Denials are one of the more frustrating aspects of medical billing. A denial is basically an insurance company’s ploy to not pay a claim. There are many reasons that a claim will be denied. Industry Standards show that denials should be 2% or less of monthly net collection. Keeping denials to a minimum can be challenging; however, it is key to successful Revenue Cycle Management.

To improve your denial management, the first step is to analyze current denials received. Start with the top/most common denials received and work from there. What are the reasons for denials – incorrect patient eligibility and benefits, lack of authorization, lack of medical necessity, coding errors, billing errors or something else? Tracking this will allow you to determine and understand what needs to be done to reduce and/or avoid denials. Some denials are avoidable and can be eliminated with a proper denial management process.

Incorrect patient eligibility and benefits: the front-end staff holds a vital and key role in any medical office/practice/setting. Carefully looking at the insurance card is key to obtaining the proper information for the patient. Checking eligibility and benefits is essential and key in a smooth claim process.

Lack of Authorization: the front-end staff should be aware of the patient’s insurance policy and benefits. Checking these benefits is key to knowing if prior authorization is required.

Lack of Medical Necessity: Coding staff should be aware of the different payers and the clinical medical policies that these payers have. Medicare has Articles/LCDs/NCDs that are specific and clear of what diagnosis code is required for a certain CPT code. Most payers will have these readily available on their website.

Coding Errors: Coding staff should be up to date on coding changes for payers. Many times, a denial is received due to missing a digit on a diagnosis code or use of an incorrect modifier.

Billing Errors: this is a wide area for denials to occur. From duplicate claim to past timely filing to the claim already being adjudicated, the Billing/RC team should verify and review the claim details before refiling a claim.

There are many other areas of denials that can take place. Knowing what the top denials are and working to avoid them is key. Once these denials are uncontrol, reviewing additional denials is the next step. Putting a plan into motion and holding the team responsible will help make the process run smooth and eventually, the denials will drop within a normal and manageable range.