Common reasons claims denied or rejected by insurance

There are various reasons why claims are denied or rejected by insurance.  The best way to avoid claims being denied is to submit “clean” claims on the front end.  This starts with the patient insurance verification at the beginning to reflect the accurate patient demographic information.  As well as, to confirm which insurance company is to receive the claims for processing on the CMS-1500 form.  This information can be obtained by calling the insurance or the information is available through the website of the insurance company or through Availity.com

Patient demographic information

When submitting claims to insurance the demographic information has to match, as it’s listed with the insurance carrier.  On the claim form, a person’s nickname cannot be listed or the claim will be “denied.” 

• The patient’s demographic information is listed by insurance (for example, the patient’s name as Jimmy, which is their government name, but you may think it’s a nickname and change it incorrectly to James.) 
• Date of birth (DOB)
• Sex (as listed on the insurance card)
• Address listed

The name is a common reason a practice will have  “denied” or “rejected” insurance claims.  As a provider, it is pleasant to refer to patients by their preferred name.  However, when it comes to insurance, you must use the name listed on their insurance card.  Many (EHR) Electronic Health Record software have a section where you may add the person’s nickname or preferred name and it does not appear on the claim form. This information is confirmed in the patient verification of benefits. At MCM South Medical Billing Service, LLC we offer this with the billing service and a standalone offering.  

Common EHR Softwares

TherapyNotes, SimplePractice, Kareo, Drchrono, Docvilla, Access,  Acuity Scheduling, AdvancedMD, Allscripts, Athenahealth, Cerner, eClinicalWorks, Epic, Elation, EHRinPractice,  Luminello, Meditab, Meditech EHR, NextGen Healthcare, PIMSY EHR, Practice Fusion, Praxis,  Procentive, Psyquel, Quenza, TheraNest, Therapyappointment, TheraPlatform, Updox, Waystar

Insurance company

When it comes to insurance, the main two reasons why a practice will have  “denied” or “rejected” by insurance claims; are 1) incorrect member ID, and 2) submitting a claim to the incorrect insurance company.

When copying the member ID from the patient’s insurance, it’s important to write all the digits.  For example, Blue Cross (Anthem) member ID’s have an alpha prefix at the beginning of the ID to identify where the plan originated. In this case, the member ID is incomplete without those digits and the claim(s) will “deny.”

United Behavioral Health or Optum member

Often the Health Plan number is mistakenly used, versus the Member ID (see red arrow in the image below)

Claims can be submitted to insurance because the payer ID was inadvertently typed.  However, with EHR systems this minimizes these errors because you can type the name of the insurer and it will populate the associated Payer ID.

It is common for mental health claims to be serviced by a “third party” insurer.  This means the health insurance company on the front of the insurance card does not receive the claims.  If claims go to the insurance company on the front of the insurance card, the claims will be “denied.”  To obtain the correct insurance company, you will need to call the “Provider Services” number on the back of the insurance card.  Ask these questions;

• Who is the insurance company for the group’s mental health claims?
• What is the phone number of the insurance company?

When calling the third-party insurance company ask these questions

• Does the patient have a different member ID?
  • If so, may you provide it to me?
• What are the patient’s benefits?
  • Will the provider be in-network or out-of-network?
  • Does the patient have a copayment?
  • Does the patient have a deductible and/ or co-insurance?
    • What are the accumulations towards the deductible?
• How do I submit claims to this insurance company?
  • What is the Payer ID?

Uncovered services

This means that present on the claim form that based on your credentials, insurance will not cover the service(s).  This is reflected in the CPT submitted to represent the service(s) rendered.  For example, 96101 is for psychological testing to be administered by a doctorate-level provider.  A master’s level provider is not authorized to administer this service.

Coordination of benefits

(COB) coordination of benefits is the majority reason that many claims are “denied” or “rejected” by insurance.   This means that the insurance company where the claims are submitted believes that the patient has other insurance.  The insurance company needs the patient to call them to confirm there is no other insurance or to clarify which insurance is primary and which is secondary.

Coordination of benefits is a financial decision for the patient and the provider’s office cannot satisfy this question for the patient.  To resolve this, the provider will need to have the patient call the “Member Service” number on the back of the insurance card to speak with an insurance representative to update this information.  After the call is placed and the coordination has been updated, the insurance company may re-process the claim.  

Timely filing

All insurance companies will state the timely filing in which a claim can be submitted after the date of service.  The standard for most insurance companies is 90 days after the date of service that a claim can be submitted to insurance to be considered for reimbursement.  Medicare has a timely filing of 365 days after the date of service. 

You may call “Provider Services” to receive the timely filing for the patient’s benefits.  Any claims received after the timely filing will be denied for this reason. 

Patient insurance verification

Many of the errors reviewed that cause the claim to be denied by insurance can be resolved at the beginning with the proper intake process of a new patient.  The process does not mean you must be a large organization. Still, the reason a large institution will have an intake process is to ensure that all the demographic information is accurate to minimize errors on the backend, which means lost revenue. See our page at MCM South about how you can add value to your practice.