Medical billing denial refers to an insurance company’s refusal to reimburse the medical practitioner for services provided. Billing denial can be costly for a medical practice, which is why denial management in healthcare should be a priority.
In 2019, insurance provider denial rates ranged between 1% and 50%. Each medical claim that has a soft denial must be corrected and appealed. Reworking a claim can be costly, and an appeal doesn’t guarantee reimbursement. Hard denials cannot be corrected and must be written off.
This article will explain the most common reasons for billing denial and ways to manage it.
The Most Common Types of Medical Denial
Once you know the most common reasons for medical billing denial, you are half-way to overcoming the problem. The most causes of denial include:
- Missing information: If a claim is missing information about a patient, it will be denied. Even if all sections of a claim form have been completed, your administration team may not have included all the required details. For example, you may have given a patient a referral for treatment. However, you will also have to include information about the diagnostic tests performed first or why a particular treatment was medically necessary.
- Billing the wrong insurer: Because of the flexibility of the current healthcare marketplace, patients have the option to change their health insurance provider each year. This enables them to find new providers and better coverage rates. Unfortunately, it also increases the risk of medical bills going to the wrong insurance company.
- Patient Obligation: Denials that are coded as patient obligation could be for one of the following reasons:
- Non coverage of a particular service
- The patient has not met their deductible
- Patient needed a referral
- Claim has insufficient information
- A different insurer covers the claim
- Contractual obligation: This denial occurs when the healthcare provider fails to meet the terms of their contract with the health insurance company. This may happen when:
- Late filing of the claim
- The claim has already been reimbursed
- The physician provided too many services
- The provider has not certified at the time of the service.
- Duplicate billing: A duplicate bill for a consultation then your medical billing software automatically creates another bill for the same service.
- Overlapping claims: This arises when the service period for one claim overlaps another. For example, if a patient seeks treatment from more than one healthcare provider at the same time. The denial will explain where the overlap has occurred.
- Non covered charges: Typically, health insurance companies only cover specified procedures. Others, such as fertility treatment, maybe excluded.
- Coding issues: If there is a coding error on the bill, it will automatically be denied. This may happen if the numbers in a billing code have been transposed or a number is missing from the code.
Keeping Track of Medical Billing Denials
If you want your practice to run smoothly without losing money due to billing denials, there are certain fundamentals that you need to take care of:
- Measure the number of denied claims: You will need to use tracking and reporting denials with your practice management system. If you are using an electronic billing system, the data will be available to you.
- Identify the reasons for denial: First, determine the categories you will track, then analyze your claim denials and count them.
- Create a tracking system: This will allow you to assess your practice’s performance over time. Seeing where you need to make any necessary improvements to reduce claim denials.
Denial Management Solutions for Medical Practices
The fundamental approach in managing denials is to use a software solution to handle your billing for you instead of spending hours reworking claims and handling appeals. The software enables you to work a claim with just a few clicks ultimately.
Software solutions store each patient’s Explanation of Medical Benefits (EOMB), so you can analyze claims and remittances and create documents in support of appeals. Other typical features include highlighting denial trends, tracking the success of appeals, and automatically importing ERNs.
Contact us today if you would like to find out more about how our software solution can help you implement denial management in your practice.