Claims denials are a significant challenge in healthcare revenue cycle management, impacting providers' financial stability and requiring resources to address the challenges. While there are various reasons for claims denials, the following are the five most common causes.
What are the most common causes of denials in healthcare?
Coding inaccuracies, including incorrect use of diagnosis (ICD-10) and procedure (CPT or HCPCS) codes, are a leading cause of claims denials. These errors may involve mismatched or missing codes, insufficient specificity, or incorrect modifiers.
Missing or Incomplete Information
Claims may be denied due to missing or incomplete patient information, such as demographic data, insurance details, and referral/authorization documentation. Accurate and comprehensive data entry during patient registration and claim submission is essential to avoid these denials.
Lack of Medical Necessity
Claims can be denied if there is inadequate documentation or insufficient evidence to support the medical necessity of the services provided. Ensuring that medical records clearly justify the need for tests, treatments, or procedures is crucial.
Authorization and Referral Issues
Payers often require pre-authorization or referrals for certain services. Failing to obtain the necessary approvals or referrals, or not following payer-specific requirements, can result in claims denials.
Timely Filing Limits
Each insurance payer sets specific deadlines for claim submission, often measured in days or months after the date of service. Failing to submit claims within these timeframes can lead to denials. It's vital to monitor and adhere to these filing deadlines.
While these are the five most common causes of claims denials, it's important to note that the healthcare revenue cycle is complex and denials can occur for various reasons. To mitigate denials, healthcare organizations should implement comprehensive revenue cycle management processes; including accurate coding, thorough documentation, eligibility verification, and adherence to payer-specific requirements. Regular staff training and the use of technology solutions can also help identify and prevent common denial causes. Additionally, having a dedicated denials management team and an effective denial appeals process can be invaluable in addressing and minimizing claims denials.