You might be wondering how your practice is following up on denied and rejected claims. According to CMS, 1 in 5 practices will see Medicare denials double for 6 months after October 1, 2015. Understanding how your practice is following up on denied and rejected claims now is critical to the success of your revenue cycle. Investing time into your denial management strategy can minimize the impact of ICD-10 on your practice.

If you’re wondering where to start, you need to first understand what denied and rejected claims are and common errors that cause them.

What are denied insurance claims? Denied claims are claims that the payer has processed and deemed unpayable. These claims may violate the terms of the payer-patient contract, or they may just contain some sort of vital error that was only caught after processing. Payers will include an explanation for why a claim is denied when they send the denied claim back to the biller. Many times, these claims can be appealed and sent back to the payer for processing, but this process can be time-consuming and, therefore, costly. For that reason, it’s important to try and get as many claims “clean” on the first go, and not waste any time billing for procedures that are incompatible with a patient’s coverage.

What are rejected insurance claims? A rejected claim is one that contains one or many errors found before the claim is processed. These errors prevent the insurance company from paying the bill as it is composed, and the rejected claim is returned to the biller in order to be corrected. A rejected claim may be the result of a clerical error, or it may come down to mismatched procedure and ICD codes. A rejected claim will be returned to the biller with an explanation of the error. These claims are then corrected and resubmitted.

Clearinghouses employ a process called “scrubbing” in order to avoid rejected claims. The end goal, for billers and clearinghouses, is a “clean” claim.

What are the common errors with denials and rejections? Something as simple as incorrect medical provider information can result in a rejected claim, as can incorrect patient information. When an incorrect diagnosis or point-of-service code is entered into medical billing software, a claim can end up with errors. Also, treatment and diagnosis codes that don’t match properly can result in claim rejections or denials. Insurers are exacting about their requirements, and medical billing software that can work with the demands of different insurers can provide a measurable return on investment by increasing clean claims.

How can my practice discover and correct errors quickly? Good communication between medical billing and coding staff and clinicians is essential to ensuring the right codes are put on claim forms. Keeping the lines of communication between the practice and insurers can be effective, too. Verifying patient coverage when an appointment is made, or at least during patient sign-in, can prevent errors caused by patient contact information changes or changes in insurance coverage. Vigilance at every step, from appointment booking through claims submission is necessary to hold down error rates.

Why should I monitor denials and rejections for trends? If there is an unexpected uptick in denials and rejections, taking the time to assess what’s going on and see if there are trends is important. You may find, for example, that claims with one particular insurer are rejected more often. Or you may find that a particular diagnosis code leads to more rejections. A simple change in insurer requirements that goes unnoticed could be responsible for an increase in rejected claims, and uncovering that reason can help you quickly and substantially increase your clean claims rate.

How Your Medical Billing Software Can Help: The best medical billing software for your practice works with your established workflows and integrated with your EMR. It should accelerate the billing process while providing accurate information for insurance claims and patient out-of-pocket charges. Even if your medical billing software is known for being easy to use, investing in training is still wise, so staff members can learn to use all the helpful features and make the most of the investment. Exceptional medical billing software, combined with training and a conscientious staff can go a long way to reducing the number of denied and rejected claims your practice deals with.

Conclusion: Denied and rejected claims are a major cause of lost revenue for medical practices. Maintaining a high clean claims rate requires attention to detail at every step of the patient journey, and having good medical billing software can also make a clear, positive difference.

At Medical Billing Virginia, our revenue cycle management experts understand the causes of denied and rejected claims and how to prevent them. Our goal is to maximize revenue for your practice, by assessing all stages of the revenue cycle, seeing where there’s room for improvement, and helping you put a plan into action. We would be happy to answer your questions about improving clean claims rates and preventing denials; we encourage you to contact us at any time to our team at MEDICAL BILLING VIRGINIA at 571-502-8804