How to Fix 5 Examples of Medical Claims Errors

I’ll admit it. I’m probably the only person on the planet who thinks medical claims management is exciting.

Here’s why: every claim your practice submits to insurers has the potential to sustain or subvert your health care organization. Accepted claims get you paid so you can maintain a profitable practice. Too many rejected or denied claims can kill it by disrupting or delaying your income.

The stakes couldn’t be higher for your livelihood.

And even if you think you and your staff are doing everything right for claims management success, there are a few common mistakes it’s all too easy for practices to make. Need proof? Studies show billing denial rates range from 5 to 10 percent for the average practice, with some rates rising as high as 15 to 20 percent.

But don’t worry; we interviewed Stan Loskutov from the Medical Billing Group to identify strategies to help.

In this article, we’ll show you 5 examples of common medical claims errors to avoid, provide solutions for fixing them and give advice on billing systems that take the hard work out of the whole process.

Where Small Practices Tend to Go Wrong

Small and midsize medical practices need to be particularly vigilant about claims errors because many of them handle billing in-house, as opposed to outsourcing revenue cycle management services to a third-party company.

In a Software Advice study of medical practices seeking to buy a new tech solution, we found a majority prefer to handle billing on their own:

Loskutov notes that the upshot of in-house billing is that RCM gets delegated to receptionists—which works for some practices, but can pose some serious risks.

“Remember, the person who does your billing is the source of your income.”

Stan Loskutov, Medical Billing Group

Step one in optimizing your RCM is getting a dedicated billing staff. Receptionists are usually pros at multitasking, but it’s likely to hurt you in the long run if your biller faces constant distractions.

Key Differences Between Rejected and Denied Claims

Having a dedicated billing staff also means you’ll be able to differentiate between denied and rejected claims and address each situation appropriately. Here are some definitions from Medical Billing and Coding Online:

Rejected vs. Denied Claims: What’s the Difference?
We’ll reference both types of claims through the rest of the article below. Each common claims error will be split into three sections:

  • The problem: A description of the issue preventing you from getting reimbursed for your medical services in a timely manner.
  • The answer: Best practices for how to avoid and/or correct the issue.
  • The tech solution: Suggestions for billing software functionalities that can simplify that aspect of claims management.

1. Patient eligibility: verify, verify, verify

The problem:

You weren’t aware that the patient was ineligible for the treatment you already performed and now you’re stuck with a denied claim from their insurance company.

Claims often get denied because a patient wasn’t eligible under their current insurance coverage to receive a health service you provided. This can happen when there’s been a policy update within a patient’s plan or coverage for a particular service expired.


The answer:

Before you try to bill the patient for the full cost of treatment, Loskutov says it’s worth asking them to contact their insurer.

“Have the patient call their insurance company and ask for a reconsideration,” he says. “Alternatively, the patient or the patient’s employer could exercise their appeal rights.”

To avoid this situation entirely, it’s very important to verify insurance eligibility before treating a patient—especially in light of potential health care policy changes from the government.

Loskutov estimates that a two-physician practice should spend 1-2 hours per day performing eligibility verification. You can verify patient coverage through an insurer’s website, by calling the company’s hotline or by using medical billing software (more on that option next).


The tech solution:

Make sure you’re never caught off-guard by a patient’s policy by investing in a medical billing software system. Some may include advanced insurance verification coverage features, such as:

Advanced Insurance Verification Coverage Features

Real-time eligibility checks Automatically contacts major payers (e.g., Medicaid, Medicare and Blue Cross) to provide eligibility information.
Scheduled eligibility “rechecks” Allows users to schedule periodic eligibility “rechecks” for existing patients to anticipate coverage changes.
Batch eligibility checks Request eligibility information for multiple patients on your appointment calendar, instead of verifying one at a time.
Additional payment information See co-pay, co-insurance and deductible information in addition to eligibility status.

 

2. Duplicate billing: double trouble

The problem:

One of your claims got denied due to “duplicate service” and you aren’t sure why.

Duplicate billing usually happens when someone at a physician’s office makes a mistake. Staff may not realize someone else already submitted a particular claim before sending it off.


The answer:

Review your files. If they show a payment has already been made for that service, then there’s no need to follow up with the insurance company and you should focus on finding out why there was a mix-up among your billing staff.

That said, there are cases where you may have to reach out to the payer for a resolution. Author Aimee Wilcox describes some of these scenarios:

  • Unbeknownst to you, your patient received the exact same service from a different health care provider on the same date.
  • You resubmitted a claim that hadn’t been paid within 60 days to avoid “timely filing denial issues.”
  • The insurance company’s payment was sent to the wrong location.

Different payers have different policies for dealing with these scenarios, so your best bet is to get a representative on the phone to determine next steps.


The tech solution:

With the right software, you can see a summary of every claim you’ve submitted and its status. It’s never been easier to track claims, thanks to user-friendly interfaces that let you see what’s going on without spending hours rifling through paper records.

Staff will be more motivated to double-check whether a claim has already been submitted before filing if they know it’ll be this easy.

A claims tracking window that highlights pending claims in MediTouch medical software

3. ICD issues: there’s a code for that

The problem:

You entered an incorrect or inadequate ICD-10 code for one or more services, so your claim got rejected.

In October 2015, providers had to change the way they documented patient encounters under the International Classification of Diseases (ICD) code set. Government health officials gave practices a 1-year grace period to get used to the ICD-10 code set, but it’s still challenging to use properly.


