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  • Writer's pictureRMK HOLDINGS INC.

Do You Have a Claim Rejection or Denial?

Updated: Sep 29, 2022

A huge threat to receiving timely healthcare reimbursements are the dreaded claim rejections and claim denials. In addition, these are two phrases often used interchangeably in healthcare billing circles that shouldn't be because they hold two different meanings. Understand the difference and adjust your workflow to reduce double work.

Claim Rejections

Claim rejections refer to submitted medical claims not meeting the proper formatting or data requirements suggested as guidelines by the Centers for Medicare and Medicaid Services (CMS). Insurance companies cannot process these because they never enter them into their computer systems. This screening process used by insurance carriers turns away improperly coded and entered claims as soon as possible in the workflow. If not technically received by the insurer, the claim is not processed. Most practices today utilize a clearinghouse and have claim edits set up in their practice management system to reduce the likelihood of rejections. Quickly correcting errors and resubmitting for insurance processing should be at the top of daily tasks.

Improve efficiency in this stage by consistently trending, analyzing, and tracking what the top rejections are and by which payers. You will begin to see patterns that can be used to fine tune your system, improving first pass clean claim rate. Additionally, this information can be packaged into great training topics and discussion to progress knowledge. Be sure information is shared with all vested parties so everyone is on the same page!

Claim Denials

Claims received and processed by the payer where payment is denied because a negative judgement about the claim was made are claim denials. The provider has decided they will not pay the claim.

This type of claim cannot be easily fixed and quickly resubmitted for payment. They need to be researched (by the provider or a third-party administrator) to ascertain the reasons for the denial. Then an appeal or reconsideration of the case must be prepared before resubmitting it. In fact, if a claim denial is resubmitted without an appeal or request for reconsideration, it will probably be denied as a duplicate. If your team receives a duplicate claim denial, it means the claim was already resubmitted and a decision previously rendered. Your denial management team should be digging deep to uncover the cause of the original denial! Remember, the true test is not the quantity of claims touched/worked but how many were accurately closed/paid.

The American Medical Association's National Health Insurer Report Card (NHIEC) publishes metrics on claims processing including the top five major reasons for denials:

  • Claim is submitted after the insurer's deadline for filing.

  • Claim was adjudicated and the same one was received again.

  • Incorrect or missing data necessary to process the claim.

  • Services not meeting the carrier's plan policy guidelines or not covered.

  • Procedures submitted separately that were already included in another service or treatment.

Improving Claim Denial / Rejection Rates

  • Ensure automated software is up to date with payor guidelines both at local and national levels.

  • Enlist vendors to optimize your system for specifics you have with your specialty to mitigate additional labor on the back end to rework claims.

  • Perform routine chart audits to catch trends.

  • Track and analyze the reasons for claim denials and rejections; adjust the workflow accordingly.

  • Educate the staff on how to quickly handle denials and rejections by knowing what to look for and how to respond. Make it a priority.

  • Collaborate with payers to adjust contract requirements that lead to denials that are regularly reversed on appeal. If you are tracking your denials, you have the data at your fingertips!

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