What Small and Mid-Sized Practices Need To Know About Denied Insurance Claims

When insurance claims are denied, your practice wastes time correcting issues and resubmitting. Taking steps to prevent denied claims is important, but knowing where to start can be overwhelming.

Often, denied insurance claims arise from errors in the claim details, coverage issues, and failures to follow payer-specific procedures. Denials also differ from rejections, as they require a formal appeal process to recover rather than simply correcting technical errors.

Claim denials are often preventable with the right front-end verification workflows, accurate coding, and complete documentation. Below, learn tips for reducing claim denial rates and the most common sources of denials that your practice should understand.

What is a denied insurance claim?

A denied insurance claim is one a payer has reviewed and refused to reimburse, whether due to an error in the claim, a procedural issue, or a lack of coverage. To resolve denied claims, you often need to go through an internal or external appeals process, which can be time-consuming.

Failing to identify, correct, and appeal denied claims within payer-specific timeframes could lead to a permanent loss of revenue. Your practice needs to carefully review claims before submission and correct workflow errors that lead to recurring revenue leakage.

The most common reasons insurance claims are denied

Insurance companies deny claims for a wide range of reasons. Looking for trends in the reasons your claims were denied can help you begin improving your workflows to mitigate this issue.

Below are some of the most frequent reasons for claim denials. If you recognize any of these in your own processes, it’s time to pinpoint the issues with your procedures that are allowing these mistakes to creep in.

Patient eligibility and coverage errors

Often, claim denials arise from discrepancies between the patient’s insurance information that you provide and what the payer has on file. You might have included incorrect policy numbers or referenced outdated plan details. You might even discover that a patient’s coverage has lapsed since their last visit.

Any of these issues can prevent a health insurer from approving the claim. You need to ensure that you have an up-to-date view of a patient’s insurance eligibility and coverage and that your services fall under their policy. Completing this process before a patient’s appointment is key, as it prevents you from performing services that are not actually covered or that you have not already informed a patient about their financial responsibility for.

Get into the habit of re-verifying insurance eligibility before each appointment to catch coverage changes.

Coding errors and inaccuracies

Insurance denials can also arise from errors within the coding process. Common mistakes include:

• Incorrect procedure codes
• Missing diagnosis codes
• Mismatched code combinations
• Omitted modifiers

When insurers deny claims due to coding errors, your billing team needs to identify the specific error, apply the correct code, and resubmit the claim within the timely filing window. Without these steps, you risk failing to recover any revenue at all.

One way to mitigate this issue is by staying on top of updates to coding guidelines and payer-specific requirements. These change regularly, and failing to recognize changes can lead to denials.

Missing or incomplete documentation

You also need to provide the necessary medical records and documentation with insurance claims to support medical necessity. Failing to provide comprehensive documentation can lead the insurer to deny the claim because they lack evidence of the treatment’s necessity.

Documentation requirements can vary by payer and appointment type, so your billing staff needs to understand these requirements before submitting claims. Make reviewing clinical documentation a key component of your billing process to promote cleaner claim submission and minimize denials.

Pre-authorization and pre-certification issues

Certain procedures require prior authorization from the carrier before you perform the service. When you submit claims without this required authorization, they will often be denied.

Authorization-related denials are especially costly for medical practices because you have already performed the service, and the chances of successfully appealing these claim denials are slim. This is why it is so important to identify authorization requirements during insurance verification and give yourself plenty of time to complete the process before the visit.

Timely filing violations

A common reason for denied insurance claims is failing to submit them within the payer’s specific window. Submitting claims after the deadline often results in denials due to timely filing violations. In many cases, this reimbursement cannot be recovered, even if the claim is otherwise accurate.

Time-related filing violations often arise from “charge lag,” which is the delay between service delivery and charge capture. This may occur because front office staff are overburdened by billing tasks or overlook certain claims due to disorganized processes.

Automating charge entry and other billing tasks can reduce the administrative delays that push claims past filing deadlines. In turn, you lower the risk of permanent revenue loss from timely filing denials.

How to appeal a denied insurance claim

Minimizing claim denials is the first step in lowering the impact of these practice challenges. But inevitably, you will still experience denied insurance claims occasionally due to human error. Knowing the right way to appeal claim denials is just as important as preventing them, because with effective methods, you can still recover revenue from these denied claims.

Most denied insurance claims can be appealed through a formal process, but prompt action is important to maximizing the likelihood of recovery. Below are the steps you should take.

Understand the reason for the denial

Start by pinpointing why the claim was denied. Every denial notice should include a reason code that explains, at a high level, the reason behind it. But you should also pinpoint where that error arose in the claim and within your workflow.

Simple errors, such as incorrect codes or patient information mismatches, can often be resolved quickly by calling the payer. In some cases of basic rejections, you may not need to move forward with a formal appeals process.

