How to Handle Rejected Claims: A Step-by-Step Guide

Receiving a rejected claim can be a frustrating experience for healthcare providers and medical billing professionals. However, knowing how to handle rejected claims is essential for maintaining a smooth revenue cycle and ensuring timely payment for your services. In this comprehensive guide, we will walk you through the process of dealing with rejected claims efficiently and effectively.

1. Understanding Rejected Claims

Rejected claims are claims that have not been accepted for processing by either the payer or Claim.MD. They can be rejected for various reasons, such as missing information, coding errors, or discrepancies between the claim and the patient's medical records. It's crucial to identify and address these issues promptly to ensure timely reimbursement.

2. Regularly Checking the Manage Claims Screen

To begin handling rejected claims, you need to visit the Manage Claims screen on a regular basis. This screen is your central hub for tracking and managing all claims. It provides valuable information about claims that require your attention, including rejected claims. Here's what you can find on this screen:

• Claims that have been rejected by either the payer or Claim.MD.
• Claims with missing status updates or remittance details.
• Claims that have reached a predefined reminder date.

3. Identifying Rejected Claims

In the event of any claims being rejected, they will be prominently showcased on the "Manage Claims" screen. You will easily spot them by the presence of a distinctive red claim iconaccompanied by the title "Rejected Claims". Additionally, you will find a message on the same line displaying the number of rejected claims that need correcting.

To access the individual claims files to address the issues that caused their rejection, click on the View Claims button. This will bring up the rejected claims list. 

In the list of claim records, you'll notice the presence of errors highlighted in both red and yellow beneath each entry. 

These errors can be categorized into two types:

1. Red Errors:

Red errors indicate issues with the data that render it invalid. These errors can occur at the Claim.MD level, at the payer level (either pre-adjudicated or post-adjudicated), or even arise from third-party clearinghouses that may not accept the data in a specific format.

2. Yellow Errors:

Yellow errors are only visible as rejected if the corresponding option is selected in the Account Settings by administrators. By default, this setting is activated, but administrators have the flexibility to deactivate it if they wish to allow for automatic transmission. These yellow errors primarily represent National Correct Coding Initiative Edits (NCCI Edits). These additional checks are designed to identify procedure combinations that should not be billed together, procedures that necessitate modifiers, and medically unlikely units.

You have the choice to either disregard these yellow errors, which may result in the claim being rejected by the payer due to incorrect data, or review the suggestions provided by NCCI to rectify the data. Saving the claims (by clicking the Save Claim button) will override the yellow errors and make the warnings disappear, thereby rendering the claim valid. It's important to remember that the yellow warnings also offer additional editing suggestions besides NCCI edits, related to potential errors based on general claim practice.

To gain insights into the claim errors, you can refer to the "Claim Errors/Responses" section at the bottom of the claim. This section will present the primary issue in bold and provide links to the affected fields below. Clicking on these links will display a notification specifying what needs to be corrected next to the corresponding field. Alternatively, hovering over the yellow field (associated with the NCCI error) will also provide details about the specific error that requires correction.

4. Analyzing the Rejection Reason

Once you've identified a rejected claim, the next step is to analyze the rejection reason. Understanding why a claim was rejected is crucial for determining the appropriate course of action. Some common reasons for claim rejection include:

• Incomplete patient information.
• Incorrect coding or billing information.
• Discrepancies between the claim and patient records.
• Insurance eligibility issues.

To get a deeper understanding of any issues involving claim errors, it is best to select the Show Notes / History button  on the bottom right of the View/Edit claim screen. You will notice that there will be in red a REJECT event or reason. In the Claim History, a reason for rejection is given in in red letters:

REJECT: Diagnoses [T1490] is valid, but not for this date [10/13/2022].

This rejection code means that the use of T1490 ended when it became a "parent" code. Beginning in 2018, greater levels of specificity were available thereby making T1490 no longer effective. 

In this case, to correct the invalid data, the provider would need to choose a code in the T1490 family (meaning code out to a greater level of detail), before resubmitting the claim.

Level of Rejection

The claim flow path consists of several stages. 

1. It starts at with the the claim biller/provider, where the claim is initiated.
2. It then goes through the Claim.MD stage for processing. 
3. Afterward, it proceeds to the payer's Electronic Data Interchange (EDI) for further handling. 
4. The final step is the payer adjudication, which involves the payer's decision regarding the claim's approval or rejection.
   This is the sequence of steps, Clinic -> Claim.MD -> Payer EDI -> Payer Adjudication

Users are advised to contact the payer's Electronic Data Interchange (EDI) department to inquire whether the claims are in the queue to be processed. This department can provide valuable insights regarding the status of the claims.

