Rejected or denied? 4 questions for improved clean claims (2024)

If your work involves generating revenue for your practice, you may be tasked with claim and denial management. To be successful, you must understand not only the requirements for a clean claim but also the reasons behind medical claim rejections and denials, and ultimately, the strategies to avoid them in the first place.

Read on for four critical questions to ask to help you reduce rejected medical claims and medical claim denials. By understanding the answers, you can identify the most common reasons for claim rejections and denials, update your processes, and improve your clean claim rate.

1. Rejected or denied. What’s the difference?

Let’s start by tackling the difference between rejections and denials. A claim rejection occurs before the claim is processed and most often results from incorrect data. Conversely, a claim denial applies to a claim that has been processed and found to be unpayable. This may be due to terms of the patient-payer contract or for other reasons that emerge during processing.

Here are a few clearinghouse rejection messages you may encounter:

• “Entity/subscriber not found.” This means the payer cannot locate this member using the provider ID number. You should check eligibility to determine if the information is correct.
• “Medicare member ID must be alpha/numeric.” The Medicare ID number provided is incorrect, or it may be in an invalid format. Check the patient’s card.
• “Payer claim control number is required; segment REF is missing.” The payer will require the original reference number on this corrected, adjusted, or voided claim. It’s also called the original claim number (ICN).
• “Diagnosis code must be valid.” The diagnosis code may not be valid for the date of service (DOS). Check with the coder.

2. What other reasons cause claims to be rejected … or denied?

The Greenway Clearinghouse Services Portal processes more than 270,000 claims per day. Although nearly 98% of those claims are accepted by payers for adjudication at first pass (the goal is 95% or higher), we’ve come across a wide range of rejection and denial reasons. These are the most common:

• Rejection reason: duplicate claims. To avoid duplicate claims, always check the status of a claim before resending. Also, check electronic remittance advice (ERA) for previously posted claims, and verify the initial denial reason. You may submit an appeal for denied claims, providing documentation with a redetermination request, but do not resubmit claims while identical claims are still pending, or when a partial payment has been made. Also, avoid automatic rebilling.
• Rejection and denials reason: eligibility. Verify the patient’s information prior to the visit. To avoid eligibility rejections or denials, ensure the patient provides accurate information before or during registration and scheduling, obtain copies of the patient’s insurance card, and try to avoid data entry errors. Also, verify dates of eligibility and benefit coverage, and obtain authorization when needed.
• Rejection reason: payer ID missing or invalid. Check the payer ID. Is it missing or invalid? You can search ourlist of connected payers, which is also accessible through the Greenway Clearinghouse Services Portal, for up-to-date payer IDs. Always make sure you use the correct payer ID for the type of claim — whether it’s institutional, professional, or dental. Also, include a secondary payer ID if necessary.
• Rejection reason: billing provider National Provider Identifier (NPI) missing or invalid. First, be sure the tax ID and provider information for your practice are up to date. To avoid billing provider “missing or invalid” rejections, confirm the billing provider is credentialed with the payer or payers and enrolled with the clearinghouse to submit electronic claims. Confirm the correct group or individual NPI is credentialed, and make sure the correct tax ID is credentialed as well.
• Rejection reason: diagnosis code. To get the most revenue per service, make sure you’re using the most up-to-date codes and coding at the highest level per procedure. Codes must be as specific as possible. To avoid rejections due to a missing or invalid diagnosis code, be sure to verify the diagnosis is active for the date of service. Also, make sure the diagnosis is consistent with procedure being performed.

3. What’s the best way to follow up on claims?

MGMA states that 25% of all claims not paid are never followed up on. That’s a lot of missed revenue. Using a date system, you can manage denials and follow up on claims as a matter of routine. To create a workflow to follow up about 25 days after claims are submitted, follow these steps:

• Compile a list of your top payers and document their timely filing deadlines.
• Use your Practice Management System to “tag” claims with a follow-up reason code and follow-up date.
• Work claims daily that are ready for follow-up on that day; work backward by date to catch any claims past the follow-up date.
• Eliminate claims that are “lost” and ultimately denied for timely filing.

Common follow-up reason codes include the following:

• Bundled: Included within the service or procedure on the same DOS.
• Non-cov: Describes a non-covered service/procedure.
• Auth: There is a missing authorization or precertification.
• Med recs: The payer needs a copy of the office, progress, and procedure notes.
• Code: The claim was denied due to CPT or diagnosis (DX) issues.
• Mod: The modifier is needed or is invalid.

The Centers for Medicare & Medicaid Services (CMS) has removed social security numbers from Medicare cards and replaced them with a new form of identification, the Medicare Beneficiary Identifier (MBI), for improved patient identity protection. CMS advises practices to use MBIs for all Medicare transactions going forward. Read more.

4. What’s the role of a clearinghouse in improving denial management?

The clearinghouse assists with denial management, which is critical to effective revenue cycle management. By sending electronic claim and financial information securely to insurance carriers, the clearinghouse software secures electronic protected health information (ePHI).

Electronic claim submission takes administrative tasks and paperwork off your practice’s plate, which leads to significant cost savings. With fewer claims lost or incomplete, electronic claim submission increases accuracy and delivers to payers in real time. There are fewer clearinghouse rejections as a result. Plus, you can track claim status easily, at any time. With a faster-moving claims cycle, cash flow disruption is less likely.

If you’re considering a clearinghouse, it’s important to choose a vendor that is aligned with your needs and goals. Working with a clearinghouse, your billers can manage all electronic claims from an online dashboard or other single location.

A clearinghouse can help you better manage the full claim cycle through technology fully integrated with your practice management system. In addition to being able to electronically submit claims to thousands of insurers, you can receive ERA reports, verify insurance eligibility, send electronic prescriptions, and more. The result is greater control and visibility into the claims lifecycle — and improved financial health for your practice.

CLICK HEREto learn more about Greenway Clearinghouse Services. If your practice needs assistance with revenue cycle management, Greenway Revenue Services is here to help.