Best Practices For Appealing A Denied Medical Claim
Claim denials can be costly for healthcare providers, no matter how or why they happen. And studies have shown that they are happening more frequently each year, up to a 23% increase in frequency for hospitals between 2016 and 2020.1
By following the right strategies, many of the costs can be avoided. This blog will cover four of the best ways to appeal medical claims:
- Optimizing your appeal and formally submitting an appeal letter to the payor
- Correcting the claim and eliminating any errors in the medical documentation
- Getting the patient in question actively involved in the claim appeal process
- Maintaining continuity and successful long-term relationships with all parties
By the time we’re done, you’ll be well prepared with strategies and resources to tackle the next claim that comes your way.
But first, let’s define our terms: what is an appeal in medical billing?
Quick 101: What is a Denied Medical Claim?
A denied medical claim occurs when a payor, such as an insurance agency, does not approve payment collections for a submitted claim. This might happen when a patient gets treated for an ailment not covered by their health insurance or deemed unnecessary. Additionally, the client may have exceeded coverage limits or be a medical service from an out-of-network healthcare provider.
A health insurance claim may also be denied because of one or more errors made on the claim form itself, in any medical records or documentation relevant to it, or even in the billing records. In these cases, the claim may be rejected rather than denied. Rejected claims are not appealed. Rather they need to be corrected and resubmitted by your practice or the client. They still may be denied afterward by the health insurer.
Best Practice #1: Optimize and Submit Your Claim Appeal
The first and most important practice is actually submitting the claim appeal to the insurance provider, only after a careful external review and editing process. Submitting a claim appeal bearing the same errors that led to the denial will result in another denial and missing revenue.
You need to clarify all of the specific claim details, including:
- Medical documentation must be accurate and appropriate (see next best practice)
- Diagnoses must be accurate and fully supported by medical documentation
- Current Procedural Terminology (CPT) codes must be 100% accurate
- Explanation of Benefits (EOB) must be accurate and match diagnoses, CPT, etc.
- All modifiers and special conditions should be double-checked for accuracy
By focusing on making the appeal a conscious, active decision, you’ll make sure it is free from errors before actually submitting it to the payor.
Sending the Formal Appeal Makes all the Difference
Many practices may fall into the bad habit of not formally appealing claims as they occur. They send a bill or invoice to the payor with an EOB with supporting documentation and wait for the payor to do the “right” thing. A larger practice may view the formal appeal process as a waste of time, whereas a smaller, newer practice may not have the resources to formally appeal.
Nonetheless, a formal appeal letter sent to the payor directly shows that your practice takes the claim denial seriously. It prompts the payor to research the issue more thoroughly and resolve the claim more swiftly.
While this may take more time upfront, it’s well worth it.
Best Practice #2: Ensure Relevant Documents are Error-Free
Not only is it important to perfect the claim appeal letter you send to the payor, but you also need to make sure all relevant documentation and reporting is completely free of mistakes. Further, you need to account not just for mistakes made by your internal team, but also for any missing or inconsistent information across all records received from other physicians and stakeholders.
Many of the errors associated with denial claims, as noted above, relate to CPT codes. Some of the most common of these errors, according to one industry expert,2 include inconsistent or mismatched coding (procedures, diagnoses, etc.), outdated codes, or insufficient specificity.
Most importantly, ensure all codes match up exactly with existing medical documentation.
The Importance of Proper Medical Documentation
Everything that appears on your billing—e.g., all codes—needs to be backed up with appropriate medical documentation. Anything that is coded but doesn’t have proper records to substantiate it could be grounds for an insurance claim denial. If the error still exists on your appeal, you won’t find success.
There are thousands of 5-digit CPT codes in use by doctors all over the country. In many cases, there are two codes for the same, or similar, procedure. There are four main categories of CPT:3
- Baseline healthcare services, such as procedures, drugs, and devices
- Quality of care and other efficacy measures for performance and services
- New and innovative healthcare services, leveraging emerging technologies
- Alpha-numeric Proprietary Lab Analyses (PLA) codes for laboratory testing
Despite possible payment variance, such as offices using 99213 or 99214 for a general office visit, all stakeholders make their selections from the same set of codes. This makes matching medical records to possible corresponding codes a relatively straightforward, if somewhat tedious, task.