An issue can arise when the payer rejects a claim at their EDI level. In the "Show History / Notes" section, there's an acknowledgment from the payer, but no Electronic Remittance Advice (ERA), and the claim is returned as rejected. In such instances, less experienced billing staff may mistakenly contact the payer/provider customer service department, believing the claim was never received by the payer. Consequently, the payer may contact Claim.MD to inquire why their claims aren't being transmitted. However, in the claim history, Claim.MD can demonstrate that the claim was indeed sent but was rejected at the payer's EDI level. 

For resolution, it's essential to engage with the payer's EDI department, as they handle correction processes in such cases, rather than involving the payer's adjudication or Electronic Remittance Advice (ERA) department. The payer's EDI department should be the primary point of contact to troubleshoot the claim transmission issue.

Smart Edits

Troubleshooting Transmission Errors using Show History / Notes

Working Backwards: When searching for the claim, it's often helpful to work backward from the most recent ID you have. Start with the last 'payer-assigned' ID, as it is the most current, and move up the history from there.

Wrong Division Check: If, after following these steps, you are still unable to locate the claim when talking to the payer's support team, consider the possibility that you might be in the wrong division or department. Double-check the division and ensure you are contacting the correct entity responsible for handling the claim.

Steps to Analyze Transmission Errors:

1. Access the "View/Claim" screen to review the claim's history and any associated notes with the button.
2. User Upload: Confirm that the claim was indeed uploaded by a user. This step is essential to ensure that the error didn't occur at the initial submission.
   
3. Transmittal Stage:Check the claim's history to locate the point at which it was transmitted. When you find this point, take note of the following:
   1. File ID: Verify if a File ID was generated by Claim.MD at the time of transmission. This is the first identifier associated with the claim.
      
   2. Payer-Generated Batch ID: Determine if the payer immediately assigned a claim/batch ID upon receiving the claim. Note that not all payers assign batch IDs at this stage.
   3. EDI Level Assignment:Understand that as the claim progresses through the Electronic Data Interchange (EDI) levels, it might be assigned a new ID. Track the most recent EDI level ID assigned.
      1. Acknowledgement: Check if the payer has assigned any acknowledgement, which indicates they have received the claim. Keep in mind that due to various divisions and trading partners that payers utilize, the claim may not be immediately visible to the person you are speaking to at the payer level. You may need to talk with that trading partner instead.
         

Payer Contact Procedure:

1. Contact Claims Adjudication: First, reach out to the claims adjudication department and inquire about the status of the claim using the most recent ID you have. If it's not found, proceed to the next steps.
2. EDI for Payer: Contact the payer's EDI department and provide them with the last known 'payer' claim/batch ID. They will help you search for the claim in their system.
3. Auto-Assigned ID: If the claim is still not found, provide them any auto-assigned ID from the time of transmission. This is the last resort to locate the claim.

By following these steps and tracking the history of the Claim/Batch IDs, you can systematically investigate potential transmission errors and ensure that you are reaching out to the right department for resolution.

5. Correcting Rejected Claims

There are two primary ways to correct common rejected claims:

a. Editing in Claim.MD: You can correct the issues directly within Claim.MD. This may involve editing the data on the claim form to address errors or omissions. Make sure to double-check the information and verify that it aligns with the patient's medical records and insurance details and saving the changes.

b. Resubmission: For reasons of consistency and record-keeping, you may need to make corrections in your billing software if that is where the claim was generated originally. This may involve updating patient records, revising billing codes, or addressing insurance-related concerns. Once you've made the necessary changes, you can resubmit the corrected claim for processing via your billing software's SFTP, API connection or manually re-uploading the claim.

c. Denials:  If the rejection occurs after adjudication, it is categorized as a denial. For guidance on dealing with denial rejections, refer to the How to Handle Denied Claims article.

Archiving Claims

If you have a claim listed in the Manage Claims section and are not currently pursuing it with the payer, you can choose to archive the claim to remove it from your manage claims screen. Importantly, this is not a permanent removal; you can retrieve the claim using the Search page or the Claim Activityreport. This allows you to save and re-transmit the claim at a later date when needed.

How to Archive Claims

At the bottom left of the screen, there is a red  button. To archive a claim, simply click on this button. A pop-up window will appear asking for confirmation to archive the claim. Click "OK" to confirm. This action will remove the claim from the "Manage Claim" screen.

More Information

To temporarily set aside a claim for future follow-up, generate a claim reminder in the Show History/Notes section before archiving it. The claim will reappear as a reminder after the selected time period but won't stay in the Manage Claims view until you're ready to address it.

6. Follow-Up and Documentation

After correcting a rejected claim, it's essential to keep a record of the changes you've made and any communication with the payer or Claim.MD. Ensure that you track the claim's progress and monitor for any further updates. If additional action is required, follow up promptly to expedite the claim's processing.

7. Prevention is Key

To minimize the occurrence of rejected claims, consider implementing the following preventive measures:

• Verify patient information and insurance details before submitting claims.
• Ensure accurate and up-to-date coding and billing practices.
• Stay informed about payer-specific requirements and guidelines.
• Regularly review and update your billing and claim submission processes.