Healthcare providers across the industry share a common frustration: denied claims. They not only slow down cash flow but also require additional time and resources to resolve. Understanding why claims get denied and learning how to prevent these denials is essential for maintaining a healthy revenue cycle. In this blog, we’ll explore the top 10 reasons claims are denied and provide actionable strategies to help your practice avoid them.
1. Missing or Inaccurate Patient Information
One of the most common reasons for claim denials is incomplete or incorrect patient information. Even minor errors—like a misspelled name, incorrect date of birth, or outdated insurance details—can lead to rejections.
How to Avoid It:
- Implement a robust patient intake process.
- Double-check all demographic and insurance details during registration.
- Use automated eligibility verification tools to ensure accuracy and avoid outdated information.
2. Failure to Verify Insurance Eligibility
Submitting claims without verifying insurance coverage often results in denials due to inactive policies or coverage exclusions.
How to Avoid It:
- Verify insurance eligibility for every patient before their appointment.
- Use real-time verification tools integrated with your practice management system.
- Train front desk staff to identify potential coverage issues in advance.
3. Coding Errors
Errors in CPT, ICD-10, or HCPCS codes are a significant reason claims are denied. Whether it’s using outdated codes or mismatched diagnosis and procedure codes, accuracy in coding is non-negotiable.
How to Avoid It:
- Provide regular training for your coding team to stay updated on the latest coding standards.
- Use advanced coding software to minimize manual errors.
- Conduct regular audits to ensure compliance with payer-specific guidelines.
4. Lack of Medical Necessity
Claims are often denied when payers determine that the service provided was not medically necessary based on the documentation submitted.
How to Avoid It:
- Ensure thorough and accurate documentation that clearly supports the medical necessity of the services.
- Stay updated on payer-specific medical necessity requirements.
- Collaborate with providers to ensure their notes include all relevant details.
5. Missing or Incomplete Documentation
Inadequate or missing documentation, such as prior authorizations or supporting medical records, is a common denial trigger.
How to Avoid It:
- Create a checklist of required documentation for each payer.
- Implement an automated system to track and attach required documents to claims.
- Train staff to verify that all supporting documentation is complete before submission.
6. Timely Filing Issues
Every payer has specific deadlines for claim submissions. Missing these deadlines often results in automatic denials.
How to Avoid It:
- Monitor payer-specific filing deadlines and update your billing team regularly.
- Use claim management software that tracks submission timelines and flags impending deadlines.
- Submit claims electronically to reduce processing times.
7. Coordination of Benefits (COB) Errors
When a patient has multiple insurance policies, failing to correctly coordinate benefits can result in denials.
How to Avoid It:
- Collect detailed insurance information during patient registration, including primary and secondary payers.
- Verify COB details with the insurance providers to ensure accurate claim routing.
- Train your billing team to handle COB scenarios effectively.
8. Duplicate Claims
Submitting the same claim multiple times can lead to denials flagged as duplicates.
How to Avoid It:
- Implement a tracking system to monitor claim submissions and prevent accidental resubmissions.
- Use clearinghouse tools to identify and correct duplicate claims before submission.
- Train staff to carefully review claims before resending.
9. Outdated Provider Credentialing
Claims can be denied if the provider’s credentialing or enrollment with the payer is not up to date.
How to Avoid It:
- Regularly review and update provider credentialing with all payers.
- Use credentialing management software to track renewal deadlines and documentation.
- Assign a dedicated team or partner with a credentialing service to stay compliant.
10. Payer Policy Changes
Insurance payers frequently update their policies and guidelines. Submitting claims based on outdated information can lead to denials.
How to Avoid It:
- Subscribe to payer updates and newsletters to stay informed about changes.
- Conduct regular training sessions to update your team on new policies.
- Leverage a billing partner or software that automatically adjusts to payer updates.
The Cost of Denied Claims
Denied claims cost practices more than just delayed payments; they drain time and resources. Research shows that the average cost to rework a denied claim ranges from $25 to $118. Moreover, nearly 65% of denied claims are never resubmitted, resulting in significant revenue losses.
How AllegianceRCM Can Help
At AllegianceRCM, we specialize in minimizing claim denials through proactive management and expert support. Our services include:
- Eligibility Verification: Ensuring patient details are accurate and coverage is valid.
- Coding Accuracy: Leveraging certified coders and advanced tools to reduce coding errors.
- Denial Management: Tracking, analyzing, and resolving denials swiftly to recover lost revenue.
- Compliance Monitoring: Keeping you updated with payer policy changes and ensuring credentialing is always current.
With our tailored solutions, you can focus on delivering quality care while we ensure your revenue cycle runs smoothly.
Conclusion: Proactive Prevention is Key
Understanding why claims get denied is the first step toward preventing them. By addressing common issues such as coding errors, missing documentation, and timely filing, your practice can significantly reduce denials and improve cash flow. Partnering with a trusted RCM provider like AllegianceRCM can further enhance your efficiency and financial performance.
Ready to take control of your revenue cycle? Contact AllegianceRCM today to learn how we can help you achieve your financial goals in 2025!
