Tips for Minimizing Claim Denials

Claims denials are a time-consuming, revenue-depleting problem for a practice if they are not managed and kept to a minimum. File your claims correctly the first time to help avoid most claim denials. 

There are many small, and not-so-small, mistakes in handling a claim that can result in a claims denial by a health insurer. From the time a patient walks into the office until a claim is transmitted to a billing service, clearinghouse, or directly to the insurer, there are multiple-points of data entry. The less automated an office is, the more “points of entry” and more opportunity for error.

File a "Clean Claim"

Many claims are denied because of mistakes in completing the claims form. Health insurers will only accept “clean claims” – meaning a claim that is free from errors. Practices must have processes in place to minimize the possibility of errors. 

Many practices use software to “scrub” every claim to identify and correct errors or use a billing service that “scrubs” claims before submission.

  • Is the service/procedure covered by the patient’s health plan?
  • Is the coding correct? The treating physician must enter the correct CPT code, modifier, and an ICD-9 diagnosis code that supports the CPT code. If this is entered manually by the physician on a “superbill,” the administrative staff must then enter it correctly into the billing system. This means both the physician and the staff must be meticulous about accuracy.
  • Is the patient information correct? The front office must ensure that the name (spelling), gender, age, address (i.e. Zip Code must match state and city), and insurance information for the patients are exactly correct when initially entered and that no errors occur if data is re-entered.
  • Is the physician’s name and/or NPI number missing or incorrect?
  • Is the place of service missing or incorrect?
  • Are all necessary referrals and pre-authorizations provided?
  • Are all other documents provided (i.e. surgical report)?
  • Unless the practice has an electronic medical record, the last two items above will need to be either scanned or faxed to transmit to your billing service, clearinghouse or the insurer.

Track Your Denials

Practices should track denials by reason code and by payor. Physicians must have confidence that their practice staff is:

  1. Submitting claims correctly the first time;
  2. Promptly resubmitting claims denied because of coding/clerical error; and
  3. Spotting any “problem plans” in terms of payment.

Tracking denials will catch possible computer “glitches” or other problems at the health plan that are resulting in claims being rejected in error. Tracking denials can also help practices quickly identify a health plan that has changed its coverage policy for a certain treatment or procedure and is now denying it as “experimental” or “not medically necessary.” 

There are financial and patient-relations aspects to changes in payment policy and practices need to made adjustments as soon as possible. If a procedure is denied as “not medically necessary” the physician may bill the patient for the service unless the patient was informed and agreed to in writing prior to the service. Please see Medical Necessity Denial Appeals for more information.

The past few years have seen improvements in prompt and correct payment by health insurers (in part because of class action lawsuit settlements with provider groups)  and improvements in technology to help practices file a “clean claim.” However, each practice must be vigilant in spotting errors before they are filed and correcting them quickly when a claim is denied.