5 Common Causes of Insurance Claim Denials and How to Avoid Them

Insurance claim denials can become a grave concern if you do not take corrective steps at the earliest. Every denial or rejection will not only impact your revenue cycle severely but also strain your relationship with the patient. Well, this makes it imperative to avoid landing up in such a situation.

Let us first understand the five most common causes of insurance claim rejections or denials and then evaluate the necessary steps that you can take to avoid these.

  1. Incorrect/Missing information in the claim forms: One of the most common mistakes that can result in a claim rejection or denial. A claim rejection is when it is rejected for some clerical errors but the payment is not denied. These errors can be in the form of spelling mistakes while entering the name, DOB, insurance ID among others. On the other hand, claim denial occurs when wrong information is presented to the insurer. Entering an incorrect procedure code or diagnosis, wrong billing information is some of the usual errors that can lead to a claim denial, which means the Insurer will not make the payment. In these cases, the re-processing of the claim can result in a long delay or even cancellation of payment.
  2. Failure to meet the claim submission deadlines: Another common mistake that you can make without even noticing it. When your staff is dealing with a large number of claims, the risk of missing on or mixing up on the respective claim submission deadlines becomes higher. While every insurer has a different deadline for claims submission, exceeding this time limit can become a valid reason for them to deny your claim.
  3. Pre-authorization or pre-certification is not obtained: The third most common mistake. Different insurers have different pre-authorization or pre-certification requisites for certain procedures based on the patient’s plan. If you fail to identify these and duly obtain approval, the insurer will deny the claim straightaway.
  4. Practice is out-of-network: Changes in the Insurer networks or insurance plans can place your practice out-of-network and your patient can remain oblivious of this change. Before verifying these important details if you carry out a procedure, and it turns out to be an out-of-network case, the insurer will deny the payment. In such a scenario either you will have to bear the entire cost of treatment or the patient will. Both scenarios can be detrimental.
  5. The medical necessity is deemed insufficient: This is again a common cause that can lead the insurer to deny your claim. The insurer may not consider the patients’ medical necessity as appropriate or sufficient and can immediately deny the claim.
5 Common Causes of Insurance Claim Denials and How to Avoid Them

5 Common Causes of Insurance Claim Denials and How to Avoid Them

Steps to avoid these errors:

  • Verify and cross-verify the patients’ records, details, and all insurance and eligibility-related information before filing any claim. You can use supporting documents wherever required as a source of verification of data. You must engage knowledgeable Certified coders and billers to assign accurate procedure codes and other billing information.
  • Set up processes that can notify you on important deadlines, claim submission, claim statuses follow-up, and essential claim requirements. Such a system can inform you in advance about the upcoming claim submission deadlines and claim requisites such as pre-authorization approvals.
  • Assess your status in the network in regular interval. You must access and ascertain this information as soon as you come in contact with the patient seeking treatment. You can duly inform the patient if you are out-of-network and enumerate the benefits he may still receive from you.
  • Determine the sufficiency of the medical necessity through an open communication platform with the insurer, patient, billing staff, and fellow clinicians. This is important for all the parties involved to take an informed and practical decision.

Following these simple steps can go a long way in ensuring timely and complete payments for you. If you are thorough with at least these, you can confidently eradicate future denials with these common reasons.


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