Denied Medical Claims vs. Rejected Medical Claims

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Most of us are used to being billed for a variety of services rendered, such as for plumbing fixes. You receive a bill outlining the work done and you pay it. Simple. However, medical billing isn’t as easy as that. Providers don’t just send a bill to the insurance company and receive payment. It is a complicated process that involves pulling together information, such as patient demographics, medical diagnosis codes, documentation of the visit, and the list goes on.  Once all of this information is collected and compiled, it is then sent off to a clearinghouse. A clearinghouse is a gateway between healthcare providers and insurance companies that checks medical claims for errors before it gets sent to the payer.  The clearinghouse works to ensure that claims get sent to the payer “clean” helping to get them paid quickly. 

However, sometimes, no matter how good your biller may be, claims get rejected or denied.  Although some use these terms interchangeably; they mean completely different things. Understanding these differences is essential to ensuring the reimbursement process is handled appropriately. 

What are Rejected Medical Claims?

Medical claims that have been submitted to a clearinghouse but do not meet their specific data requirements or the basic format required will be rejected. Typos, misspellings, terminated patient policy or incorrect coding are some of the reasons that a claim can be rejected. 

Rejected claims get caught at the clearinghouse stage and are not submitted to the payer, thus do not make it to the adjudication system. Since the claim hasn’t been submitted to the payer yet, it can be resubmitted once all errors are corrected. Be mindful, however, that there is still a timeline as to when a claim needs to be filed so do not delay in correcting and resubmitting the claim.

What are Denied Medical Claims?

While a rejected claim comes from an intermediary, denied medical claims come directly from the payer. A denial occurs due to a payer determining that they are not going to pay the claim. These denials can happen for several reasons – need for authorization, the claim was filed too late, the payer didn’t feel the service was medically necessary based on documentation provided, and so on. 

Once a claim has been denied the remedy is a bit more complex. You can’t just resubmit a claim and hope it will be paid the second time around. More than likely it will be seen as a duplicate claim and be denied again. Denied medical claims have to go through an appeal process where a provider asks the payer to review their decision to not pay by providing additional information. Additional info can be more detailed notes regarding the service or situation and an explanation of the medical necessity of the services rendered. 

The first stage of an appeal is a request for an internal review by the payer. If it is still denied, the next step is a second-level appeal which means the appeal is typically reviewed by a medical director at the insurance company who was not involved in the original claim decision. The last step is to request an external review where a third party reviews all pertinent information and documentation to determine whether to stand with the denial or overturn it. 

denied medical claims | Billed Right

Improving Your Revenue Cycle

Although errors will happen and rejections and denials are to be expected, occasionally, the number of them needs to be managed to ensure the financial viability of a practice. Not to mention the headache and hassle saved by not having to rework or resubmit claims that have already been filed. Rejections and denials have a trickle-down effect until they finally hit the bottom line – negatively.

Understanding why claims are rejected or denied is the first step in eliminating a majority of them as they are usually caused by human error. Tasking a staff member to review all reports to ensure they are addressing both denials and rejections can have a positive effect on the bottom line both immediately and in the future. In the future as once reasons are determined training of staff can happen that can remove the reasons for the initial mistakes. Thus ensuring clean claims get submitted the first time. 

Billed Right Can Impact Claim Denials and Rejections

Billed Right is a revenue cycle management company that has been partnering with practitioners for over 15 years. Part of the RCM process is ensuring that claims go out “clean” to the clearinghouses to eliminate as many denials and rejections as possible.  Billed Right employees AAPC Certified Coders who review claims and documentation for issues before they are submitted to the clearinghouse and have a 99% clean claim rate.

By increasing the clean claim submission rate, Billed Right saves time and money for the practitioner and their staff so they can concentrate on providing the best quality of care possible to their patients.  

Contact Billed Right today to learn how partnering with them can help you with your claim denials and rejections. 

The Issue of Overcoding and Undercoding

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Medical coding is necessary for physicians to get reimbursed for services rendered. To get paid their contracted rate by insurance companies, physicians have to code procedures accurately to reflect the services rendered.  But the job of coding medical claims is complicated. 

There are thousands of codes and compliance rules and you have to be able to stay abreast of all of the changes that happen constantly. Make a mistake and you run the risk of being denied, not receiving the maximum reimbursement, or worse, being audited – and no one wants that. Two of the most common mistakes that get made during the coding process are overcoding and undercoding. 

What is Overcoding?

Overcoding happens when claims report higher-level CPT or HCPCS codes than what is supported by medical necessity, medical facts, or the provider’s documentation resulting in a higher reimbursement than is warranted for services rendered. There are generally two ways that overcoding happens:

  1. Upcoding – using a code for a higher level of service than what was provided or coding for a service not covered by the payer by using a code for a service that is covered
  2. Unbundling – some services are put together under one code, but if you submit a claim with a separate code for multiple components that should be billed as one charge, that is overcoding

The consequences of overcoding are serious; In fact, prosecuting medical fraud has become one of the top priorities for the U.S. Department of Justice as medical fraud is estimated to cost patients and taxpayers between $70 and $234 billion every year.

