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Five Reasons Medical Claims are Denied

With healthcare administrative costs making up approximately thirty percent of all medical bills received in the United States, it is essential that claims filed to different insurance networks meet the specific criteria of each payer in order to avoid a lengthy correctional process, costly paperwork and further frustration. Administrative costs are a component of the healthcare system in the United States that many know exists, but only few understand. Healthcare administration charges include all activities related to coordinating health and medical services, such as scheduling, billing, and claims processing. Becoming familiar with the different reasons a claim could be denied can help limit the number of denials a clinician’s office and the patient receives. This also can be an enabler of progress between both payers and providers relationships. Signature is well positioned and building a bridge of comprehension between these two important healthcare services.

Incorrect Patient Identifier Information

When it comes to assessing the cause of a denied claim, the answer could be as simple as a name or birth date error within the submitted paperwork. Even though this unintentional typo may seem minor, if the information does not match the health plan that the payer has on file, this would cause a medical claim to be marked as denied. Understanding the impact of this simple error is important as it slows down an already complicated process for all involved. When this very simple fix is enacted it will reduce rework and lower overall administrative fees through streamlining the process and improving accuracy. Some of the most common mistakes that can cause a claim to be denied due to incorrect patient identification information include:

  • The patient's first or last name is incorrectly spelled.

  • The patient's date of birth on the claim doesn't match the date of birth on the health insurance plan.

  • Missing or incomplete patient information was submitted.

Coordination of Benefits

Coordination of benefits is a term used when a patient has two or more health insurance plans in their name. Certain rules typically apply to determine which health insurance plan pays the primary or secondary amount for medical expenses. There are a number of guidelines that every clinician’s office must follow in order to determine how much to bill each health insurance plan the patient has. Proper coordination and understanding of the payer/provider rules of engagement speeds up this process resulting in proper funding being allocated quicker and more efficiently. This opens the door to a mutual win between both healthcare payers and providers.

Missing or Invalid CPT or HCPCS Codes

Accurate medical documentation is a critical aspect of billing within the revenue cycle process in the healthcare industry. Providers use these detailed medical records to validate their reimbursements to payers when a conflict with a claim has been issued. In order for medical claims to be processed correctly, there are standard codes used to identify services and procedures. Changes to the HCPCS codes are updated periodically due to new codes being developed for newer procedures and current codes being revised or removed entirely. By ensuring that documentation is correct before it is sent to the payer, the flow of the revenue cycle can go uninterrupted and healthcare administration costs can be kept at a minimum.

Referral or Pre-Authorization was Required or Expired

Proper referral or pre-authorization eliminates rework and impacts not only the administrative cost, but improves the quality and timeliness of care. For example, If you have recently undergone a medical procedure and had your medical claim denied, there is a chance that a referral or pre-authorization was required prior to the procedure. If you did receive a referral or pre-authorization, there could be a chance that the authorization request expired. Insurance companies generally give physicians either a certain number of appointments or a certain number of days before authorization runs out. If care is given following these days, the physician will not get paid for his/her services. Knowing which insurers require pre-authorization and for what is key.

Medical Services Excluded from Plan Coverage

Exclusions or non-covered medical procedures are medical services that are not included on the patient's health insurance plan coverage. When this happens, patients are responsible for 100% of the care they received from the provider. Most clinician offices will reach out to a patient before the service is provided to inform them that a specific procedure or appointment may not be covered by their current plan. A complete understanding of plan coverage will not only improve efficiencies, but help to eliminate undue patient stress during the process.

Signature Performance Reduces Healthcare Administrative Costs

At Signature Performance, we are dedicated to making a lasting impact in the nexus of healthcare by inhabiting the payer, provider, federal and community sectors. Our unmatched experience on both the payer and provider side of the business allows our team the opportunity to evaluate some of healthcare’s largest challenges from a variety of perspectives and create custom solutions that get to the core of the problem. We believe the healthcare industry in the United States deserves only the best, and that sentiment is what motivates our dedicated team to do our very best each and every day. It’s our calling to bend the cost of healthcare administration by improving the overall quality and experience while minimizing resources and cost. To learn more about Signature Performance, contact our team today or check out our career page for a list of our latest career opportunities.


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