Introduction
Medical billing is a vital sub-process in the overall revenue cycle management to facilitate timely payment of services to a provider. However, when implemented, claim rejections and their levels in medical billing still serve to drastically slow payments and do nothing but add to the workload.
Definition of Key Terms
- Rejection: A rejected claim is reached through mistakes or missing data that the payer discovers before they process the claim.
- Denial: This occurs after the payer has received and worked through the claim where the patient’s request for payment is rejected based on failure to meet coverage standards.
- Clearinghouse: A claims processing service that verifies the correctness of claims against data and formatting rules typical of both payers and providers.
- Payer: Health insurance is a cost defense mechanism offered by the insurance company or any entity that is under obligation to compensate the healthcare providers for the services they offer.
1. What is Claim Rejection in Medical Billing?
Definition
Claim rejection means that the claim submitted does not conform to the payer or clearinghouse standards and is denied for submission correction.
The difference between Rejection and Denial
• Rejection: Searched for before the claims processing stage.
• Denial: Claim processing is based and is usually presented after the claim has been denied.
Example:
When a claim is submitted with no patient ID number or invalid, the software rejects it on the clearinghouse level, allowing the provider to fix and resubmit the mistake.
2. Levels of Rejections in Medical Billing
Definition of Levels
Rejection levels refer to the positions where errors are noted in the billing cycle, and it has a level of rejections.
Stages of Rejections
- Pre-Submission: These errors are uncovered before the collection agency claim is sent to the clearinghouse.
- Clearinghouse Level: All mistakes found during the intermediary validation stage.
- Payer Level: These errors arise after a claim has been submitted to the clearinghouse and then protested to the payer.
Impact of Levels
It shows that the clearinghouse and payer level rejections considerably impact the billing cycle and cause more administrative burdens.
3. Types of Rejections in Medical Billing
Common Rejection Types
- Incomplete Information: Lack of information about the patient, for example, his/her age, gender, policy numbers, and name.
- Eligibility Issues: The patient is not necessarily included in the submitted plan.
- Duplicate Claims: This is self-explanatory, where one repeatedly presents the same claim to the insurance company.
- Coding Errors: Employer code references, which include CPT, HCPCS, or ICD-10 codes, may be inaccurate or outdated percentages.
- Invalid Patient Details: Data entry inaccuracies concerning the patient.
- Provider-related Rejections: Lack of or wrong information about the provider.
Other Common Rejections
The former involves issues such as invalid service dates, unauthorized procedures, and/or the documents to support the claims as provided were inadequate.
4. Clearinghouse Rejections in Medical Billing
What is a Clearinghouse?
A clearinghouse works by facilitating and reconciling claims of health care providers and their related payers, which involves data and formatting compliance.
Causes of Clearinghouse Rejections in Medical Billing:
- The wrong type of code (for example, CPT or ICD codes).
- Lack of patient demographic data in the patient record
- Mistakes in insurance-related information, such as policy numbers, payers’ identification numbers, and IDs.
How Clearinghouse Rejections Differ from Payer Rejections
Claims denied at the clearinghouse level happen before the payer, while the payer rejection is identified after a clearinghouse validation.
5. Payer Rejections in Medical Billing
Definition of Payer Rejection in Medical Billing:
A payer rejection means a claim did not meet specific payer rules after clearing the payer’s clearinghouse.
Reasons for Payer Rejections
- Coverage Issues: It is especially true for services or procedures not covered by the insurance.
- Policy Changes: Failure to update the claims to match some policy changes.
- Eligibility Problems: Incorrect or disclosed information about insurance.
- Insufficient Documentation: Lack of referral forms, medical necessity letters, and copies of letters from insurance underwriters.
How to Handle Payer Rejections
- Continue establishing a specific billing guide according to the payer
- Make a habit of auditing claims
- In the patient context, create unambiguous communication and establish relationships with a specific billing guide.
6. The Difference Between Rejection and Denial in Medical Billing
Rejection vs. Denial
- Claim Rejection: Discovered before when the payer has acted upon it; can be adjusted and re-contributed.
- Claim Denial: Determined after analysis, and often, addresses require an appeal.
Why the Difference Matters
Understanding the difference between rejection and denial ensures timely resolution and reduces administrative overhead, enhancing the efficiency of the billing process.
7. How to Prevent and Handle Rejections in Medical Billing
Preventive Measures Include:
- Establish proper data entry controls to reduce the chances of errors.
- Rejections should be handled promptly to understand the causes.
- Automatically track billing errors and use cutting-edge billing software in the process.
- Design procedural techniques for correcting and resubmitting the claims.
Handling Rejections
- Address rejections proactively by identifying root causes.
- Use advanced billing software to track and resolve errors efficiently.
- Develop a systematic approach for correcting and resubmitting claims
Conclusion
Healthcare providers need to understand the different levels of rejections in medical billing and their causes to improve their revenue cycles. Managers can avoid aversive collected reactions by implementing failure control elements and practicing training procedures and funding expectations that interrelate to better fiscal outcomes.
