Learning about medical billing is full of challenges and interest. Medical services given by the provider must be reimbursed as it is an important part of the healthcare system. But in practical terms, the process is not as smooth as it appears. One of the major challenges is rejections; they are time-consuming, mentally draining, and interrupt cash flow when not tackled properly. Learn the art of medical billing by understanding insurance claim rejections and handling them proactively.
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The Big Picture: What Are Medical Billing Rejections?
Let’s have a look on basics before going into the complex information.
When a medical billing claim doesn’t meet the payer’s criteria or has errors that create hurdles in the process this results in a medical billing rejection.
In medical billing, there are majorly two red flags known as denials and rejections. It is necessary to have an idea of the difference between claim rejection and denial. A rejection happens when there’s a mistake, like a typo or missing information, so the claim doesn’t even get processed. A denial means the insurance company reviewed the claim but decided not to pay for it.
Rejections are gentle reminders to amend your mistake but this is not the case with denials as denials are firm “NO”
A brief overview of Claim rejection vs. denial in healthcare
| Aspect | Denial | Rejection |
| What it is? | Payment cannot be processed | Temporary issue can be fixed |
| Example | Service not covered by insurance. | Wrong date or missing info. |
| Reason | Service does not align with the insurance rules. | Small mistakes (e.g., typos, wrong codes). |
| Can It Be Fixed? | Need to submit an appeal with more info. | Just amend the mistake and resend |
| How long it takes | Takes longer to fix | Easier to fix |
| How to prevent It | Stay updated with insurance guidelines | Verify all information of claim before sending. |
Types of claim rejections in medical billing
1. Demographic Disasters: Patient Information Errors
Incorrect or incomplete patient information is one of the top reasons for claim rejections in medical billing. A quick rejection can happen from a simple typo in the name, wrong date of birth, and incorrect insurance ID.
Scenario: The patient’s insurance card has the name Alexander but the claim has been submitted with the name Alex. This kind of mistake can result in an immediate rejection.
Practice to Follow: Always verify the patient’s details against their insurance card. It results in increased accuracy.
2. Policy Perils: Eligibility and Coverage Issues
If the services taken by the patient are not covered by it’s insurance policy, it can result in a rejected claim
Scenario: A patient comes in for MRIs, but their insurance only covers CT scans. Without verifying coverage, the claim will be rejected.
Practice to follow: Stay updated with the patient insurance coverage plan. It is one of the Common medical billing rejection reasons.
3. Coding Chaos: Incorrect or Incomplete Codes
Medical coding is tricky yet interesting. A minor error in codes (CPT, ICD-10, or HCPCS) can lead to a rejected claim.
Scenario: Using ICD-10 code M15.9 – Osteoarthritis, unspecified, for a patient diagnosed with M81.0 – Age-related osteoporosis without current pathological fracture will result in a rejection because the code is mismatched for the actual diagnosis.
Practice to follow: Train your medical coding team at regular intervals. Before submitting claims, verify the accuracy of codes. By looking at medical billing rejection codes explained, it will help providers prevent delays in payment.
4. Payer Preference Pitfalls: Submission Format Errors
Claims must comply with the payer’s requirements for submission to ensure claim approval
Scenario: Most of the payers need specific modifiers for certain procedures. Claim rejection can occur in case of missing modifiers.
Practice to follow: The medical billing team must stay up-to-date with the payer’s guidelines for claim submission. Ultimately it guarantees that everyone understands the same set of rules.
5. Timeliness Troubles: Late Claim Submission
Failing to submit claims on deadlines given by insurance companies, even by a single day, guarantees rejection.
Scenario: If the deadline for the claim to be submitted is 90 days after service and you have submitted the claim after 92 days, it will be automatically rejected.
Practice to follow: Develop a tracking system to avoid missing any claim submission deadlines.
6. Coordination of Benefits (COB) Confusion
A patient can have more than one insurance policy, and an expert team of medical billing must have information about the primary payer of the patient. If claims are submitted to the wrong payer such kind of Medical billing errors leading to rejections of claims.
Example: A service is availed by the patient having private insurance and medicare insurance. One must evaluate a primary payer otherwise submitting a claim to a secondary payer will result in claim rejection
Practice to follow: Evaluate detailed COB information of the patient before submitting a claim.
7. Duplicate Claims Issues
Rejection of duplication can result in the case of submitting the same claims multiple times. The main reason can be a lack of coordination among team members.
Practice to follow: Verify claim submissions efficiently by developing centralized billing systems.
8. The Challenges of Missing Paperwork
Certain type of claims require additional paperwork, such as medical records and pre-authorization to avoid rejection.
Scenario: A claim of chiropractic care requiring treatment notes is submitted without them. Insurance companies will reject such claims.
Practice to follow: For claims requiring documentation, maintain a checklist to ensure that all documentation is done accordingly, thus preventing medical billing claim rejections.
Medical billing denial Categories
1. Eligibility Denial
If the patient is not enrolled in any other plan and their previous insurance has ended. e.g., the patient is visiting for services recently whereas his insurance contract has ended last month
2. Medical Necessity Denial
The service or treatment provided was not medically necessary as per the insurance company.
3. Authorization Denial
Claim denial can result if prior authorization has not been taken.
4. Lack of Provider Network Participation
The patient is taking the services of a provider that is not on the list of the patient’s insurance network.
5. Exceeding Benefit Limits
Denial can occur if the patient has availed the maximum number of particular services.
6. Non-Covered Service Denial
Whether the services taken by the patient are covered by the payer or not.
The Bottom Line: Mastering the Rejection Maze
Think of every rejection as a part of learning and improvement. By implementing some practices, the medical billing team can streamline the process of revenue cycle management. EMDEON understand why medical bills get rejected by evaluating reasons for rejections to healthcare providers. EMDEON’s team of billing experts takes into account a minute detail thus making it easier for healthcare providers to submit their claims with greater accuracy and improved revenue.
So, roll up your sleeves, tackle those challenges, and see how work efficiency will be improved.
FAQs
1. What are the common types of rejections in medical billing?
The most common types of rejections include missing or incorrect patient information, invalid procedure or diagnosis codes, eligibility issues, and duplicate claims.
2. How do rejections differ from denials in medical billing?
Rejections occur when a claim fails initial processing due to errors and can be corrected and resubmitted. Denials happen when a payer processes a claim but refuses to pay, requiring an appeal.
3. What are the best practices to prevent claim rejections?
To prevent rejections, ensure accurate patient information, verify insurance coverage, use correct codes, and perform pre-submission audits of claims.
4. How can rejected claims be resolved?
Rejected claims can be corrected by identifying the issue, making the necessary changes, and resubmitting the claim promptly to the payer.
