Healthcare Claim Processing Errors
Common Reasons Medical Billing Claims Get Rejected

Healthcare claim processing errors delay provider reimbursement. If not resolved they mean not getting paid at all. Here are some of the most common medical billing errors and suggested billing practices to prevent them.

So the doctor has provided the services and the claim has been entered and submitted. The next step is getting paid. But then you receive the EOB (Explanation of Benefits) indicating the claim has been denied.

Those denials can be minimized by proactively addressing problems promptly and monitoring trends. I’ve found it takes a lot more time and effort to find out why a claim was denied or rejected, than it would have taken to catch it when the claim and patient info was being entered and submitted.

I’ve seen estimates that as many as approximately 10% of claims are initially denied. Of these about half on average are resolved in favor or the provider.

Healthcare Claim Processing - Rejected Claims

Most Common Reasons for Rejected Claims

Some of the more common causes of claim rejections are:

  • Errors to patient demographic data - age, date of birth, sex, etc. or address.
  • Errors to provider data.
  • Incorrect patient insurance ID.
  • Patient no longer covered by policy - insurance info is not up to date.
  • Incorrect, omitted, or invalid ICD or CPT codes.
  • Treatment code doesn’t match the diagnosis code.
  • Incorrect modifiers.
  • Lack of pre-authorization.
  • Incorrect place of service code.
  • Lack of medical necessity.
  • No referring provider ID or NPI number.

Denied Claim Not Same As Rejected Claim
A denied claim is not the same as a rejected claim, however both terms are frequently used interchangeably. A rejected claim is one that has not been processed due to problems detected before healthcare claim processing. Claims are typically rejected for incorrect patient names, date of birth, insurance ID’s, address, etc. Since rejected claims have not been processed yet, there is no appeal - the claim just has to be corrected and resubmitted.

A denied claim is one that has been through healthcare claim processing and determined by the insurance company that it cannot be paid. A denied claim can be appealed by submitting the required information or correcting the claim and resubmitting.

Causes of Medical Billing Errors
Superbills that are difficult or impossible to read for the employee(s) responsible for entering the information into the practice management system. If the provider is not readily available to answer questions and clarify, sometime its up to the employee to determine.

Getting up-to-date patient info. When a patient checks in, that's the time to ask if there are any insurance changes, address changes, etc. The front desk employees play an important roll in the reimbursement process.

Untrained or inexperienced employees. Many providers don’t see the need to pay well for the billing and coding functions. For this they get untrained and inexperienced employees who are not proficient on using the practice management software or the insurance claim process.

Hiring more mature and experienced staff may cost a little more, but believe me it’s money well spent. And that’s true also for a healthcare billing service.

Charges are not posted. Many providers don’t realize the importance of posting insurance and patient payments for successful healthcare claim processing. If insurance payments are not posted, you can’t bill patients for the remaining uncovered yet eligible charges, copays, coinsurance, etc. Nor can secondary claims be created.

This adds up to a lot of money. A provider also doesn’t know how the practice is performing financially. Without posted payment information, you can’t run the reports necessary to show accounts receivable, outstanding claims, which insurance companies are paying, etc.

Medical Billing Practices to Prevent Billing Errors

  1. Probably the easiest way to increase claim payments is through prevention - submitting a clean claim the first time without any errors. If information is difficult to read or doesn’t look right, go back to the originating documents such as the superbill or patient insurance card.
  2. Have the front office employees ask each patient as they sign in for any changes in insurance or patient info. Getting this info after the claim has been rejected is a lot more time consuming and difficult.
  3. Most clearinghouses or practice management software will catch any obvious errors such as missing or invalid information. But they don’t have the capability to catch coding errors. Double check claims when entering.
  4. Make sure the EOB’s are being interpreted correctly. This takes experience. Many billers and coders do not know how to interpret the sometimes cryptic codes and messages the insurance payers provide on the EOB for denied or unpaid claims.
  5. Use your practice management software to routinely run reports. Most all health insurance claim software have reporting features that allow you to analyze your accounts receivables and unpaid claims. Look for the percentage of claims that are being denied, what the most common reasons are for denial, and the insurance companies that are the most troublesome.
  6. The sooner you follow up on a claim, the more likely it is to be paid. In healthcare claim processing, time is an enemy to getting denied claims paid. Most insurance payers have timely filing limits to getting paid so identifying problems and resolving them promptly is important.

Resolving many denied or unpaid claims requires actually calling the insurance company. This can be a very time consuming effort. Especially when you have to work through phone menus require you to enter insurance ID’s, provider ID’s, dates of service, etc.

Many reoccurring health claim processing errors fall into the “80/20” rule which means that 80% of your problems are caused by 20% of the coding.

When processes or employee issues are identified as the root cause of the medical billing errors, it’s important to communicate this to the billers and coders. Likewise asking for their input from the beginning can be a valuable way to identify and improve healthcare claim processing. Many times the billing functions are handled by the newer and inexperienced employees who lack the experience and training for such an important function. Some time spent one-on-one in training or enrolling them in training is money and time very well spent.

It’s important the coding and billing processes are well defined and understood by everyone involved in the process - if it’s a few people in a small practice - or several in a large multi-provider one.

Some denied claims require an appeal letter to be submitted. This letter should clearly communicate why the denied charges should be reconsidered. Be sure to include all the specific claim data and documentation with the appeal. Supporting notes, lab results, etc. can be very helpful in backing up your case. Send this by certified or registered mail to ensure it is received by the payer.

Many insurance payers have a representatives that can be very helpful for resolving denied claims. Our local BCBS has assigned a provider contact that helps us navigate the process and is very responsive.

If the insurance payer is troublesome, consider reporting them to the state insurance commissioner.

It’s a good idea to become familiar with the appeals process described in contracts with the insurance payer. Some payers have specific criteria and time periods for appealing claims.

If you need to submit a corrected claim because of typographical errors, incorrect provider or patient information, identification numbers, or ICD & CPT codes, note on the claim that this is a corrected claim when sending via paper or attach a letter stating what the corrections were.

Healthcare Claim Processing Errors by Insurance Carriers
Even when “clean” claims reach the insurance company, that doesn’t guarantee they will get paid. The American Medical Association has determined that insurers electronic healthcare claim processing accuracy ranges from 88% to 73% depending on the payer. This is due to a lack of healthcare claim processing standard requirements - they vary with insuror. Some insurers unfair practices and cumbersome appeals processes contribute to reduced provider payments.

The AMA estimates that physicians spend up to 14% of their income dealing with health insurer requirements.

In summary healthcare claim processing and medical billing errors are inherent given the complexity of the process and the players involved. Identifying problems early and addressing them promptly and aggressively can save a practice significant lost income.

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