What is Undercoding?

Undercoding is when codes for services fail to capture all of the work performed during the provider-patient encounter. This can happen for several reasons, oversight, insufficient documentation, or it is done intentionally hoping to avoid an audit.  Whatever the reason the practice loses. Not only do they lose revenue, but undercoding can also skew data on claims resulting in lower reimbursement rates from payers. 

Like overcoding, undercoding can be seen as a violation of federal law in a variety of ways. Under any one of these acts or statutes, the False Claims Act, the Criminal Health Care Fraud statute, or the Anti-kickback statute, a physician could be found in violation as undercoding can still be seen as obtaining money by making false or fraudulent statements. Or in the case of the Anti-kickback statute, undercoding can be interpreted as an inducement to patients who could benefit by paying lower out-of-pocket costs for services.

medical coding - overcoding and undercoding

What Can You Do?

Most of the time, these mistakes are completely unintentional. However, they are a risk nonetheless, and eliminating as many incidences as possible helps to ensure you are in compliance and not a target for an audit. The following are ways in which you can identify and eliminate undercoding or overcoding issues:

  • Internal audit of your coding, billing, and documentation practices
  • Hire an external auditor to verify your findings
  • Provide continuing education for your coding and billing staff 
  • Update coding manuals yearly
  • Ensure your documentation is clear and concise and specific to each patient visit
  • Develop a simple practice-level cheat sheet that can provide guidance to your staff 

Getting Help

Having a certified billing expert on staff can be expensive and the cost to keep them up to date on guidelines and codes can be cost-prohibitive. Not to mention what happens if they go on vacation, only work part-time, or worse, leave?

Outsourcing your medical billing to the right revenue cycle management company can help eliminate incorrect medical coding as well as save you time and money by providing a team of AAPC certified coders to review claims, documentation and keep your staff educated on changes and compliance issues.

This is where Billed Right can help! Since 2006 we have been partnering with physicians to help streamline their workflow, continually educate them on ongoing code changes, increase their income and decrease the time their staff spends on medical billing, denials, and account receivable collections. 

To learn more on how to become a partner with Billed Right, contact us today!

The Difference Between Medical Authorizations and Referrals

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Managed care brought about so much more administrative work to the healthcare industry than there had ever been before. To make it even more complicated each insurance company has a different set of rules and guidelines that must be followed. What if a patient needs to see a specialist? Or needs to have a procedure done? Two requirements that are critical to know are medical authorizations, sometimes called pre-authorization or prior approval, and medical referrals.  And understanding the difference can save you time, frustration, and money.

What is a Medical Referral?

A medical referral is a written order from a primary care physician (PCP) for a patient to be seen by a specialist.  A PCP will issue a referral when they believe a patient needs the expertise of another physician for treatment or for testing that needs to be done outside their office. 

One thing to remember is the specialist that the PCP provides the referral to may or may not be in the patient’s provider network. It is the patient’s responsibility to verify this information with their insurance company and request someone in-network if the original one is not. 

Not having a medical referral can cost both the specialist and the patient as the medical care may not be covered without it.

Medical Authorizations

What is an Authorization?

There are times when specific healthcare services require pre-authorization or prior approval from the insurance company before services are rendered.  This formal request for services is sent to the insurance company by the physician. The insurance company then does a review of the medical services being requested to determine if they feel it is medically necessary, appropriate, and covered by the healthcare plan. Once the review is completed the insurance company will either deny or approve the authorization. 

If approved, an authorization number will be issued that needs to be documented on the claim for services when the claim is filed. Although this number does not guarantee payment not having it will certainly lead to denial with the cost then being passed on to the patient. 

Medical authorizations can take time. Sometimes patients don’t want to wait and would like to have procedures done as soon as possible. They need to be educated that going ahead with health services without the appropriate authorization can end with them being financially responsible for the entire bill. 

Getting Help with Medical Authorizations and Medical Referrals

Both authorizations and referrals take time and add an administrative burden on your staff. Time that could be spent ensuring the quality of patient care. Billed Right can help! 

Billed Right is a revenue cycle management company, started in 2006, that believes in a holistic approach to practice management. To that end, they not only offer RCM but also have virtual back-office services such as an authorization and referral service.

With Billed Right’s Medical authorization and Medical referral service you can expect:

  • A virtual resource
  • Submission request within 12-24 hours
  • Record of the authorization and referral steps completed
  • Work done through Practice Management System
  • Notification of peer-to-peer review requests
  • Communication with staff on approvals and denials 

With over 15 years of experience and a highly trained and HIPAA-certified staff, Billed Right understands the ins and out of obtaining pre-authorizations and referrals and can save you time and money on what can be a time-consuming and sometimes complex process. 

Contact us today to see how we can help!