Best Practice #3: Involve the Patient in Question
Denial claims and their ensuing costs don’t just involve payors and providers. In some cases, the patient(s) in question may have costs passed onto them. In these scenarios, they may be willing to work with your practice or the payor to resolve any claims. In fact, they may take matters into their own hands and handle things with the insurer irrespective of what your practice does.
Patients should be made aware of any expenses that they may not have been expecting. One crucial element of fidelity that we didn’t touch on above is ensuring that patients are eligible for treatments that you provide for them and that their insurance company will cover them. As part of that initial process, you can also notify the patients of what they can expect if their claim is denied.
How Working With the Patient Can Help
As noted above, some of the errors that can lead to a denial claim are a result of various inputs and potential miscommunications across documentation that relates to a given transaction. You can work together with a patient to help alleviate some of these issues.
Consider this example:
- You are working with a patient who recently moved into the US from a foreign country; their medical records and documentation all utilize codes unfamiliar to your personnel.
- The patient’s recent claim was denied because of a lack of clarity and overall confusion between codes used by your practice and others used by the patient’s previous doctors.
- Working with this patient, you can establish a strong line of communication with the other doctors and translate the other codes into ones more intelligible for the payor.
In this simple scenario, working with the patient can be your key to success in your claim appeal. And, doing so benefits all parties involved—which brings us to our last point.
Best Practice #4: Maintain Long-Term Relationships
The last essential practice to implement involves taking measures to repair any damage done to relationships and looking forward to how you can ensure continuity with all strategic partners.
Following the best practices above, especially #1 and #3, is one way to get started on long-term relationship building. But it’s also far from enough; you also need to follow up with payors, patients, and other stakeholders throughout the process to manage expectations.
Beyond the payor provider relationship, you should also look to maximize your internal team’s response and recovery abilities. Conducting regular audits and tests to maximize efficiency will help staff prepare and reduce the burdens placed on your relationships moving forward—a win-win.
Moving from Correction to Long-Term Prevention
For healthcare providers of all shapes and sizes, across the country, the best way to navigate denied claim appeals and all other elements of billing and payor management is to contract a third-party service provider. That’s where we come in: the experts at PayrHealth offer a suite of solutions aimed at not only maintenance and optimization, but long-term growth.
We can help you resolve current claim appeals and prevent others in the future with innovative approaches to signing better contracts, negotiating higher rates, and expanding your team. To see how smooth your payor management processes can be, feel free to contact us today!
- Revcycle Intelligence. Hospital Claim Denials Steadily Rising, Increasing 23% in 2020. https://revcycleintelligence.com/news/hospital-claim-denials-steadily-rising-increasing-23-in-2020
- M-Scribe. Four Simple Steps to Reduce Medical Claim Denials. https://www.m-scribe.com/blog/four-simple-steps-to-reduce-medical-claim-denials
- Very well health. An Overview of CPT Codes in Medical Billing. https://www.verywellhealth.com/what-are-cpt-codes-2614950
- The balance. How to Appeal Health Insurance Claim Denials. https://www.thebalance.com/health-insurance-claim-denial-4177347
- M-Scribe. Helpful Tips for Appealing a Medical Claim Denial. https://www.m-scribe.com/blog/helpful-tips-for-appealing-medical-claim-denial
- M-Scribe. Understanding Medicare Denials and How to Appeal Them. https://www.m-scribe.com/blog/understanding-medicare-denials-and-how-to-appeal-them
- Revcycle Intelligence. 8 Tips for Avoiding Denials, Improving Claims Reimbursement. https://revcycleintelligence.com/news/8-tips-for-avoiding-denials-improving-claims-reimbursement