4 Steps to Preventing Medical Claim Denials

It's no secret that the relationship between health care providers and insurance companies is complicated. Healthcare providers are spending a significant amount of time and energy with patients just to find out that an insurance company will fight them on paying for the services provided. Preventing claim denials helps ease the complications but denial management doesn't come so easy to every medical practice.

While every medical practice is bound to experience some claims denials, practices need to recognize when denials are out of control and pointing to a bigger problem in terms of revenue cycle management.

The Real Cost of Revenue Cycle Management Errors

Underpaid, rejected or denied claims can cost your practice as much as $100,000 per month, according to the American Medical Association.

And, if an insurance provider underpays a claim, statistics show that it is up to 35% lower than the original contract amount.

Not only that, but your practice can potentially lose more than $75,000 per year in denied claims, since studies show that once a claim is denied, many practices do not resubmit (up to 50% of their denied claims).

Insurance providers are in the business of carefully inspecting every claim that comes their way. There is always the potential to resubmit a claim or appeal denied claims, but it is time-consuming, costly, and typically doesn't happen within most revenue cycle management operations.

Denial Management 101

A better performing clinic will, on average, have a 4% denial rate. What's yours?

Maybe it's worse or maybe it's better. Hopefully it is the latter but for most practices, denial management is a very difficult piece of the revenue cycle management process.

How do you make sure your clinic is a top performer in denial management? Here are five essential steps to follow.

1. Improve Data Quality

Front office staff must be checking eligibility before patients are seen and determining if the services that will be provided are going to be covered by the patients insurance. Simple clerical errors, such as the patient's name being spelled incorrectly or a missing Social Security Number can result in a claim rejection. The payment isn't necessarily being denied but the claim is being kicked back to your staff and resulting in more time and money being wasted.

An example of a claim being denied because of data quality would be along the lines of an incorrect diagnosis code being used. While this could be appealed, it's best to prevent it from happening in the first place which starts with improving the data quality of every claim.

2. Review Coding Processes

If a high number of your claim denials are resulting from insufficient medical necessity, you may need to consider some additional training for the clinicians. The best way to prevent this from happening in the first place is to make sure good communication exists among clinicians, medical billing staff, and coders.

Monitor your medical necessity denials and you can see where patterns exist and put in place the necessary processes to prevent these denials.

3. Focus on Pre-Authorization

Neglecting to get pre-authorization can cost your practice. Your practice management software can assist (in some cases) by flagging certain procedures and insurers so you're staff will know what to do but your staff should also be aware of which insurers require pre-authorization and for what.


Additionally, it's better to get pre-authorization for a procedure that isn't ultimately done, rather than to do a procedure and try to get retroactive authorization for it. Some practices have found success by dedicating certain employees to this process entirely so that's always something you can consider if your staffing volume is there.

4. Submit Claims on Time

Time is money and each insurance has a window in which you can submit a claim. Held on to a claim too long? You likely won't be getting paid. 

Some insurance guidelines will state that a claim must be submitted within 30 days of the date of service while others may be more lenient and give you 12 months. Occasionally claims are submitted but maybe not received or they just weren't submitted in time in the first place.

Other instances where a claim is denied for timely filing may come about because you submitted a claim, it was denied, and then you resubmitted it in which then it was denied because of timely filing. In this particular instance you'll need to appeal the denial which is going to take up even more time.

The solution? Submit clean claims and be proactive in following up on every claim to ensure that they are received by the insurance carrier.


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