The answer:

Coding errors usually fall into three categories:

  • Upcoding: you assign billing code(s) for a more expensive medical procedure or treatment than the one(s) you actually performed. This is illegal because it results in greater revenue for services that weren’t performed.
  • Undercoding: your claim doesn’t include codes for services that you did perform. This is also illegal, though some physicians undercode to avoid audits or decrease a patient’s bill.
  • Insufficient specificity: your code isn’t specific enough. ICD-10 codes are more complex and allow for greater detail than the previous code set. Check out this graphic to see an example of ICD-9 vs ICD-10:

Source: American Academy of Professional Coders

Because of the potential for coding errors, it’s incredibly important for physicians to document patient encounters as comprehensively as possible. Keep detailed records with information, such as laterality, severity and accompanying conditions to inform the codes you use.

If you have the documentation to support the codes in your claim, you’ll be able to appeal a rejection—a process we’ll describe in greater detail in the next section.


The tech solution:

Nowadays, most electronic medical records (EMR) systems are able to automatically suggest relevant ICD codes based on common keywords for a diagnosis or treatment.

For example, vendor Nextech explains that seven codes come up when physicians enter the term “nasal fracture” in their system, including the following:

  • S02.2XXG Fracture of nasal bones subsequent encounter for fracture with delayed healing.
  • S02.2XXK Fracture of nasal bones subsequent encounter for fracture with nonunion.
  • S02.2XXS Fracture of nasal bones sequela.

This video of an Austin-based solo practice physician shows how she leveraged technology to comply with the code set:

 

 

4. Data entry errors: it’s not you, it’s me

The problem:

There’s incorrect information in your claim and you didn’t catch it until it was already submitted.

Sometimes the problem isn’t all that complex: there’s a typo in your paperwork and it couldn’t be fixed in time.


The answer:

Proofread, proofread, proofread. Before submitting a claim, you should double check whether the following information is accurate:

  • The physician’s name, address and phone number
  • The patient’s name, sex, birthday and insurance information
  • The insurance company’s address and policy number

If your claim has already been rejected or denied because of a data entry mistake, you can always call the insurer and ask for a reconsideration. Claim denials can often be resolved over the phone, but you can also submit an appeal in writing.

Before writing an appeal, check whether the insurance company has guidelines (e.g., procedures or timeframes) for sending an appeal. Appeal letters should include documentation that can serve as evidence and should be sent using certified mail.


The tech solution:

Loskutov says medical billing software can be an invaluable asset when it comes to preventing these kinds of claims errors.

“Even though it will not help you to avoid all denials, software can prevent simple ‘wrong zip code’ or ‘invalid member ID’ errors,” he says.

For example, AdvancedMD has a claim-scrubbing tool that identifies potential causes for rejection. The system flags issues so staff can correct them if necessary.

AdvancedMD’s ClaimInspector

5. Payer mistakes: it’s not me, it’s you

The problem:

You’re pretty sure you did everything right, but your claim *still* got denied or rejected.

Insurance companies make mistakes, too. If you’ve already reviewed the accuracy of your coding, data entry and documentation, then it’s entirely possible that the payer processed your claim incorrectly.


The answer:

Call the insurance company to figure out why the claim was denied. You can ask them for a reconsideration if you think it was processed incorrectly, or you can write a formal appeal.

It’s unfortunate, but these kinds of payer glitches are not uncommon. According to a 2013 article by American Medical News, the American Medical Association “estimates that more than $43 billion could have been saved since 2010 if commercial insurers had consistently paid claims correctly.”

One of the best ways to determine if there’s been an oversight with one of your claims is to analyze denial statistics.

Loskutov recommends that doctors’ offices run monthly denial reports to track repeating denials, since that may uncover patterns.

“Let’s say a procedure is payable according to a provider’s contract; however, the payer’s adjudication system keeps denying it as ‘not payable’,” he says. “Analyzing the denial statistics can provide a lot of answers and clues as to what the issue may be in each specific case.”


The tech solution:

Once again, medical billing software can help by generating the kinds of financial reports that make it easier to spot issues quickly and efficiently.

In our article, The 3 Medical Billing Reports You Should Be Running Regularly, we break down how different systems allow you to see:

  • How many days it’s been since a submitted claim was unpaid.
  • The status of charges, payments and collections for your practice’s most commonly-used payers.

NueMD’s Insurance Collection Report shows unpaid claims over 30-day periods

These tools take much of the effort out of assessing claims and deciding which denials need to be appealed due to payer errors.

Takeaways for Billing Success

Don’t let bad billing habits sabotage your practice. If you abide by the tips in this article, you’ll be able to get paid faster and avoid stressing over unpaid claims. Here’s a quick summary of everything we covered:

  1. Make sure patients’ insurance coverage information is up-to-date to avoid denials due to eligibility issues.
  2. Keep track of submitted claims so you’re not accused of duplicate billing.
  3. Document patient encounters comprehensively and choose the most specific code available for a treatment/procedure.
  4. Double-check that names, addresses and other details are entered accurately before submitting a claim.
  5. Evaluate the reasons for denied and rejected claims to identify whether the payer made a mistake during processing.

Finally, we highlighted some tech solutions throughout this piece that can help automate some of these tedious tasks.

If you want some help finding the right billing software for your practice, fill out this quick questionnaire. We’ll send you a shortlist of solutions that can meet your needs and budget.

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