Navigating a complex reimbursement landscape: 10 reasons for denials

Payers utilize cutting-edge technology and advanced systems to detect claim anomalies and perform multi-tier reviews. This results in denied claims and lengthy appeals processes. Also, the criteria for a clean claim has changed and become more complex.

The claim submission process is no longer linear. A complicated payer matrix and increased variables in the payer contract add several layers of complexity to the reimbursement process.

Unmet prior authorization requirements are the leading cause of claim denials. A poll by MGMA (Medical Group Management Association) states that 86% of healthcare organizations feel that the prior authorization burden is worsening. Every medical practice spends close to $68000 annually on PA related denials.

These are a few common reasons why claims are denied due to prior authorization gaps:

• Incorrect or missing number in the prior authorization form.
• Authorization is not valid for the service date or procedure code.
• The PA request exceeds limits of the patients’ coverage.
• Insufficient supporting documentation.

Medical coding and documentation errors are seen as a necessary evil in healthcare circles. In 2023 there will be 225 new CPT codes and 93 revised codes. Evaluation and management codes have seen a complete overhaul this year. The Medical Decision Making table has also seen sweeping changes. Staying on top of vast changes in the coding space is a herculean task.

To close the loop between clinical care and reimbursement has never been more urgent or critical.

Though coding denials account for less than 10% of medical claim denials the numbers add up over time and become a major source of revenue drain. In fact, medical coding errors are seen as a top reason for revenue cycle vulnerability.

Clinical documentation presents a huge revenue cycle challenge for provider organizations. The need for pristine clinical documentation places additional administrative burden on providers. The current coding and documentation processes aren’t optimized for the DRG payment system. A survey by HIMSS Media states that 68% of hospital finance leaders do not think that their current systems are equipped to manage the DRG system.

Detailed documentation has become a mainstream-must and is tied to enhanced reimbursement.

A strong reimbursement process rests on accurate clinical documentation. Insufficient or inaccurate clinical documentation and lack of standardized CDI programs result in a high denial percentage and unresolved denials.

The eligibility and benefit verification process is fairly straightforward. The front-desk staff receive the coverage information of patients, verify details and help the patient progress to the next steps of the care journey. What can possibly go wrong? A lot.

A survey by Becker’s Hospital Review reveals that 24% of medical claim denials are due to eligibility verification errors. Upstream issues such as patient registration and benefit verification are a significant cause of claim denials.

Automatic rebilling creates duplicate claims. It is important to check the status of the medical claim before resending it to payers. Checking ERA to understand initial denial reasons and other details about previously posted claims minimizes duplicate claims.

To address claim denials always provide a valid re-determination request and supporting documentation.

The timely filing limit is the timeframe in which a claim can be submitted to payers. The TFL differs from payer to payer and across various health plans. This can lead to missed TFL and subsequent denials. Also, delays in addressing claim rejections result in payers denying reimbursement because of exceeding the timely filing limit.

The average provider organization grapples with multiple systems and processes. Disjointed workflows promote inefficiencies across the revenue cycle continuum and lead to increased denials and cost to collect. Systems that do not integrate seamlessly or processes that operate in silos are silent revenue killers. They cause denials to pile up and unrecovered AR.

Constant software upgrades cause AR backlogs and inaccurate, incomplete claims. The need for a centralized system and technology that can talk to one another are essential to prevent revenue from slipping through the cracks.

A sharp rise in high deductible health plans and insurance marketplaces are two key factors that have caused claims processing to become more complex. It has now become a more time-intensive process fraught with inconsistencies. The American Medical Association cites that claims processing inefficiencies cost $120 to $210 billion a year. To absorb the high cost of denied claims due to systemic failures is no longer feasible for provider organizations as margins shrink.

The cost of reworking denials is high, and this underscores the importance of having a strong denial prevention process. Taking preventive steps brings down denials and is a more effective approach to managing denied claims. According to HFMA, 90% of denials are preventable.

Identifying denial patterns can bubble up opportunities for prevention. Technology coupled with holistic process improvements will pave the way for a robust denial prevention process.