Denied Medical Claims vs. Rejected Medical Claims

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. 

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.