Claim rejections and denials are quite common in medical billing. Not that it is a good thing but any professional working in the field will understand that it happens quite frequently. Claim rejections and claim denials can happen due to a variety of reasons like improper documentation, incorrect codes, authorization issues, and what not.
But what is the difference between claim rejections and claim denials. In this blog, we will understand how rejected claims and denied claims are different from each other.
Denied claims are the claims that are processed by the payer and deemed unpayable. On the other hand, a rejected claim is one that contains some errors and hence cannot be processed. Rejected claims are never entered into the system as the data requirements are not fulfilled.
The duty of a medical biller is to ensure that the healthcare provider is reimbursed for the services they provide. It's important to reduce as many of these errors as possible as it is directly proportional to the revenue of a healthcare organization. When an insurance company denies a claim, they keep a record of it in the system. They do not keep track of rejected claims.
Let's understand the differences better:
Denied Claims
The denied claims are those claims that were received and processed by the insurance companies but due to some errors, it was deemed unpayable. A variety of reasons might be responsible for denials. It could be a violation of the terms of the payer-patient contract, or any error which only came to light after processing.
A claim once denied cannot be resubmitted without determining why the claim was denied in the first place.
A denied claim generally comes with an explanation of Benefits or Electronic Remittance Advice (ERA). The insurance company will provide an explanation to why the claim has been denied when it is sent back to the biller. This information allows an appropriate appeal which can be sent for a reconsideration request.
A majority denied claims can be appealed and sent back to the insurance company for processing. This is a time-consuming and costly process, that is why it is important to get a clean claim in the beginning.
If a denied claim is resubmitted without rectifying the errors or a reconsideration request, it will be considered as a duplicate claim. This will cost your practice more time and money.
Once a claim is denied you must send a corrected claim. If the claim is denied and you resubmit it without the necessary changes, you will receive a duplicate claim rejection.
Reasons for Denied Claims
There can be many reasons for a denied claim, however, these are the most common reasons.
- Claim error during processing
- Incorrect diagnosis code
- Missing referrals
- No Pre-authorization
- Submission deadline missed
- Medically unnecessary treatment
- Enrollment or credentialing issues
Rejected Claims
A rejected claim is one in which errors are found before the claim is processed. These claims are never entered into the computer system because of missing data requirements. These errors prevent the insurance company from paying the bill and are returned to the biller for rectification.
A rejected claim can be a result of any clerical errors or a mismatched procedure and ICD codes. When a claim is submitted electronically, the rejection comes back as an EDI Rejection or electronic claim error. It will not be mentioned on the Explanation of Benefits or Electronic Remittance Advice that you will receive from the insurance company.
Receiving the rejection notice from the clearinghouse or any other electronic system depends on the processor. This is why tracking the status of claims is so important
The errors can be as simple as a misplaced digit from the patient’s insurance ID number. A rejected claim can be resubmitted only after rectifying the errors as it was never entered into the system.
If somehow the status of claims goes unmonitored, rejections can be very problematic for healthcare providers, their patients, and their families. Traditionally healthcare providers wait for notifications to take action on unpaid claims. When a claim is rejected, generally it does not include a follow-up notice. You may lose a significant amount of time before realizing that the claim went unreceived. This might result in delayed resubmission which will lead you to non-payment of the claim.
The impact of a rejected claim is a ripple effect in your organization. It not only declines the revenue but also affects your practice’s ability to fund services which impacts patient services. This also means an additional workload for your team.
This diverts attention from new claims and forces your staff to work on it. This also increases the operational costs as revisiting the claims takes time and effort from your staff. Other than that, it frustrates the employees who are responsible for addressing the issues.
Efficient management of rejections is very important to maintain the financial health and efficacy of a healthcare practice.
Reasons for Rejected Claims
There are a variety of reasons for claim rejections. However, here is a list of the most common reasons.
- Clerical Reason
- Incorrect Patient data
- Missing information
- Mismatched Diagnosis
How Can You Avoid Denials and Rejections?
Claim denials and claim rejections are a big hurdle for any healthcare practice. Dealing with them is a big responsibility and takes a lot of time and effort. It reduces the working capacity of your practice as a huge portion of their work hours are dedicated to rectifying the claims.
When this feels like a hassle, outsourcing your medical billing to professionals comes up as the best way to enhance your revenue.
Unify Healthcare Services is a top performing medical billing company that has ample experience in the field of medical billing. Accurate billing and precise claim filings are easy if you partner with us.
Unify Healthcare Services has a team of dedicated employees who ensure that you are being reimbursed for every single claim. We take care of all the documentation so that you don’t have to go through the hassle. We make sure that all the codes are accurate, and every service is mentioned in the most precise form.
This leads to a better cash flow for your organization which you can invest in your business for better patient care. We make sure that you are relieved of the billing burden so you can focus solely on your expertise.
Unify Healthcare Services envisions making billing and coding easy for every healthcare provider so that they can provide the best patient care with peace of mind. This ultimately will increase the footfall of your healthcare practice resulting in word-of-mouth publicity and enhanced revenue.
