Claims Follow-Up and Denials Management: How to Better Manage Medical Claims Denials

Once payment is received and claims reconciled, the next step in the medical billing process is following up on denied claims. Understanding why denials occurred can help mitigate the same issues going forward.

The focus of this blog will be on following up on denials to help maximize revenue earned by the practice. Most practices meet timely filing standards for the initial submission of a claim but be aware there are also deadlines for reworking and appealing denials.

Insurance payers communicate claim denials to providers using remittance advice codes that include brief explanations. Review these codes to determine whether to correct and resubmit the claim or bill the patient. 

There are many reasons a claim may be denied. For example, payers may reject services due to a lack of medical necessity or because services took place outside of the appropriate time frame. Denials may also be attributed to non-coverage by the patient’s insurance plan or lack of proper authorization.

How Medicare communicates payment adjustment

After Medicare processes a claim, either Electronic Remittance Advice (ERA) or a Standard Paper Remit (SPR) is sent with final claim adjudication and payment information. Itemized information in the ERA or SPR helps you associate the adjudication with the appropriate claims or line items. The ERA or SPR reports the reason for each adjustment, and the value of each adjustment. Three sets of codes may be used:

• Claim Adjustment Group Code – assigns financial responsibility for the unpaid portion of the   claim to the provider or the patient
• Claim Adjustment Reason Code – provides an overall explanation
  for the financial adjustment
• Remittance Advice Remark Code – may provide a more specific
  explanation for the financial adjustment

Tips on how to better manage denials in medical billing:

A denied claim isn’t the final word. For Medicare denials, you may resubmit the claim to CMS for re-determination or reconsideration. Commercial insurers have an internal appeal process. Most insurers have multiple levels of internal appeals, external review, and a grievance process if you disagree with the outcome after you’ve exhausted the internal appeals process. 

Medicare denials can ultimately be appealed through the federal court system. For commercial insurers, grievances can be taken to your state insurance commission.

Update your rules engine to mitigate future denials 

If a high percentage of your denials are related to the same error or omission, you can use preprogrammed rules to avoid that error. Select an EHR and PM solution that allows you to update the rules engine, so you can avoid recurring denials.

Determine if a claim is processable
When a Medicare claim contains incomplete or invalid information, CMS may return it as "un-processable." This means Medicare is unable to complete processing and make an initial determination on the claim. You must correct the claim and resubmit it—generally within one year of service. 

There are no appeal rights on claims deemed un-processable and not followed up on by the deadline. Note that deadlines for appealing a claim after a denial are a different matter altogether.

Make sure providers are identified as in-network by payers

Make sure each provider affiliated with your practice is properly credentialed and connected to the appropriate group for billing purposes, especially if your practice contracts out some professional services. Identification of the physician as out-of-network is a common cause of denials. 

A national provider identifier (NPI) number is a unique 10-digit identification number issued by CMS to healthcare providers. The NPI is a required physician identifier for Medicare services and commercial healthcare insurers. Each individual physician has their own NPI. In addition, every group practice has its own NPI. Out-of-network denials may result if NPI and tax ID information is mismatched; for example, if an individual provider's NPI number is not associated with the Tax ID of the medial practice billing for services by the insurance payer.

Minimize the impact of denied claims

In summary, denied claims can have significant impact to a practice’s bottom line. Knowing your options makes it easier to address denied claims. Tracking denial information will help you see the big picture and identify trends. 

Other steps you can take include: updating your rules engine to prevent future denials, resubmitting claims deemed un-processable by Medicare within one year from the date of service, and making sure providers affiliated with your practice are properly credentialed and associated with your group for billing purposes

As we round out the practice management and medical billing series, our final stop will be our next and last blog on reporting and analytics. 

To learn more about boosting practice efficiency, enhancing patient convenience, and optimizing practice revenue, read 10 Tips for Better Medical Billing and Practice Management.