Managing Denied Claims as a Medical Practice

Denied claims are inevitable. When they occur, it’s important that providers have a solid process in place to manage them. Handling denied claims requires juggling multiple moving parts like patient records, insurance information, and payment policies for each plan type. This post will provide tips on how to best manage denied claims as a medical practice. Read on to learn more about why you should handle denials as a medical practice and how you can improve your processes so you mitigate the impact of these denials rather than have them impact your business operations.

Why Medical Practices Should Handle Denied Claims as a Practice

Denied claims cost practices money. The impact of lost revenue can be compounded by administrative costs associated with re-submitting claims, as well as the potential for litigation when patients feel their rights have been violated. This is why it’s important for medical practices to handle denied claims as a practice, meaning having a process in place for all team members to follow when handling these denials. When claims are denied, practices need to know who will be responsible for handling the denials and have a standard way to deal with them. To ensure a consistent approach across the practice, a best practice is to assign a person or team to handle denials. This ensures that all members are following the same process and gives them a single point of contact when they need help resolving or dealing with denied claims.

Some medical practices will accept all denials on the spot and then just pass those along to their providers. This is often a dangerous practice since it is difficult to find the root of the problem and identify a solution that will work for all providers. If a medical practice accepts denials, they have access to the claim information and can easily identify the reason for the denial and then work with providers to correct and resubmit the claim. A medical practice accepting denials for themselves and for providers allows for more thorough review of the claim and more precise identification of areas for improvement. This will result in denials being resolved more quickly and with less strain on providers. Another reason medical practices should handle denials is because they have access to information about their reimbursements that no individual provider does. When a claim is denied, providers receive the same message all the time. But a medical practice, which receives denials for itself and for all providers, can see if there are any patterns. And a medical practice can then pass this information on to all providers so they can address the root cause of the problem.

Establish a Solid Process for Managing Denied Claims

As a medical practice, you have a responsibility to providers to manage their denials as effectively as possible. Having a solid process in place is critical to improving your overall claim denial management. This includes tasks such as reviewing the reasons for denials, notifying providers of denials and the reasons behind each one, and working with providers to resubmit corrected claims so they can receive payment. If a medical practice is not managing denials effectively, providers will experience an increase in stress and frustration and may even quit the practice. In turn, this will cause a major negative impact on your cash flow, operations, and staffing. To manage denied claims more effectively, a medical practice can take a few key steps. The first is to create a policy for handling denials. This policy should include the reasons for denial, the process for handling denials, and how providers can appeal denials if needed. The policy will help providers stay on top of their denied claims and provide a clear path for resolving any issues that may arise. And the process for handling denials at a medical practice should include each step of the process needed to identify the root cause of a denial and then corrected the claim so it can be paid appropriately.

Because each claim is unique, there is no one-size-fits-all approach to resolving denials. That said, there are some best practices you can follow to help manage denials. This includes creating a process that is repeatable so every team member follows the same steps to resolve denials. Here are some tips for establishing your process for handling denials: 

1. Identify who will be responsible for each type of denial. When a claim is denied, the insurance company will provide some type of written notification to the patient explaining the reason for the denial. The team member who is responsible for the initial communication with patients about the denial should be designated ahead of time. It’s also important to have a team member who will manage the appeals process. 

2. Assign a standard process for handling each type of denial. When a claim is denied, the team member who is responsible for initial communication with patients should manage the first step in the process. In other words, there needs to be a uniform starting point for each type of denial. You should include who the team member should contact, what information they should seek, and what they should communicate to the patient.

3. Establish a process for reviewing denials. When a claim is denied, the team member who is responsible for initial communication with patients should proceed to the next step in the process. In other words, there needs to be a uniform standard for reviewing denials. 

4. Set up a process for resending denied claims. When a claim is denied, the team member responsible for initial communication with patients should proceed to the next step in the process. In other words, there needs to be a uniform standard for re-sending denials.

