Best Practices When Researching Claim Denials
A medical claim can be denied for various reasons. The most common reasons are:
- Lack of medical necessity
- Lack of pre-authorization
- Erroneous patient demographic information
- Erroneous provider data
- Incorrect subscriber identification number
- Invalid ICD-9-CM, CPT® and/or HCPCS Level II codes
- Invalid place of service codes
How do you work smarter, not harder when it comes to managing your denied claims? Here are 10 tips:
- Track information monthly, quarterly, and annually. Prepare a spreadsheet documenting the following data:
- Percentage of claims denied
- Most common types of denials
- Which payers denied claims most frequently and why
- Net effect of denials on cash flow
- Appoint well-trained employees in the distinctive position of denial management. When EOBs are interpreted incorrectly, there is the potential for loss of revenue through incorrect contractual write-offs on the patient’s account, oversight of an opportunity to appeal a denied charge, or improperly balance billing the patient.
- When the reason for the denied claim has been determined, timely action is required. Many payers have time limits on filing appeals. Sometimes the corrective action could simply be to call the payer. Be sure that the staff member calling knows the details of the reason for the denial, the medical necessity for the service(s) provided, and the original codes filed on the claim.
- If a phone call to the payer is unsuccessful, a written appeal letter may be necessary. Send this by certified or registered mail to ensure it is received by the payer. Be sure to attach any necessary documentation to support your appeal. Progress notes, operative reports, laboratory and/or test results are very helpful in substantiating your case.
- If after exhausting your appeal options, you do not attain a satisfactory outcome, you may contact your state insurance commissioner. Formal complaints against health insurance companies (with the exception of self-funded plans) can be filed with your state insurance commissioner. For additional information, visit the National Association of Insurance Commissioners (NAIC) at www.naic.org.
- If you need to submit a corrected claim because of incorrect demographic information, invalid identification numbers, place of service or ICD-9-CM, CPT® or HCPCS Level II codes, be sure to make the correction(s) and note on the claim “Corrected Claim,” or send a letter with the claim stating what you corrected. Avoid resubmitting the claim without this information: It may get denied again as a “duplicate claim.”
- Read and understand your managed care contracts. Be aware of each payer’s appeal process. Many contracts require the provider to request a review of denied claims in writing. Specifically examine the contract language that relates to the timeframe for seeking reconsideration by the payer, the documentation required, and the address and title of the person to whom to direct the appeal.
- Implement automated systems for obtaining, tracking and monitoring data. If possible use scanning devices for obtaining copies of insurance cards. This will help decrease data entry errors. Be sure to train staff properly on how to use the equipment and software programs.
- Monitor results and report positive financial impact to the staff and providers. This will help to motivate everyone to continue to work on preventing future denials.
- Clearly, the way to work smarter and get paid promptly is to submit a clean claim the first time. A clean claim is defined as “a claim free of any errors.” Double check claims, either manually or via your computer software, for any simple errors. Check for codes that are billed, but not supported by documentation, incorrect dates of service, missing provider or patient data, etc. Most electronic claims processing software and/or clearinghouses have the capability to perform these proofreading functions. This will allow corrections to be made before the claim is submitted to the third party payer.
In “From the Field,” a spreadsheet is described for you.
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