How to Manage Insurance Company Claim Denials: A Guide for Patients and Practices
How to Manage Insurance Company Claim Denials and Insurance Eligibility Verification
By: Mick Polo | Read Time: 7 minutes
Patients and medical practices have a major common interest: they want the patient to receive the care that they need. We're going to go in depth on how to manage claim denials and insurance eligibility verification.
At NCDS Medical Billing, we’ve seen firsthand how claims denials are costly to both patients and practices. Patients struggle to pay out-of-pocket healthcare costs and medical bills, while practices’ cash flows and revenue are reliant on timely payment of services.
Difficulty of affording necessities by the Kaiser Family Foundation
46% of adults say it’s difficult to pay for out-of-pocket medical costs not covered by insurance. If about half of adults struggle to pay for services, necessary care can’t occur and practices’ revenue takes a major hit.
Nearly ⅓ of American adults say that they put off getting care because of cost concerns. Both the patient and practice suffer due to this procrastination: the patient’s health and the practice’s income.
Patients have medical insurance to help pay for these costs, so denials can be an overwhelming roadblock. Avoiding and resolving denials are the key to maintaining a healthy patient and a healthy cash flow.
Read on to learn about our tips for how to avoid, manage, and resolve denials for patients and for practices.
Top Reasons for Health Insurance Denials
The first step to handling denials is understanding why they occur. Insurance claims can be denied for a number of reasons, many of which are within the control of the patient and practice.
Reasons for denied claims from MGMA
Errors and Missing Information
36% of denied claims occur due to missing information or medical billing errors. Whether the claim didn’t have all the necessary fields filled in or had incorrect information about the patient, mistakes are avoidable.
Missing Prior Authorization
Prior authorization is necessary for certain treatments, prescriptions, or procedures. Payers often need to deem the healthcare need as medically necessary.
Prior authorization statistics from MGMA
Missing prior authorization is an unsurprising challenge for denials. Payer prior authorization requirements have not eased up in the past year with 98% of practices sharing that these requirements have either stayed the same or increased.
Lack of Insurance Eligibility Verification or Coverage
Sometimes, the patient simply doesn’t have the coverage for the medical service or procedure. Their insurance plan may not cover the service, or their relationship with their insurance company may have lapsed.
NCDS SOLUTION: Tools for verifying insurance eligibility verification digitally and establishing a patient portal are available to you through the NCDS Client Logins. NCDS also offers outsourced Verification Of Benefits and Claim Prior Authorization services to help streamline your front office processes, save your staff time, reduce denials, and improve your clean claim rate.
And for more information on insurance eligibility verification and VOB, check out this page.
Out of Network
A medical practice may be out of network for the patient’s insurance plan. For an out of network practice, the insurance company will reject the claim.
Learn more about our credentialing solutions here.
How to Avoid Claims Denials as a Patient
As the patient, you have the ability to take matters into your own hands to increase the likelihood that your insurance claim will be approved.
It’s important to mention that many of the top reasons for denials are items that can be confirmed prior to submission to help ensure you get the coverage you need. Confirming the following details can help save the headache of denials and costly bills.
Statistics on Premiums and Deductibles over time from KFF
With deductibles rising 111% since 2010, families need to get the most out of their insurance to help cover healthcare costs.
Verify your information with your medical provider
Check that your medical provider has all your correct information and that it’s up to date. Confirm that crucial details such as your address, name spelling, birthdate, and insurance identifiers are all accurate.
Missing information is a top reason for denials, so ensuring your provider has all the necessary information helps mitigate this concern.
Review your coverage
What is covered within your current insurance plan?
Check with your insurance provider to familiarize yourself with what’s covered.
Educate yourself on what services and procedures your insurance plan can help you with, and keep this information in mind when discussing options with your doctor.
Confirm providers in your network
Review your local providers that are covered by your insurance plan. Which providers are in network for the type of practice you seek?
When choosing a doctor, confirm they’re in your plan’s network to increase likelihood of approval and keep your medical costs down.
How to Avoid Claims Denials as a Practice
Clean claims are the golden standard for medical practices and their revenue cycles.
The best way for medical practices to manage claim denials is to get it right the first time and submit medical claims that are error free and approval-ready with an efficient billing process.
Determine prior authorization
As shown by MGMA, 31% of denials are due to a lack of prior authorization.
This is a necessary step that can’t be skipped. Clean claims are much more likely when prior authorization is completed as soon as possible.
