7 Common Reasons For Claims Denials and Effective Mitigation Strategies

Efficient revenue cycle management is important for healthcare practice, and claim denials can significantly disrupt cash flow. Knowing why claims get denied will make it easier to maintain a steady stream of revenue and improve patient satisfaction.

Through this blog, I will walk you through seven common reasons for claim denials and present effective claims mitigation strategies for the protection of your healthcare revenue cycle.

Reasons For Claims Denials

1. Make Sure the Information is Correct
The most frequent reason for any denial is inaccurate or missing information. For instance, the patient’s date of birth, and insurance ID, among others, could be one of the commonest causes for immediate denial.

Claims Mitigation Strategy: Ensure that this does not happen by having a good patient information collection and verification system in your practice. Have electronic health records (EHR) software as part of the patient registration process and eliminate many errors at one time. Always cross-check the data entered to avoid denial.

2. Failure to Meet Filing Deadlines
The other critical factor causing claim denial is the failure to submit the claim within the deadline. All insurance companies have set time for submitting claims, and even the shortest delay leads to denial in claim submission.

Claims Mitigation Strategy: Maintain a clean, updated schedule for every payer’s claim submission deadlines. You can even set up reminders in your practice management system or with an automated tool for timely submissions. This way, you won’t incur unnecessary denials that might have been prevented by the timely filing of claims.

3. Incorrect Coding and Modifiers
One of the top reasons for claim denials is implementing incorrect coding, whether it comes from outdated codes or procedure codes that are used incorrectly. It can even be a misuse of modifiers, as modifiers refer to add-on information related to the procedure, among other things.

Claims Mitigation Strategy: Ensure that your billing staff is continually trained and updated on the latest coding guidelines. Avoiding coding errors is best approached by investing in automated coding software that keeps an eye on updates happening on ICD-10 and CPT codes.

4. Absence of Prior Authorization
Some of the treatments require prior authorization by the insurance firm before being carried out. In case one fails to obtain such authorization, the claims are instantly rejected.

Claims Mitigation Strategy: Set up a process to obtain verification in advance of any pre-authorization requirements needed for any treatment provided. Make sure that your staff verify their procedures prior to scheduling any treatment for appropriateness of care, including all pre-authorizations. Also, keep your good communication open with the insurers so that there aren’t any last-minute surprises.

5. Coverage Issues or Policy Termination
Sometimes the patient’s insurance is denied, and this could be due to the covering of a patient no longer being active or simply because the service is not included in present policy coverage. Sometimes these changes may have occurred outside the knowledge of the practice.

Claims Mitigation Strategy: To mitigate that, you have to ensure you check the eligibility status and coverage at every visit. Make use of real-time verification tools to verify the current status of the patient’s coverage just before treatments. This way, you do not keep on serving the patient without ensuring there is insurance coverage.

6. Duplicate Submission Claim
Another common reason for denials is when the same claim is submitted multiple times. This normally occurs when some people start following up on their pending claims and automatically resubmit instead of updating the status of the claim submitted.

Claims Mitigation Strategy: You must follow up in an organized manner on all claims submitted and track them. Your billing system must allow access to claim status reports to minimize duplication work. Where the claim has to have a follow-up, you refer to the original submission but must not resubmit any claim, especially if the patient has not asked you to do so.

7. Lack of Medical Need
From the documents availed, it is clear that whenever insurance companies feel that there is no medical necessity for the given treatment, they will deny their claims. In case the medical necessity cannot be proved, then the claim will be rejected.

Claims Mitigation Strategy: Ensure that your medical records give you explanations enough in case the treatment is required. Include detailed notes from your health provider indicating the needs for each procedure. If the alignments with the patient’s medical history could have been properly in line with the insurer’s guidelines, this mistake may not have occurred.

Final Thoughts

Knowing what brings about and solutions to apply to the same, reduces denial of claims. All the strategies mentioned above will help you ensure your healthcare revenue cycle is safe; improving patient satisfaction, decreasing denials, ensuring claim approvals faster, and getting an efficient revenue stream will eventually allow your practice to thrive.