However, more complex denials involving medical necessity or prior authorization issues may require a written appeal letter with supporting documentation that directly addresses the specific reason for the denial.

Contact the health insurance company

Once you understand the reason for the denial or have confirmed that you had a valid claim and that the denial was unfounded, your next step is to contact the insurance company. Usually, calling them is the fastest way to discuss the matter. The payer claims representative may be able to explain exactly what information is missing and the additional details you need to provide for the claim to be accepted.

Before initiating this call, gather the patient’s policy information, the plan documents, the denial notice, the claim details, and a list of questions. Having this information at the ready can help make the call as efficient as possible.

Submit a formal appeal

While a phone call can sometimes resolve a claim rejection, you should prepare to submit a formal appeal for more complex denial issues. This may also be the next step if the health insurer refuses to approve a claim that you believe to be accurate and valid.

Your formal appeal letter should clearly state why the claim should be paid under the patient’s policy. It should reference the specific denial reason and include all necessary documentation to address the payer’s objection.

You may need to attach any of the following with this letter to appeal medical necessity objections:

• Clinical records
• Lab results
• Imaging
• A letter from the treating provider explaining why the service was necessary for the patient’s care

Be sure to keep copies of everything submitted with the appeal. This creates a paper trail that can support escalation if the internal appeal is not successful. You may need an independent third party to perform an external review if the insurer still wrongfully denies the claim.

Track the appeals process

After submitting an appeal, be sure to monitor its status moving forward. Payers are generally required to respond to internal appeals within 72 hours for urgent care denials, 30 days for treatment not yet received, and 60 days for treatment already delivered. But these timelines can vary depending on the health plan or payer.

Take the time to learn the deadline for your appeal and avoid missing it. Failing to submit the appeal within the required time frame can result in permanent revenue loss for the claim that was denied.

When initial appeal responses are unsatisfactory, you’ll want to escalate the appeal to external review quickly. This may involve contacting the state insurance department to report bad faith practices.

How to reduce denied health insurance claims in your practice

You know the common reasons claims are denied, but actually preventing these problems in your practice is easier said than done. Often, improving your claim approval rates starts with making small but meaningful changes to your overall billing process.

Start by auditing your denial patterns by reason code, payer, and provider. Are certain providers more likely to have claims denied than others? Is there a specific payer that most often denies claims? Finding trends can help you pinpoint where major issues lie. For example, if the same payer continually denies claims, you may need to review their specific policies and procedures to make sure you aren’t overlooking something important.

Next, work on standardizing patient insurance verification before every visit. Following consistent, comprehensive workflows can help you thoroughly catch coverage changes and eligibility errors that most commonly lead to claim denials.

Implementing digital intake forms in your scheduling process can also help you reduce errors. Patients can fill out these forms on their mobile devices, preventing you from mishearing names or addresses and entering incorrect information into patient profiles. You can automatically transfer the data from these forms into your practice management system to further reduce typos.

Finally, automating charge capture and billing workflows can also help reduce denials. Automations streamline the claim submission process to minimize the risk of filing violations. This is especially helpful for practices with high patient volumes that consistently feel behind on claim submissions.

How Weave helps small practices reduce denied claims

Weave’s communication platform helps small and mid-sized practices like yours streamline a range of administrative processes and spend more time on patient care. If you are trying to reduce denied insurance claims, Weave can support your practice through communication and engagement features.

To start, Weave’s digital intake forms allow patients to complete their pre-visit paperwork at a time convenient for them. You can import this data directly into your practice management system to reduce the risk of typos and errors.

Meanwhile, Weave’s automated text and email reminders allow practices to send quick communications to patients. If you have a question about a patient’s name spelling, want to remind them to pay an overdue bill, or need to communicate an out-of-pocket cost estimate, you can easily do so using these communication tools without tying up phone lines.

Weave connects your front-end verification and patient intake workflows to scheduling, appointment reminders, and billing communication, allowing you to manage every patient interaction consistently in one place. You can also integrate Weave directly with a range of practice management systems for even more streamlined, unified workflows.

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Final thoughts

If you’re tired of wasting time on denied insurance claims that never actually lead to reimbursement, it’s time to rethink how you’re approaching the claim submission and appeals process. Most claim denials stem from preventable errors your practice can reduce through workflow adjustments. With reliable front-end verification protocols and prompt denial management, your practice can collect more revenue and spend less time on rework.

Start by auditing your current claim denial rates and patterns to pinpoint the biggest issues in your workflow. Then implement the strategies in this guide to increase claim acceptance rates and save time.

See how Weave helps your practice reduce insurance claim denials

Weave helps practices manage patient communication, digital intake, scheduling, and other processes in a single, user-friendly platform with automation features. Request a demo today to see how Weave can help your practice reduce denied insurance claims and improve front-end processes.