Claim Rejections vs. Claim Denials ─ What’s the Difference?
Claims Errors
The healthcare billing industry has seen its ups and downs over the years – but one would surely think that advances in billing technology would have made claim errors a rare occurrence.
Think again! The industry still experiences an 80% error rate!
According to one study, as many as 80% of today’s healthcare claims contain errors. When these errors happen, it means dollars and cents in the form of delayed payments or unpaid claims that can spell disaster for your ambulance service.
What Makes a Claim ‘Clean’ or ‘Dirty’?
Claims submitted to an insurer are considered either ‘dirty’ or ‘clean’.
When we say a claim is ‘dirty’, we’re not referring to its physical properties like a smudge of leftover mayonnaise on that CMS 1500 resulting from that potato salad you had at your desk (though technically that could cause a problem if it’s located over some key information).
Seriously though, a ‘Clean Claim’ is when the ambulance claim form arrives in the insurer’s hands with all of the necessary data elements and presented in the insurer’s required format for them to consider the claim for payment, while a ‘Dirty Claim’ is missing some or all of these items.
Understanding Rejections
Claims that fail to meet the payor’s submission criteria – whether missing information or in the wrong format – are automatically REJECTED by the insurance company before a payment review even begins.
Errors that lead to rejection of the claim can be as simple as an incorrect digit in the patient’s insurance number or as complex as skewed digital formatting of the claim file which can happen if the biller’s software didn’t run a software update in a timely manner.
While rejections are frustrating and often avoidable, the good news is that they are easily fixed and can usually be resubmitted.
Does your ambulance service’s billing provider check claims for possible rejection criteria prior to submission so that a claim moves through the insurer’s review and payment process – and your revenue cycle – as quickly as possible?
Understanding Denials
Once a claim successfully passes the automated rejection process, the insurer will consider the information contained in the claim for payment. A DENIAL occurs when an insurance company deems the claim to be ineligible for payment.
Denial reasons are plentiful and can range from the lack of pre-authorization by the insurer, filing past the date allowed from the date of service, coding errors (ICD-10 diagnosis or HCPCS procedure codes), lack of medical necessity documentation, or even because the ambulance company performing the transport was out-of-network with that insurer.
Is the denial hard or soft?
Ice cream’s not the only thing that comes in hard or soft –
Insurance denials are, too!
A HARD DENIAL is when an insurance company denies to pay a claim because they do not believe that they are obligated to pay for the service based on their review of the facts presented on the claim. The best example of this is a transport that is denied because it did not meet the insurer’s medical necessity rules. Yet another example is when the ambulance service failed to obtain the required pre-authorization prior to providing the transport (See the ‘Guiding -vs- Chasing Reimbursement’ blog for more help with these trips).
A SOFT DENIAL is when the insurer requests additional information before they will consider paying the claim.
A soft denial is, in essence, a “not now, maybe later” scenario wherein the insurer has reviewed the claim and determines that it is possible to pay the claim but the claim is lacking certain key information. When this happens, they communicate with the billing provider requesting specific information or documentation required by the insurer before they will pay the claim at a later date.
Is your billing service putting the resources necessary toward reviewing every hard and soft denial for opportunities to resubmit and/or appeal the claim on your behalf?
How You Can Prevent Rejections and Denials from Affecting Your Bottom Line
Now that we know what Rejections and Denials are and how they differ – How can you prevent them?
The short answer is…Choose your billing team wisely!
Quick Med Claims is committed to submitting ‘clean’ claims THE FIRST TIME. We experience minimal rejections and denials because we employ multiple checks and balances within the billing cycle, such as:
- We have proactive review processes in place to prevent as many rejections and denials as possible before a claim is submitted.
- Our administrative and technology staff are constantly updating systems, monitoring claims for rejection and denial trends, and responding to communications from payors to prevent errors in the submission process.
- We have invested in the staff and technology necessary to work each rejection or denial to its resolution – so our clients don’t lose money in lost claim payments.
If your billing service isn’t successful keeping your rejection and denial rates to a minimum, maybe you should consider finding someone new.
Contact us today for a free, no-obligation account review. Do you have anything to GAIN? Let’s talk!
