Three Common Causes of Claim Denials and How to Avoid Them

revenue cycle managementClaim denials can lead to significant cash flow loss for any medical organization, offsetting gains in your healthcare revenue cycle. Luckily, healthcare organizations can avoid the majority of denials by performing careful claims processing and error prevention tactics. Organizations that effectively implement these practices join the ranks of the most successfully-performing medical groups, which average a claims denial rate of just four percent, according to the Medical Group Management Association’s (MGMA) 2011 “Performance and Practices of Successful Medical Groups” report.

In order for a healthcare organization to submit cleaner claims, reduce write-offs and increase revenue, it is important to understand some of the common causes of denials and how to avoid them. Below are three reasons why insurance claims often get denied, and how your practice can prevent that from happening:

1. Information is missing. Leaving out even one crucial piece of information, such as date of service or patient subscriber number, can cause a claim denial and create a delay in payment. Before submitting any claim forms, be sure to check that all required areas are filled in. You can also provide your billing representatives with a list of commonly missed fields to double-check before transmitting the claim to the payer.

2. Codes are omitted or assigned incorrectly. In order for a medical claim to process correctly, it is necessary for it to include the code identifying the diagnosis, as well as the services and procedures performed. Certified coders are used to carry out this task, as they know the coding process best and are equipped with the knowledge to code to the highest level of specificity. In order to prevent denials – and reduce compliance risks – it is also necessary for coders to work closely with physicians. By doing so, coders can properly identify illegible information and obtain missing data without having to guess what the physician intended to communicate. Billers can also help prevent denials by reviewing codes for omitted numbers (and double-checking with the coder, if necessary) before sending any claims.

3. Filing deadline is not met. Failing to submit a claim before the payer deadline will cause a denial, even if all of the information on the claim is accurate and complete. Therefore, it is important to know the filing deadline schedule for each payer and to have a list with these deadlines in plain view for all billing staff.

If your organization lacks the time, resources or FTEs to effectively handle claim submissions, resubmissions, appeals and denials, consider hiring a healthcare revenue cycle management company to do ir for you.


This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Although we attempt to provide up-to-date information, laws and regulations often change. We make no claims, promises, or guarantees about the accuracy or completeness of this document. For legal advice, please consult an attorney.
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