9 Common Reasons for Claim Denials

Claim denials by payers can be debilitating for medical practices with respect to both cash flow and total revenues. Many independent practices have closed their doors due to the challenges they’ve had to face with payers denying their submitted claims. Here are some common reasons for claim denials to be on the lookout for when submitting claims to payers:

  1. The patient does have a referral from a Primary Care Provider (PCP) – Certain medical insurance plans require the referred-to provider to have an official referral on file from the patient’s PCP in order to get paid for services rendered to the patient. To prevent a denial, the referred-to provider’s office staff should be trained and knowledgeable on which plans require a referral prior to rendering services, and they should obtain a referral authorization from the payer before rendering services to ensure the claim does not get denied for this reason.
  2. The practice is not tracking the number of payer authorized sessions for a patient – Payers generally authorize a limited number of appointments with respect to a particular condition at a given point in time. If a practice renders services to a patient beyond the number of authorized appointments without obtaining a new authorization, the claim will get denied. Ensure tabulating the number of authorized sessions granted by payers and utilized by patients in order to prevent this type of denial.
  3. The authorization on-file for a patient has expired – Authorizations are generally granted with an expiration date. This means that providers must not only tabulate the number of appointments granted, but must also schedule and render these appointments within a specified timeframe to prevent denials.
  4. Inaccurate, additional, or missing diagnostic and procedure codes – Inaccurate, invalid, and/or incomplete ICD-10 and CPT codes, and the missing of proper modifiers, that do not appropriately convey the diagnoses and treatment plans rendered by a provider will result in a denial. Educating providers on coding, and having a professional coder review every claim before submission, is crucial to preventing claim denials.
  5. Delays in claim submissions – Many payers specify that claims must be submitted within a set amount of time after services are rendered. This time limit can range anywhere from 15 days to 1 year depending on the payer. If claims are submitted after the allowable timeframe designated by a specific payer, the claim is very likely to be denied.
  6. Providing multiple services in one day – Certain payers designate that only certain services can be rendered in a given day and that other types of services must be rendered in a subsequent session. For example, if a patient visits the practice for a follow-up appointment in the morning and then comes back again for a second follow-up in the afternoon of the same day, without any extenuating circumstances, the claim will be denied.
  7. Patient changes Insurance Plans – Practices must always run an eligibility and verification check of the patient’s insurance the same day as the patient’s appointment and before the patient sees the provider in order to submit claims to the correct payer. The new plan may have different requirements and necessitate its own pre-authorizations. Failing to recognize a change in patient insurance can lead to claim denials.
  8. Providing services at an unauthorized location – Providers must ensure that all services rendered are done so at addresses that are enrolled and submitted/updated with payer sources. If services are rendered to a patient at an unregistered address, the payer is likely to deny the claim.
  9. Rendering services to a patient with an out-of-state Insurance Plan – Providers that render services to a patient with an out-of-state insurance plan must first make sure that they obtain approval from the plan to render services. If approval is not obtained, then the claim may be denied.

Most practices struggle with denials due to several of the above-mentioned reasons, typically resulting in an average of 20% to 25% of claim denials. With a First Pass Clean Claims rate of less than 80%, practices suffer from diminished cash flow and reduced net revenues. Along with other challenges practices face, low clean claims rates have resulted in providers forced to lose their autonomy and sell their practices to hospital systems (and this only ends-up raising patient costs to get services while curbing provider independence). Without root cause analysis being preformed for each denial, many practices just keep resubmitting denied claims hoping to capture their revenue, only to find their time and energy wasted. To improve clean claims rates and reduce denials, practices must engage with revenue cycle management professionals that perform root cause analysis for all denials, establish key performance indicators (KPIs) to enhance the practice’s claim submission practices, and provide robust analytical data to help practices optimize their operational workflow. If your practice is struggling with denials, feel free to contact us to discuss how Avosina can help you maximize your revenue collections in a more timely manner.

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