In 2021, insurance companies denied an average of 17% of claims. One insurer had a denial rate of 49%. Another reached a staggering 80% in 2020.
All these denials were for patients who were treated by in-network physicians.
That’s why medical claims processing is crucial for having a healthy revenue cycle. Efficient claims management strengthens your company’s financial stability.
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Key Takeaways
Understand insurance payer requirements for claims.
Submit clean claims for faster payout.
Act promptly when submitting claims and appeals.
Let’s simplify the insurance claims process, helping you collect payments and avoid claim denials.
Medical Insurance Claims Processing Steps
Claim processing steps may vary depending on the patient’s insurance provider. However, we can outline the general steps as follows:
STEP 1
Ensure the completeness and correctness of the patient’s information
The first step is to validate the patient’s information. This step links the patient to their medical insurance policy. At a minimum, ensure that the following are present:
- Patient’s name
- Address
- Date of birth
- Insurance policy details
STEP 2
Verify health insurance eligibility and coverage
As a healthcare provider, you need to confirm your patient’s insurance details.
This ensures that the patient’s policy is active. It also checks that the patient has the proper coverage. In addition, be sure to check the following points:
Policy Benefits
Verification allows you to identify the patient’s policy benefits. This provides the extent of coverage the patient may receive.
Financial Obligations
This process helps identify unpaid co-pays, deductibles, and out-of-pocket expenses. This data prevents unforeseen financial burdens for the patient.
Pre-Authorization or Prior Authorization (PA)
Some treatments may need pre-authorization.
For example, in elderly care, Medicare does not require PA for CT Scans. But, it may require PA for some form of cataract surgery.
So be sure to contact the patient’s insurance policy. Kaiser reports that around 8% of claims were denied because it lacks PA. This step will help prevent claims denial.
STEP 3
Prepare a medical claim form and check compliance
This is where the expertise of your medical billers comes in.
At this stage, medical billers convert medical coders’ input into insurance claims. They ensure the accurate use of medical codes that align with the final bill.
As part of compliance checking, be sure to check the following:
Medical Codes
Medical claims require certain codes to describe a patient’s condition and treatment.
There are 2 types of codes: diagnosis and procedure codes. The procedure codes reveal the specifics (“what”). Diagnosis codes explain the reasons (”why”).
Examples of procedure codes are the Current Procedure Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS).
Medical coders and billers use ICD codes to record diagnoses.
Medical coding errors usually cause denied claims. Using these standardized medical codes helps you avoid claims denial.
This helps insurers understand the patient’s services.
Itemized Medical Services
When it comes to filing claims, it’s important to provide a clear breakdown of the medical services rendered.
Mention the dates of service, the procedures performed, and any supplies or medication used.
These details help the payer understand the nature and cost of each component.
Insurance company claim form
Claim forms, such as the CMS-1500 and UB-04, play a crucial role in healthcare services payment. Both forms capture relevant information needed to process claims.
Healthcare providers must use the correct form. This ensures accurate and timely claim submission.
STEP 4
Submit the claim to the health insurance company
Once all the necessary documents are ready, it is time to submit the claim. You can submit the claim form manually or electronically.
In most cases, healthcare providers submit claims electronically. They use standardized formats like HIPAA-compliant EDI.
This method speeds up claim processing and reduces errors from paper submissions.
Be sure to review your claims before submission.
In addition to errors in codes and details, they will check for duplicate charges or non-covered services. In 2021, 14% of medical claims were denied because of this.
STEP 5
Monitor claims approval
The final step is to monitor the approval of your claims.
Insurance companies will comb through the claim details, services provided, and insurance coverage.
Based on the insurance plan, the insurance company decides the amount to cover.
The timelines for claim approval vary across insurance providers.
Medicare, for example, normally has a claim processing time of 30 to 45 days. Medicaid varies by state but aims for a 30-day turnaround time.
Private healthcare insurance agencies have their specific timelines. These timelines usually range from 15 to 60 days.
Once the insurer gives their approval for the claim, you will receive a final bill. This bill will indicate the approved amount for the services provided.
The insurer then pays the facility directly, covering the eligible portion of the claim. You can now bill the patient for any co-pays or deductibles.
What happens when medical insurance companies deny your claims?
Denied medical insurance claims can occur due to various reasons.
Some common causes include:
- Inaccurate or incomplete information
- Lack of medical necessity
- Non-Covered Services
- Coding errors
- Pre-Authorization requirements
- Timely filing limits
- Policy limitations
- Coordination of benefits issues
What to do when medical insurance companies deny your claims?
When the insurer denies your claim, there are several steps you can take:
- Review the denial letter. Check for coding errors, lack of medical necessity, or missing information.
- Contact the insurance company and seek clarification.
- Understand the appeal process.
- Gather the necessary documents. Collect relevant medical records, physician’s notes, and test results to strengthen your appeal.
- Submit an appeal.
After submission, monitor your approval. Communicate with the insurance company to know the status of your claim.
Quick reminders when preparing your claims
- Learn insurance payer claim requirements for smooth processing.
- Knowing clean claims speeds up processing and reduces appeals.
- Work with specialized clearinghouses for streamlined claims.
- Stay updated on insurance payer policies and regulations.
- Communicate well with healthcare providers for accurate claims.
- Use reliable billing software for efficiency and accuracy.
Frequently Asked Questions
Many insurance companies have a time frame of 90 days from the date of service. This means the claim must be filed within 90 days of providing the healthcare treatment.
The time filing limit is generally one calendar year (12 months) from the date of service. But it’s best to submit claims asap for timely processing.
Medicaid time filing limits can vary by state. In some states, the limit may be as short as 90 days. Others may allow up to one year for claim submission. It’s important to check the guidelines of your state’s Medicaid program.
Time filing limits for private insurance plans can vary. Contact the insurer directly to determine the time frame for filing claims.
The time limit for submitting appeals varies by insurance company and plan. Generally, it ranges from 30 to 180 days from the date of the claim denial. There are due dates for each level of the appeals process for Medicare. Private insurance plans have their own time limits, while Medicaid varies by state.
Sources
Analysis: Health insurance claim denials are on the rise, to the detriment of patients. (2023). Retrieved 22 June 2023, from https://www.pbs.org/newshour/health/analysis-health-insurance-claim-denials-are-on-the-rise-to-the-detriment-of-patients
Claims Denials and Appeals in ACA Marketplace Plans in 2021. (2023). Retrieved 22 June 2023, from https://www.kff.org/private-insurance/issue-brief/claims-denials-and-appeals-in-aca-marketplace-plans/
