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Reasons for Denied Claims and it's Prevention

Multi-layered factors can drive the number of denied claims in the healthcare industry. Regardless of either provider or payor being at fault, it is understandable that denials occur owing to the complex medical billing and coding procedures. Physicians must work closely with their in-house or third-party medical billing services providers to document patient information accurately. In addition, it is essential to ensure that all claims are filed on time.

Impact of Denied Claims

Inefficient management and processing of claims can impact a healthcare facility negatively, even hurting its revenue cycle. It is important to have a transparent system to rectify such instances of revenue loss and denied claims. While coding and billing services can be managed by a team of in-house billers, outsourcing to a third-party billing company is always preferable. Third-party billing companies have industry experience and expertise and follow a set system of practices, ensuring no mistakes are made or repeated in the entire medical billing process.

Let’s look at the top reasons driving the number of denied claims and how these can be rectified:

1. Late Filing of Claims

Each claim has a specific amount of time under which it needs to be submitted and considered for reimbursement. Neglecting the said time and filing the claims after their due date more often results in the healthcare practice paying for it at their own expense. Providers sometimes miss filing timely claims due to lost or incomplete superbills. Superbills are charge tickets, having an itemized list of patient services/treatments offered. Even when such claims are corrected, they get denied if submitted past their filing date.

2. Wrong Insurance IDs

It is a practitioner’s responsibility to verify the patient’s current insurance information at every visit. This verification of information also includes any current changes to a patient’s insurance. Expired or old ID or insurance card numbers might not be recognizable by the insurance or payor if submitted on the original claims. Manual entries of data and information might also result in medical billing or coding mistakes. Certain instances arise when your in-house billing staff is not trained with the proper data entry procedures.

3. Denied Claims for Non-covered Services

Conferring to the payer policy, some services might not be considered medically necessary owing to the diagnosis submitted with the claims. Even when a patient is given treatment based on a physician’s documentation, the real diagnosis may not have been communicated to the staff in charge of the medical coding and billing management system.

It is still a challenge to prevent coding and billing errors even after instilling extensive knowledge of provider’s services, and its linked diagnosis.

4. Separate Reporting of Services

Specific treatments, services, and procedures must be billed and coded together as they are performed by a single physician or their team. Additionally, it is imperative to note that a physician might belong to a practice that a patient’s insurance provider does not cover. Thus, certain services must not be bundled together in such a case. 

A professional third-party medical billing service provider shall help reduce the number of denied claims. Outsourcing billing services reduces the number of denials and decreases the need for coding edits. Professionals at 3rd party billing companies get familiarized with the offered services from a provider and the current bundling policies of healthcare facilities.

5. Incorrect Use of Modifiers

Some common modifiers, like modifier 59 or 25, indicate whether or not a service took place on the same day or spans multiple days. Take modifier 25 into consideration; it stands for an evaluation and management service offered on the same day. On the other hand, the modifier 59 tells us that the procedures span multiple/different days.

Furthermore, the modifier 59 can also indicate a service catered to a different provider or organ, which typically does not blend into the routine of the original service. When modifiers are used inaccurately, the frequency of denied claims increases substantially. Leveraging the expertise of expert medical billers and coders – denied claims can be effectively reduced by applying the important common modifiers with the proper procedure or service.

6. Unreliable Data/Information

When a claim has incorrect data, it often results in claim denials for the services rendered. It is advisable that medical practices invest in an alert system, so they are alerted whenever an inconstancy or error occurs. When an alert system is put to use, flagging the errors will keep the particular claims from getting processed and denied. Overall, this shall save providers more resources, including time and money.


Better management of denied claims before those even leave your office can effectively bypass the resource-draining process of reworking. Doing so will also increase compensation coming in on your first claims submissions, in addition to lower leakage, can improve your revenue cycle. Doing so can achieve a better ROI, with even fewer headaches of reprocessing claims.

Frequently Asked Questions

The most common reason for denied claims is incorrect information. Be it by accident or intentionally, coding and billing errors are the most common reasons for claims denials due to incomplete, missing, or incorrect information.

Your billers can forward an appeal letter to the insurance provider stating why you believe the claim denial is wrong, thus, requesting the insurance company to reverse the denial.

It is a strategic process that aims to resolve and unmask problems that lead to claim denials.