Review the claim and identify errors

When a claim is denied, the first thing to do is review the claim to see if there are any obvious errors. This can include reviewing the patient’s demographic information, visit information, and any other information that may have been misread by the insurance company. Ideally, a provider should be reviewing the documentation on all claims before they are submitted. This way, if there is a mistake on the claim, the provider can identify and correct it before submitting it to the payer. If a claim has been denied, check the date to make sure you’ve submitted it in a timely manner. Next, check the type of service that was provided. Make sure it is consistent with the diagnosis. For example, if you billed for an MRI, make sure it was an MRI and not an X-ray. It’s also important to check the date of service and the diagnosis codes that were entered on the claim to make sure they match the patient encounter.

After finishing everything, review the claim again to identify any potential errors such as missing or incorrect information, or a lack of proper documentation. You can also review the claim to ensure that the proper modifier was used. Even seemingly small mistakes can cause a claim to be denied. Once you’ve identified errors, you can correct them and then resubmit the claim.

Resend the claim with explanation of benefit (EOB) information

If errors are not the reason for the denial, then you will need to obtain EOB information from the payer. When a claim is denied, a payer will provide the patient with an EOB. The purpose of an EOB is to provide a brief explanation as to why the claim was denied. The EOB will contain information like the diagnosis code, the dollar amount of the claim, and the reason it was denied. Providers need to obtain this information from the patient and include it when they resend the claim. Doing so will increase the likelihood that the claim is paid. If a payer is denying a claim because it doesn’t have enough information, get the patient’s permission to obtain the missing information.

Resend the claim with an appeal letter

If errors are not the reason for the denial and you’ve obtained EOB information, the next step is to resend the claim with an appeal letter. In the appeal letter, briefly explain why the claim was denied. Include the EOB information so the payer knows why the provider is disputing the denial. Next, provide documentation to support your position. Make sure to submit the claim with the appeal letter to the payer on the same date as the original claim. If you send the claim first, then send the appeal letter, the payer will not see that you’ve resubmitted the claim. If a payer is denying a claim because it needs more information, get the patient’s permission to obtain the missing information.

Escalate denied claims that are part of a larger problem

If you’ve followed the steps above and a claim continues to be denied, then it’s time to escalate the denial. This means speaking to someone at the payer to resolve the issue. There are a few ways to do this. First, you can call the payer directly and ask for assistance in resolving the denial. Another option is to request a review by the third-party administrator (TPA). The TPA is the party that contracted with your payer to handle claims and payment. By escalating denials, you can determine if there is a larger problem that is leading to more denials. Maybe there is an issue with coding, documentation, or another aspect of the workflow. Once you identify the source of the problem, you can implement a solution so future denials don’t impact your bottom line.

If a claim is denied and you feel comfortable responding with an explanation of benefits or an appeal letter, do so. If a claim is denied and you feel that there is more going on and that the provider should not be held responsible for the denial, it’s important to escalate the claim to a higher level. This may include contacting the insurance company that denied the claim and informing them that the visit was necessary and that the claim was coded appropriately. It may also include contacting the insurance company and requesting an appeal letter on behalf of the provider. You can also use your knowledge of your own claims to identify patterns. If you see a high percentage of claims being denied for a specific reason, you can then work with providers to correct the issues and improve the process. This will help reduce the number of denials your practice experiences and will help providers see the benefits of working with your practice.

Actionable Insights

Denied claims are an unfortunate reality of operating a business. The best way to mitigate the impact of these denials is to handle them professionally and quickly. This means having a process in place so team members know what to do and when they should act when a claim is denied. A repeatable process allows practices to manage the volume of denials they receive each month. When a claim is denied, the team member responsible for initial communication with patients needs to proceed to the next step in the process. In other words, there needs to be a uniform standard for reviewing denials. 

When a claim is denied, it can be easy to get frustrated and feel like there is nothing you can do. It’s important to keep in mind that most denials have nothing to do with the quality of care provided. Instead, they are due to a variety of reasons, including incorrect coding, missing information, or incorrect information. When a claim is denied, it’s important to first determine why it was denied and then correct the issue so the claim can be paid appropriately. While it can be frustrating to deal with denials, following these tips will help you manage them effectively so they don’t have a major impact on your practice.