Top 3 Reasons for Claim Denials and How to Prevent Them

A Header Image Showing A Medical Professional Looking Down At A Laptop, With Insurance Claim Folders Behind Them On A Shelf. The Headline Reads: &Quot;The Top 3 Reasons For Claim Denials And How To Prevent Them.&Quot;

There are few things more disheartening and frustrating than having your medical claims denied. However, with the right digital solutions in place, your revenue cycle management (RCM) can be automated and streamlined, making it easy for your staff to catch errors before a claim is ever submitted! From specialty-specific clinical documentation to automated claim scrubbing, utilizing an all-in-one electronic medical record (EMR) system like Raintree can help you gain operational efficiencies and significantly reduce denials. 

But in order to address claim denials, it’s important to acknowledge and understand why they occur. Here are the top three reasons why your practice might be seeing denials:

  • Registration and eligibility
  • Claims aren’t submitted on time
  • Medical coding errors

Let’s go over how these issues impact your business, the main reasons why they might be happening, as well as how Raintree’s automated front office and back-end billing workflows can help prevent denials!

Claim Denial vs. Claim Rejection

First, it is vital to understand the difference between a denial and a rejection of a claim.

In short, a denial is a claim that has been processed by the insurance company and deemed unpayable. The unfortunate matter with a denied claim is that you cannot simply correct the claim and resubmit it – your options are limited to filing an appeal or reworking an entirely new claim. Be careful here, because resubmitting a corrected claim without the appropriate appeal paperwork can be considered a duplicate document and be denied again, possibly incurring fees!

Alternatively, an insurance company can reject a claim before it is processed, saving your practice the hassle of dealing with a denial. Rejected claims are often due to missing required information, meaning that the claims didn’t meet the basic criteria to be processed. These claims can often be corrected and resubmitted without any additional fees or paperwork.

Why Are Claim Denials Bad for Business?

Multiple denials can lead to an insurance company ending its contract with your organization, particularly if it’s a routine occurrence. What’s more, filing an appeal can be a lengthy, expensive process, so it’s best to do everything possible to avoid getting a denial in the first place.

Sadly, not all insurance companies will return claims with an explanation of benefits (EOB) to help determine why the claim was denied, leaving confused therapists and their staff to research complicated coding criteria without much direction. This research time, coupled with the appeals process, can result in significant delays in payment, additional responsibilities for overworked office personnel, and sometimes even missed deadlines for claims to be reimbursed!

Any number of claim denials can damage a therapy and rehab practice’s ability to function, which is why having an automated RCM system that can generate an EOB with every claim is a must. By taking advantage of Raintree’s billing tools, your practice can ensure denials are appealed in a timely manner.

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Good Revenue Cycle Management

When running a successful therapy practice, looking for digital solutions that promote accuracy and timeliness is critical! Here are some strategies to implement in your business that can optimize your financial operations and cut down on human error:

  • Internally audit your practice to determine the risk for denials
  • Train staff to identify errors before claims are submitted
  • Replace manual processes with integrated automated RCM solutions

To better understand how to employ these practices, let’s take a closer look at the three primary reasons behind claim denials and what proactive steps can be taken to avoid unnecessary issues.

1. Registration and Eligibility

Notably, 26.6% of denials are caused by registration or eligibility issues. This can mean several things – and in cases where the denial was not returned with an EOB, it’s up to you to determine the cause. Reasons for this type of denial include:

  • Procedure not covered. This means that the insurance company does not reimburse a specific treatment. While most standard, frequently-used current procedural terminology (CPT) codes will not be problematic, issues can occur. For instance, an insurer may have a rule that a physical therapist cannot bill Therapeutic Activity 97530, and conversely, an occupational therapist cannot bill Therapeutic Exercise 97110, even when the medical necessity of one of these procedural codes is unquestionable.
  • Maximum benefit reached. Some insurances have annual limits on the dollar amount or number of therapy visits a beneficiary is allowed. Submitting claims when this maximum has already been reached may cause a denial.
  • Absence of coordination of patient benefits. Some patients have multiple payors, and a claim must be submitted to their primary insurance first. Then, the balance is submitted to their secondary insurance. Then, tertiary and so on. Coordination of benefit denials occur because:
    • The estimate of benefits is missing
    • Another payor is considered primary
    • The beneficiary hasn’t updated additional insurance information

The Solution

Between coordinating patient benefits, keeping up to date on payor-specific rules, and juggling reimbursement caps, the registration and eligibility issues can get complicated! With a comprehensive RCM and billing platform, your practice can tackle these issues easily with eligibility check modules that verify coverage before submitting a claim and payor-specific billing management tools.

2. Claims Not Submitted on Time

Claims must be submitted within a certain number of days and appealed claims are no exception! In fact, a claim that is sent before a deadline but isn’t received until after the deadline has passed will be denied automatically. While insurance providers generally provide plenty of time to submit a claim, the Affordable Care Act reduced the claims-submittal period from 15 – 27 months to 12 months, which just goes to show how important it is to stay up-to-date on new rulings. 

The Solution

As stressful as these deadlines may be, when you pick Raintree’s EMR, you don’t need to worry! Our RCM system keeps you on track by automating submissions and monitoring claim statuses as they process.

Rcm And Billing Hero

3. Medical Coding Errors

We all make mistakes, right? Unfortunately, medical billing is a big place to make even a little slip-up. An error that was simply an innocent oversight may be considered fraud or abuse by insurance companies – which can mean major trouble for your practice, especially if these mistakes are repetitive. Common coding errors include:

  • Unbundling or the use of multiple CPT codes for individual parts of a single procedure
  • Upcoding or using the highest-level CPT code for a patient that required a lower level of treatment
  • Failing to check National Correct Coding Initiatives (NCCI) edits for correct billing procedures
  • Incorrect modifiers that may double-bill for a service

The Solution

Fortunately, Raintree’s RCM and billing tools can significantly cut down on these errors with denial management tools that can catch NCCI edits and incorrect modifiers, as well as technology that can scan clinical documentation and assign the appropriate CPT codes according to the service rendered.

Use Raintree to Prevent Therapy and Rehab Claim Denials

Sure, Raintree can help streamline your revenue, increase your number of clean claims, and boost the efficiency of your practice, but did you know that our practice management software can do so much more than prevent denials?

With the therapy and rehab field growing exponentially, it’s important that your digital solutions not only keep up but also ensure that you grow with them! From automated RCM and billing to scalable business intelligence tools to patient engagement, stay ahead of the game with Raintree’s all-in-one EMR.

Interested in how Raintree’s custom solutions can be tailored to benefit your organization? Don’t wait to future-proof your therapy and rehab practice. Schedule a discovery call or contact a Raintree representative today!

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Blogs are created for educational and informational purposes only.  The information provided does not constitute or, is not intended to constitute, legal or medical advice. When you read this information, visit our website, or access our materials, you are not forming an attorney-client, provider-patient, or other relationship with us.

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