Confirm patient information
Each visit, have your patients confirm all their information.
Whether it’s a new patient or someone who has visited 20 times, patients should always ensure that their data is up to date and accurate.
Automate patient eligibility checks
Before submitting any claim, confirm that patients are eligible.
Implement an automated process to check their insurance. This check should ensure you’re in their network, that their insurance coverage is valid, and what services will be covered. Knowing and confirming this information ahead of time is brief, and saves time and money on denials later on.
Quality check every claim
Every claim should be submitted only after a round of quality checks.
Confirm all of the above steps are completed, that all information is filled in, and that there are no clerical errors or typos. At the same time, make sure the medical coding is accurate as well.
NCDS SOLUTION: Tools for verifying insurance eligibility digitally and establishing a patient portal are available to you through the NCDS Client and Patient Logins. Get in touch with NCDS for a demonstration of how these services work, automating and streamlining processes for your practice and your patients.
How to Handle Denied Claims as a Patient
If your insurance claim for a medical service, prescription, or procedure was denied, don’t fret. There are many steps you can take to turn this decision around. Don’t simply accept the denial; take these actions to ensure you only pay what you need to.
Write everything down
While going through the appeal process, create a paper trail. From the person you talk to in customer service, to keeping a copy of your appeal, to your initial denial letter, be sure to keep records of all information documented throughout the appeal process.
Note appeal window
Take note of your appeal window shared on your denial letter. This window shares how much time you have to make your appeal and take action. Your appeal needs to be submitted within this time frame.
Call your insurance company
Get in contact with your insurance company. Call the company’s customer service department and ask about what their appeals process is and where you can get started with making an appeal.
Many insurance companies have online capability to request appeal forms or fill out your appeal online, but start with gathering information straight from your insurer.
Understand the reason for denial
What were the specific reasons for denial? This information should be shared in the notice of denial provided by your insurer. This will be important when proceeding with an appeal, as your appeal should be directly aligned with the reason you were denied.
Make an appeal
You can respond to your insurer with an appeal to provide context and supporting evidence about why your claim is necessary and requires coverage. Your appeal should address the grounds that you were denied on.
Depending on what you learned when calling your insurance company, submit your appeal in the communication method your insurer prefers, for example written in a letter or submitted online.
Inquire about escalated appeal process
If you’re denied again, this doesn’t mean you’re done. Ask your insurer if there’s an escalated appeal process, and follow the steps to make another appeal.
If the internal review and escalated appeal from your insurer are unsuccessful, seek an external opinion. Appeals can be taken to an independent third party to provide another review. An external review means that the insurance company does not get the final determination of whether they will pay the claim.
Following up is necessary; don’t let your appeal fall into the abyss! Check in regularly to request your appeal’s status and when you can expect to see a decision.
How to Handle Denied Claims as a Practice
Denials are costly for a medical practice. Handling denied claims the right way helps keep costs as minimal as possible and gets your practice paid for your services.
Track all claims
Keep meticulous records of all of your claims. Your practice management systems should have a process that comprehensively keeps a reliable record of claim statuses throughout the full revenue cycle.
NCDS SOLUTION: According to the American Academy of Family Physicians, with the cost of rebilling a claim at $25 or more, the practice of reviewing denied claims needs to be efficient. NCDS uses a priority RMT (Receivables Management Task) system to identify, prioritize, track, and analyze denials to optimize the efforts of billing teams and produce the best results.
Determine reasons for denials
Use your analytical skills to examine what the majority of your practice’s denials are due to. What are your practice’s top reasons for denial over the past 6 months? Do any themes arise? Identify what your practice’s patterns are, and build a subsequent plan to help address those denials.
Follow up in a timely manner
Follow up on claim denials and resubmit them with corrections or necessary context. Without following up, your practice loses out on money that should be paid out from the payer!
Typically, denials can be corrected and resubmitted in the time frame specified by the insurer. This time frame varies between payers, so be sure to check what the time frame is for the insurer at hand.
Make it a priority within your practice to follow up on denials with corrected claims (where appropriate) as soon as possible.
Engage a medical billing partner
Denials can be overwhelming, and a partner can help you take control. At NCDS Medical Billing, we have a team of in-house experts specializing in revenue cycle management and finding ways to manage and optimize your claims process to increase revenue and handle denials.
Contact us to see how we can help improve your billing process.