It is common knowledge that medical billing denials not only costs the practice money left on the table but also adds costs in the work needed to resolve them. The average cost to resolve and collect denied claims is between $20-25 per claim. In other words, the practice sometimes pays twice or possibly three times to collect from carriers and patients. Some practice see denials rates as high as 15-20%, for some providers that could mean one of every five claims submitted to the insurance.
Denials in some cases are simple and preventable. In fact most denials can be prevented with improved processes, increased training and proper system edits. The common denials faced by providers are:
There may be several reasons for a particular service not being covered by Medicare, Medicaid or a commercial insurance. Medicare lists four specific categories-
(a) Services which are not medically reasonable and necessary;
(b) Non-covered services
(c) Services denied as bundled or included in the basic allowance of other service.
(d) Services reimbursable by other organizations or furnished without charge.
However, exceptions to each category exist that would allow payment by Medicare or commercial payer, as applicable. It is advisable to therefore review the applicable exceptions to determine if the service is indeed covered under the exception to the non-coverage category. If the above option is not feasible, then the alternate option would be to obtain a written consent from the patient stating that he/ she will be financially responsible for the payment of services that are not covered under the patient’s commercial insurance plan (before rendering the service).
Incorrect Insurance Information
Error in entering insurance information correctly or outdated insurance information of a patient not seen in a while may lead to denials. This is possibly the simplest denial to avoid. Double checking the information of choosing the correct insurance provider, in addition checking insurance eligibility of the patient on the date of service can help alleviate such denials.
Timely Filing Limit Crossed or Expired Time Limit
Some practices tend to hold and process claims in batches. This often leads for some claims to cross the limit set by the insurers on claim submission. For example, if the payer has a 90-day timely filing requirement, it means that one needs to submit the claim within 90 days from the date of service. However, there may be exceptions, in which case an extension could be granted on the timely filing limit. For Medicare, the three areas of exception are
(a) Administrative Error caused by error or misrepresentation of an employee or the Medicare contractor.
(b) Retroactive Medicare Entitlement. This occurs when the beneficiary receives notification of Medicare entitlement retroactively to or before the date of the furnished service.
(c) Retroactive Medicare Entitlement Involving State Medicare Agencies. In this case a state Medicaid agency recoups payment from a provider or supplier six months or more after the date of service was furnished to a dually eligible beneficiary.
A claim is considered duplicate when the same claim is resubmitted for a single encounter on the same date, by the same provider, for the same beneficiary, for the same service or item. Duplicate claims form the largest denials for Medicare Part B claims denied. Medicare pays for the first claim that is approved, but denies subsequent claims with an error code CO18.
Incorrect, omitted or invalid ICD or CPT codes are the most common cause of medical claim denial. The three most common denials due to coding errors are-
(a) Bundled Services- In certain instances, services should not be separately reported when the work has already been captured as a part of another service being billed. Similarly, an E/M service performed on the same day as service will be denied if an appropriate modifier is added to indicate that the service was significant enough to warrant separate payment. Each quarter, Medicare publishes pair of codes that generally should not be billed together because they are mutually exclusive or more comprehensive than the other.
(b) Incorrect Use of Modifiers- When modifiers are used incorrectly, the services to which these modifiers are appended will be denied. Having a certified, experienced coder on board can help prevent these denials by ensuring the appropriate use of common modifiers.
(c) Selecting Wrong Procedure Codes- There are over 75,000 CPT codes in addition to Level II HCPCS codes making it fairly easy to select an incorrect procedural code. Review of the CPT and HCPCS codes by a certified coder with extensive experience in procedural codes will address the above issue.
(d) Failing to link Diagnosis Code- A CPT code or HCPCS gives information to the payer on the service performed, while the diagnosis code informs the payer on the reason for the service. E.g. One patient present for more than one condition requiring unrelated services, while some other patient may receive a service that is only covered for a specific indication, thus it is necessary to enter the correct Diagnosis Codes along with the procedural codes.
Denials can often be overwhelming for a practice’s in-house billing team. Collaborating with an experienced medical billing and coding provider such as MedServiz can easily avoid the common denials helping you collect the most difficult dollars from the insurance carriers.
Learn more about how MedServiz’s Denial Management services can help you reduce your denials and add to your bottom line. Drop us a line at firstname.lastname@example.org and we will revert with a customized service especially designed for your practice.