How to Handle Denied Claims

Handling denied claims is a critical aspect of the healthcare billing process. Denied claims can result in delayed payments and negatively impact a healthcare facility's revenue. This comprehensive guide will walk you through the steps claim billers typically take when dealing with denial-rejected claims that appear on the "Rejected Claim" line item in a Manage Claims screen. We will also discuss the appeals process in detail. Additionally, we'll explore how to review an ERA (Electronic Remittance Advice) to understand why a payer denied benefits.

1: Identifying and Understanding Denied Claims

Within Manage Claims screen, click on the Rejected Claim line item, which lists claims that have been denied. Most times, if it is a denial there will be a clear indication in the error summary that the claim is an ERA DENIAL. 

Click on the denied claim to view the specific denial reason. Common reasons include:

• Coding errors
• Lack of medical necessity
• Missing documentation

2: Viewing the ERA for Denied Claims:

When the rejected claim status indicates a denied claim, it is essential to review the ERA associated with the claim to understand the reasons behind the denial and what actions to take. You can navigate to the specific ERA record by:

1. Clicking the  on the bottom right of the View/Edit claim screen and then clicking on the EFT / Check#:

OR

2. Navigating to View ERA on the left navigation menu and searching for the ERA based on criteria such as Check # or Payer ICN #. 

The ERA information will typically include:

1. Date of Service: The date when the healthcare service was provided.
2. Provider Information: Details about the healthcare provider who rendered the services.
3. Patient Information: Information about the patient, including their name, date of birth, and insurance information.
4. Denial Reason Code: A specific code that indicates why the claim was denied. These codes are standardized and can provide insight into the nature of the denial (e.g., coding errors, lack of medical necessity).
5. Denial Description: A brief description of the reason for denial. This offers further clarification about the denial reason.
6. Charged Amount: The total amount billed for the services.
7. Allowed Amount: The amount that the insurance payer is willing to cover.

3: Analyzing Next Steps:

Based on the denial reason and the information provided in the ERA, billers can formulate a plan for addressing the denial. This may include making necessary corrections to the claim, providing missing documentation, or initiating the appeals process if the denial is deemed incorrect.

Documentation and Communication:

Billers should keep detailed records of the ERA, including the denial reason, for future reference. If corrections are needed, proper documentation and communication with the healthcare provider or relevant parties are crucial.

4: Initiating Next Actions:

Depending on the denial reason, billers can proceed with corrections and resubmission of the claim, initiate an appeal, or take other necessary steps to address the denial.

Voiding and Correcting Claims for Resubmission

In some instances, claims may need to be voided or corrected due to errors or discrepancies in the submitted information. The following steps in the Claim.MD software explain how to void a claim:

Click on the appropriate article depending on if the claim is a professional or institutional claim:

• How to void or correct a professional claim (HCFA 1500)
• How to void or correct an institutional claim (UBO4)

Appeals Process

If you believe the denial reason is incorrect or that the claim is valid, consider appealing the decision. Common scenarios for appealing denials include:

• Medical necessity disputes 
• Coding disputes and 
• Issues related to documentation.

To learn how to submit an appeal, click on this article. 

Conclusion:

Handling denied claims efficiently and effectively, along with navigating the appeals process, is crucial for healthcare billing professionals. By following these steps and being meticulous in your approach, you can increase your chances of successfully resolving denied claims and optimizing revenue for your healthcare facility. Additionally, keep in mind that Medicare does not accept electronic corrected claims, and the appeals process should be used for corrections after adjudication.