Five Common Types of Denials in Medical Billing

10 November 2022
Five Common Types of Denials in Medical Billing

A request by an individual or provider gets submitted for payment of the healthcare services obtained to the insurance carrier on medical assistance from a professional. At times these requests aren't honored by the insurance company, which results in disturbing your cash flow and causes a strain on your relationship with the patient. Denials in medical billing cause an unhealthy revenue cycle for the health provider and affect the efficiency of the organization's operational workflow.

But the good news is that you could avoid the claim denials by identifying and understanding the common reasons behind them. By doing so, it is easier to eliminate denied claims with the help of proper strategies and expertise. In this blog, we shall discuss the five most common types of denials in medical billing, which would help you take appropriate steps to avoid them occurring in the first place. 

The Five Most Common Types Of Medical Claim Denials In Healthcare:

1.Issues related to Eligibility
2.Mistakes in the Claim Forms
3.Neglected Authorization Issues
4.Uncovered Services
5.Lack of Sufficient Documentation

1.Issues Related to Eligibility:

Mostly those denials with issues related to Eligibility result in unpaid claims. There are several reasons for such a denial, but more often, the root cause would be failing to collect certain necessary information from the patient during the registration procedure. Sometimes there are changes in the coverage due to an extended hospital stay by the patient, resulting in claim denial. One effective way to avoid such healthcare denials is to ensure that all the relevant information about the patient is collected in advance. Though it might not prevent the eligibility denials altogether, there is a fair chance to reduce the denials rate. 

Double-checking Eligibility before billing the claim minimizes the denials. Correct plan code entry is needed to check the plan's maximum coverage. You can also utilize the coverage discovery tool to ensure the patient's active range. Every single effort to avoid or reduce the Eligibility related denials enhances the organization's revenue cycle.

2.Mistakes in the Claim Forms:

Some claims get rejected due to simple errors during filing, which primarily does not affect the payment. The patient's name gets misspelled, or there might be some missing or wrong digits in an ID number. You can fix these kinds of errors quickly. Even though they do not involve the denial of payments, they tend to drag your revenue cycle process. 

Also, a wrong diagnosis and incorrect procedure codes can cause denials in healthcare and it is possible to appeal the same successfully. By utilizing advanced medical billing software and thoroughly trained coders with ample experience, you can prevent such types of denial in medical billing.

3. Neglected Authorization Issues:

When the pre-authorization-related issues are neglected, it results in stern denials which cannot be fixed, and recovering the payment is out of the question. It severely affects your organization's revenue cycle while reducing patient satisfaction. Such a situation is most likely to occur when an essential authorization is failed to be obtained prior to the medical service or happens due to an invalid number mentioned for authorization in the submitted claim. There are chances of getting prior authorization and being denied by the insurance for an eligibility issue. It could be a change in the patient's coverage or the expiry period before usage.

It is sometimes possible to flag certain insurers and procedures through your medical billing software to know what needs to be done. It is better to obtain a pre-authorization before a medical practice to avoid the risk of receiving retroactive authorization after completing the procedure. By doing so, you can steer clear of medical claim denials thus caused.

4. Uncovered Services

When the rendered medical service is not covered under the payer's plan, it results in these types of healthcare denials. Recovering the payment in these cases is quite unsure. When a patient happens to stay for additional days to receive a specific medical service, exceeding the allowed number of days, it again results in a denial.  

Even when there were violations on a managed care plan with strict restrictions, it resulted in non-covered service denial. Despite submitting substantial documentation by appealing, such claims are almost impossible to be recovered for payment, thereby straining your organization's revenue cycle.

5. Lack Of Sufficient Documentation

The claims get rejected if the required documentation is not submitted at the beginning or, at times, though they are provided, the payer might not receive the same. Such claims are referred to as technical denials. At times, they might have failed to be received within the proposed timeframe of the payer, or they could be obtained with a lack of vital information and result in claim denial. The payer will likely fix the claims by resubmitting the claims with the additional details requested by the payer.

In another case, the submitted documentation fails to validate the service obtained and results in a missing documentation denial. It is still possible to appeal, providing the required documentation substantiating the need to perform such a medical service. A concrete clinical documentation improvement (CDI) system keeps such denials at bay. 

Enjoy Efficient Denial Management in Medical Billing With BIS:

Handling medical claims can be tedious and time-consuming. Business Integrity Services gladly aids you with a seamless denial management process in medical billing. Our adeptly trained professionals have years of experience and communicate excellently with patients and insurers. They are thoroughly knowledgeable about the medical billing processes and expertly handle keeping the claim denials at bay.