Getting your claims denied? Here are reasons why and what you can do about it

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A recent voluntary, national survey by Premier shed new light on denied claims. The survey, conducted from October to December 2023, revealed that nearly 15% of all claims across Medicare Advantage, Medicaid, Commercial, and Managed Medicaid are denied. Of those denied claims, 45% to 60% were overturned, albeit with a costly appeal process sometimes involving multiple appeals.

Many physicians face financial burdens when claims are denied, leading to difficulties meeting payroll and hindering investments in necessary medical equipment advancements. Additionally, closures of hospitals and health clinics are occurring in communities nationwide due to this issue. Many physicians opt to outsource their revenue cycle management (RCM), but this article will discuss why a hands-off approach may pose financial risks.

Gretchen Heinen, RN, PHN, BSN
_{© Authsnap Inc.}

Wael Khouli, MD, MBA
_{© Authsnap Inc.}

With a skillfully crafted appeal letter, a denial can be overturned 50% to 70% of the time. In this article, we will cover denial basics, reasons for claim denials, and actions to take.

It is crucial to address all potential reasons for claim denial, including:

• Lack of coverage: The service or treatment may not be covered under the terms of the insurance policy due to various reasons such as being considered experimental, investigational, or excluded due to specific policy limitations.
• Incomplete or inaccurate information: Errors in patient information, physician’s details, or service information on the claim form can lead to denial.
• Failure to meet medical necessity criteria: Some insurance policies require services or treatments to meet specific criteria for medical necessity for coverage.
• Out-of-network physicians: Services provided by health care physicians outside the insurance company's network may be denied or only partially covered.
• Prior authorization requirements: Services or treatments requiring prior authorization must follow the insurance company's process; otherwise, the claim may be denied.
• Coordination of benefits issues: When patients have multiple insurance policies, resolving coordination of benefits issues is necessary for claims processing.
• Timely filing limitations: Claims must be submitted within the insurance company's specified timeframe; otherwise, they may be denied.

If a claim is denied, the insurance company must explain, including specific reasons for the decision. In many cases, patients and health care physicians have the right to appeal the denial by providing additional information or documentation to support the claim. However, the denial explanation in the received letter is often vague, and the individual handling the appeal may lack clinical expertise to effectively overturn it.

Here are three things to consider in your appeal process:

1. Utilize clinical practice and society guidelines while avoiding complete reliance on proprietary criteria. Insurance companies are persuaded by clinical best practices more than they care if something “meets criteria” of software they do not even use.
2. Understand the appeal process outlined in the contract with the commercial payer and provide feedback if terms seem unfair. Each payor publicly lists their criteria, albeit sometimes in small links on their website. Make sure your team is looking at those and reading them carefully.
3. Ensure the person handling appeals and RCM understands prior authorization nuances and stays informed about any changes. A prevented denial is a denial you never have to touch. A strong PA process is critical to a well-rounded denial program.

Maintaining a solid process, workflow, tracking, and reporting is essential. While it may be tempting to be hands-off with denials due to business day to day, it's a critical area that impacts financial health, and outsourcing requires careful consideration. If your denial overturn rate is below 60% or not being tracked, consider adding an expert to help.

Gretchen Heinen, RN, PHN, BSN, a skilled RN case manager with 15 years of comprehensive case management expertise, specializing in reducing avoidable admissions, optimizing health care resources, and aligning them with payer criteria. She is founder and CEO of Authsnap Inc. Wael Khouli, MD, MBA, is a seasoned physician executive with more than 20 years of experience in clinical care and health care management, known for leading diverse medical teams, implementing innovative health care programs, and elevating the quality and efficiency of medical care. He is chief medical officer of Authsnap Inc., a team of health care experts dedicated to creating solutions for hospitals in revenue cycle management.