cycle management and focus on what matters the most – quality patient healthcare delivery.

“Partner with Vozo RCM Service and unlock the full potential of your healthcare practice and maximize its revenue”.