Claim denial rates refer to the number of sent and unpaid insurance claims that are rejected upon first submission. You track this metric so you can see what problems you might have in anything from coding and documentation to the prior authorization process. 

Why do claims get denied?

Your claims can get denied for any number of reasons. Sometimes a claim is initially denied for medical necessity or because insurance coverage is unclear. Other times, the claim is initially denied due to factors like:

– Missing modifiers

– Incorrect patient details

– Billing to the wrong payer

Prior authorization denials often arise from mismatches between prior authorization requests and payer rules. And then employer-sponsored insurance plans can add another layer when plans carry unique requirements.

What role does medical necessity play?

Medical necessity drives loads of different decisions. Health insurers and the federal government set the rules that define which health services qualify for coverage. And if documentation doesn’t justify medical necessity, health plans may issue insurance claim denials or prior authorization denials. 

That’s why clear clinical notes and accurate coding reduce the risk of being initially denied.

How do prior authorizations impact denial rates?

The prior authorization process definitely helps you avoid cash flow issues, but you do now have a lot more administrative responsibilities. But then missing or late prior authorization requests can lead to denials or requests for more documentation, so it’s something you’re better off investing in so your practice doesn’t run into financial troubles, whether you perform general surgery or pain management.

Who bears the risk of denied claims?

Both patients and providers feel the impact! Patients face surprise bills and higher out-of-pocket costs, and patient care can get interrupted when claims are denied to remove coverage for a needed service. Also, you’re constantly losing revenue and spending staff time on appeals. 

What types of denials should practices monitor?

Watch for:

– Coding errors

– In network claims are routed incorrectly

– Claims with outdated insurer rules (or those flagged for medical necessity)

Also, make sure you track denials tied to ACA marketplace plans and qualified health plans, since those payers apply specific rules. Reviewing denial reasons in claims data helps prioritize fixes.

How do appeals work after a denied claim?

Claims denials and appeals start with documentation. So make sure you do everything from submitting supporting medical records and referencing the correct policy language to following the insurer’s timelines. Your appeal success rates will generally vary by payer and the strength of the supporting material. And claims process discipline here also matters a lot.

What trends affect denial rates now and next?

Insurer denial rates are usually down to changes in policy language and telehealth expansion – also any shifts in payer audits. The Kaiser Family Foundation tracks health insurance trends and the affordable care act’s impact on insurer behaviour

Advances in claims analytics and automation should definitely lower denial rates over time, but administrative burden will likely remain until documentation and prior authorization processes improve.

How can practices reduce denial rates?

Fix the front-end: 

– Clean demographics

– Right codes

– Accurate linking to medical necessity

– Completed prior authorization requests

We’d recommend using claims scrubbers and implementing a consistent claims process – PMN can help you with this, which lowers denials and reduces the cycle time between submitting claims and receiving payment. That’s a solid way to improve your cash flow and stop wasting time on admin work when your time could be spent on patient care.

What are the pros and cons of aggressive denial management?

A strong denial management program improves revenue and reduces time chasing unpaid claims. So this requires investment in staff and training – or just a third party team that specializes in denial management like PMN.

What about public programs and policy impacts?

Medicaid services and federal government policy shifts influence coverage rules and appeals processes. Health insurers adapt to changes in law and guidance. Monitoring policy updates and payer bulletins reduces surprises and helps you anticipate changes to insurer denial rates.

How does this relate to PMN?

PMN specialises in medical billing and coding! We handle administrative paperwork so clinicians can focus on patient care. We cover everything from physician billing and audits to patient collection management, and we work to prevent denied claims before submission. 

We have more than 20 years of experience across multiple specialties. Want to know more about how our services work? Get in touch today by giving us a call at (949) 215-5055 or visiting our office in Laguna Hills, Orange County, California.