Understanding the Medical Claims Process to Get Paid

By Aimee Heckman  |  May 1, 2018

Here's an excerpt from my new guide, Achieving Clean Medical Claims and Higher Insurance Reimbursements.

Why do clean claims matter? Bottom line: improving your claims process improves the profitability of your business. This guide provides valuable tips, tricks and resources to help you achieve your goal of “Clean Claims Nirvana” by attaining a First Pass Acceptance Rate (FPAR) of greater than 95%. By doing this, you’ll:

  • Prevent recurring front-end rejections
  • Reduce time-consuming followups on accounts receivables
  • Work to eliminate labor-intensive filing denials

Rejections and Denials - What’s the difference?

Let’s define what we mean by a clean claim. A clean claim contains all of the information required by the payer and is filed in a timely manner. The terms “rejection” and “denial” are sometimes used interchangeably when discussing claims and the overall revenue cycle, but they are actually different. The consequences of not properly understanding the difference and addressing both the cause and the effect of each type of claim can have a big impact on your net collections rate.

Claim rejections denials

This all may seem obvious, but understanding the difference between a rejection and a denial is critical to properly handling each type of claim and reducing future rejections and denials.

Three Stages of Rejections

A rejection can typically occur at one of these three stages in the billing process:

1. Within Your Practice

The first stage of rejection is within the practice management software, before the claim is even sent off to the clearinghouse. A good practice management system will have internal edits that check for things like proper setup of providers, payers and patient demographics. A common error that prevents claims from even making it out of the practice management system is missing referring provider NPI. Taking the time to review practice, provider and payer information prior to submitting claims will save a lot of time and frustration and is the first step toward achieving our goal of a FPAR of greater than 95%.

50% of rejected or denied claims don’t get reworked. That’s lost revenue.

2. At the Clearinghouse

The next stage of rejections happen at the clearinghouse. These rejections typically include payer information that the clearinghouse can build into edits to prevent claims from getting to the payer and rejecting there. For example, if a subscriber ID is required 

to have an alpha prefix and a provider submits a claim that is missing that prefix, 

the clearinghouse edits will catch that error and return the claim as rejected. Billers 

can correct the the claim and resubmit.

3. At the Payer

Most common rejections involve patient demographics and eligibility

The final stage of rejections occurs at the payer. These are commonly related to patient demographics and eligibility issues that are discovered when the claim reaches the payer. The most common patient-related rejections are also the most preventable. “Subscriber and Subscriber ID Mismatched” or “Not Found” are usually an indication that the patient was not eligible at the time of ser vice or that there is a data entry error in the patient’s demographics. These rejections can be prevented by simply making sure that eligibility is verified at the time of ser vice. It’s all too common that practices will lose revenue on visits due to not checking eligibility, then not reworking rejected claims in a timely manner.

Writing off just one denied claim a week can result in thousands of dollars loss to net revenue.

Check out my new guide, Achieving Clean Medical Claims and Higher Insurance Reimbursements, to learn more about identifying barriers and pitfalls in your insurance claims process. Download the guide and share it with your staff today!




More Articles Like This..

Revenue | Article

There was a time when you didn’t have to give much thought to patient...

By Aimee Heckman | 06/19/17
Revenue | Article

As patient responsibility balances climb, practices are seeking...

By Aimee Heckman | 07/05/17
Revenue | Article

Here's a round-up of the Patient Collections Boot Camp resources we...

By Aimee Heckman | 08/16/17