Managing Denials: How to Win the Claims Game

It’s played like this: As medical billing grows ever more complex, payers find new reasons to deny or underpay claims. You submit; they deny. You re-file; they deny it again.

 

The claims game is not small change. The typical medical practice experiences an overall claims denial rate of 5 percent to 8 percent (although it can easily jump to 20 percent or more)1. That, in turn, impacts practice cash flow.

 

Think that 5 percent is just small change? Consider this: With a claims denial rate of 5 percent, a practice with five physicians generating $500,000 each could be losing up to $125,000 a year!

 

The five most common reasons for claim denial are:

1. Diagnosis is not coded to the highest level of specificity

2. The patient subscriber or ID number is missing

3. Patient information (e.g., name and address) doesn’t match insurer’s records

4. Physician information or ID number is missing

5. Claim information is illegible or improperly entered

Source: Medical Group Management Association (MGMA)

 

Here are some suggestions to help minimize your denial rate.

Clean up. Submitting timely, accurate claims is the first step. Review your claims to ensure that all required fields are complete, legible and correctly coded.

Staff up. Make sure you have sufficient trained staff dedicated to the job.

Utilize technology. Consider investing in software that helps navigate insurers’ payment systems and prevent denials. Often, the insurer will provide some form of software (sometimes called a “rules engine”) to help in identifying billing errors and making corrections.

Verify eligibility. There’s no use appealing denial of a non-eligible service or patient. The key is to verify eligibility and/or pre-certify them upfront. Most payers allow you to determine eligibility online.

Code correctly. When you perform a service or procedure, report it according to the AMA CPT codes, guidelines and conventions.

 

What should you do when a claim comes back inappropriately paid or denied? The American Medical Association encourages practices to audit and appeal denied or underpaid claims.

Audit. Audit each EOB/RA to determine the accuracy and appropriateness of the claim, making sure you understand exactly why the claim was denied.

Appeal. After you’ve reviewed a denied claim and made sure all required fields are complete and correctly coded, submit a formal appeal of the denial. If you don’t receive a response in a timely manner, follow up by contacting the payer’s office. The AMA website (http://ama-assn.org) hosts a variety of tools for appealing denials, including form letters that you can modify for your own use.

Consider Alternative Methods. Certain companies, often referred to as “denial management” providers, dig through past claims in search of short-changed payments and go to bat for you over charges misadjudicated by payers. Typically, they take a percentage of collections. Others provide software that integrates with your electronic medical record/billing system or offer a Web-based system that reviews claims.

 

Cash flow is critical. Prevent denials from dragging down your practice cash flow by watching for patterns such as recurring denial codes and chronically incomplete submissions. Address these deficiencies with staff and revise your processes and systems accordingly. The bottom line: Cleaner claims means fewer denials.