Top 3 Reasons Medical Claims Rejections Occur & How to Avoid Them 

Reading Time: 6 minutes

By Blakely Roth | April 20, 2023

High-growth practices don’t tolerate a high claims rejections rate. Instead, they use automation and technology to significantly reduce the billing errors that lead to rejections. 

Prevent claims rejection to get paid faster and ensure your billing staff can spend their time where it matters most. See the top 3 causes of claims rejections and how preventing them improves your overall cash flow.

Preventing Claims Rejections Improves Denials Processing 

Get paid faster by reducing the impact claims rejections can have on the length of your billing process. On average, 65% of denied claims are never reworked. With fewer rejected claims to process and resubmit, your practice will have more time to rework claims denials and ensure payment on those services.  

When a claim is rejected, it means that it has not been accepted for processing by the insurance payer due to errors or omissions in the claim submission. The claim is essentially returned to the provider, and the provider must correct the errors and resubmit the claim. Processing claims rejections and resubmitting these claims takes time away from your billing and administrative staff. Time that could be better spent modifying complex claims or resubmitting claims denials. Simply put, your high-value, experienced billing staff shouldn’t have to delegate hours to correcting patient data, solving outstanding eligibility issues or resubmitting claims rejections. 

3 Ways Claims Rejections Occur & How to Stop Them

Claims rejections are an extra step that you can avoid through automation and cleaner data capture. Here are the most common reasons you may have a high claims rejection rate and how to solve these challenges.  

1. Incomplete or missing information

When patient information provided in a claim is incorrect, then the insurance company will not be able to process the claim completely. To process a claim, insurance companies must first find insured patients in their database. Consider how many Sarah Smith’s or Jack Johnson’s that a single insurance company covers.  

When a patient’s name is misspelled, their birth date is incorrect or the patient ID/group/subscriber number is missing, the insurance company will have a difficult time matching the claim to the correct patient — meaning the claim cannot be processed and therefore is rejected. 

Solution: Automate patient data entry & record updates (addresses, insurance numbers, etc.) 

Nearly 86% of mistakes made in the healthcare industry are administrative errors, meaning that by reducing manual staff data entry, you can improve patient data capture — and minimize complications. Find a digital solution that lets your patients implement and review their own data, which will reduce the administrative errors that come with data entry.  

Start by removing pen and clipboard registration processes and any registration tools that require manual data entry into your practice management system (PMS). Automating patient registration is a clear step your practice can take to reduce simple data errors or missing information. Smart, patient self-registration technology can capture patient data and directly integrate it into your PMS to help your practice process cleaner claims. 

Go a step further by using digital tools that automatically scan patient ID cards and update information, like addresses, zip codes and insurance numbers. Implementing these digital tools has significantly helped practices reduce incomplete, incorrect or missing patient information in claims, dropping rejections by upwards of 90%.

2. Insurance eligibility verification setbacks

Insurance eligibility errors are a common setback that can lead to claims rejections. Practices can incur rejections of claims because a patient’s payer ID is missing, their Medicare ID number is in an invalid format, or secondary/tertiary insurance information was incorrect.  Enable your staff to solve these challenges and errors prior to submitting claims, so you can reduce rejections due to insurance issues altogether. 

There can be numerous, complex reasons why a patient’s insurance may be inactive, rejected or errored. It’s imperative that your staff can quickly find and understand any issues so they can solve insurance challenges before a patient’s appointment, or prior to a patient leaving the office.  

When insurance isn’t verified correctly or updated before a patient leaves, your staff will be left to chase down patients and insurance payers in the coming days to solve issues before submitting a claim. If errors aren’t even identified prior to submitting the claim, your practice will be sure to incur a rejection and have to spend time resubmitting the claim to collect future payments. Both of these challenges only lengthen your billing cycle and time-to-revenue. 

Proper action taken on the front end of patient data collection can support back-end claims processing — reducing rejections and accelerating cash flow.  

Solution: Automate insurance verification & alert staff to solve specific errors 

To avoid eligibility rejections (or even denials), help your patients provide more accurate data and ensure your staff can quickly identify any insurance issues, prior to a patient’s arrival. Use a real-time insurance verification tool to verify primary, secondary and tertiary patient insurance at critical touchpoints, like scheduling and registration. Additionally, with patient registration solutions that can automatically capture and update patient insurance, with one scan of their insurance card, you can ensure you’re getting the cleanest insurance information.  

Go a step further and consider a smart insurance verification tool, one that will notify your staff of specific errors. With this insight staff can take fast action, ensuring you can capture payment once the patient arrives. With a tool that provides an easy-to-use insurance verification dashboard, your staff will be able to quickly determine why insurance is errored and what to do to solve those errors prior to a patient’s appointment. At Clearwave, we help practice configure pre-verification workflows to help their staff build a process around reviewing their insurance dashboard and solving any issues, all before patients even see their provider. 

When you have an easy-to-use dashboard and alert system that automatically flags errors and triggers administrative tasks, your staff will spend less time chasing down patients or insurance payers after the fact, improving claims processing and dropping staff workloads.  

3. Duplicate claims and rejected diagnosis codes

Claims can be rejected if they are duplicates of previous claims already submitted or if they have an invalid diagnosis code or date. These challenges are just more examples of simple mistakes that your administrative staff can make when they’re overburdened. With rejections and denials to resubmit, along with other billings priorities, your staff may not have the time to properly file claims, which will only cause the cycle to repeat itself. Speed up claims processing and get paid faster by breaking the cycle.  

Labor costs are up 30% in recent years and 90% of practices state that their overall costs are rising faster than revenues. Don’t let employee churn halt your growth. With a heavy workload, your practice may fall victim to increasing employee churn, only raising your rehiring costs and slowing down your ability to process all existing claims and resubmissions — slowing down your time-to-revenue. High-growth practices use automation to reduce rejections, staff workloads and churn while accelerating cash flow.  

Solution: Use automation to reduce administrative errors due to heavy staff workloads 

Practices report up to a 94% reduction in claims rejections, simply by automating patient registration and insurance verification. These practices save money by avoiding resubmission costs ($17.50/claim) and save time by dropping mundane or complex tasks from their staff’s to-do list. With one major roadblock removed from your staff’s workload, they will have more time to properly process claims, reducing other minor mistakes that lead to rejections.  

Using patient self-registration solutions and real-time insurance verification helps practices increase efficiencies in other areas, reducing overall employee stress and therefore churn. At the same time, these practices see an increase in point-of-service collections by enabling patients to check in themselves and pay privately via kiosk, tablet or their mobile phone.  

Automate Data Collection & Patient Eligibility Management

Claims rejection prevention starts with better patient data and improved insurance eligibility management — both are tasks that can be automated in a way that drives cleaner claims. 

Use automation to your advantage and put time and money back into your practice. See how practices are making it happen, Thomas Eye Group is a strong example. Thomas Eye Group needed a solution to solve long waiting room lines, high amounts of past-due payments and errors in patient data resulting in rejected claims. Today, they’ve dropped claims rejections by 94%, which also reduced their costs associated with claims resubmissions (by $17.50 per resubmission!) Read their story and see how you could achieve similar results for your specialty practice or health system. 

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