Reasons why Payers? Deny a Claim

Posted by Ecareindia on January 5th, 2015

Maintaining a good first-pass ratio is essential for all healthcare entities including offshore medical billing companies.Perfect medical claims processing is the key factor to maintaining a good first-pass ratio. Even after much effort in trying to send clean claims, some healthcare entities still face the issue of claim denials. One must think from the Payers’ perspective to understand the reasons for which claims are denied and mitigate them. It has been estimated by AARP that approximately 200 million claims get rejected every year. Let us take a look at some of the reasons for which Payers’ deny a claim:

Submitting Erroneous Claims: It isone of the major reasons why a Payer denies claims. Some common factors that cause errors in claims include entering wrong patient information, failing to do the insurance eligibility verification prior to the encounter with the Provider, inaccurate coding of CPT, ICD & Modifiers and missing out diagnostic tests/procedures. Healthcare entities that have a good in-house medical claims processing team will easily overcome such errors. However, Providers and medical billing companies that are inexperienced and small face this issue.

Filing Claims after Timely Filing Limit (TFL): Each Payer has a predetermined TFL to submit claims. The time limit may vary from 30 days to 2 years. Claims that are submitted after the provided time limit will get rejected by the Payer.

Loss of Claims: It can happen either at the Clearing House or at the Payer. Sometimes, insurance companies might misplace or lose the claims submitted by the healthcare entities. In such cases, Providers or medical claims processing companies must do regular AR follow-ups for proper reimbursements.

Lack of Insurance Prior-Authorizations: It is important that Providers get prior-authorizations for specialty and non-specialty services. Using the prior-authorization number, a medical claims processing company can easily handle denied claims.

Overbilling: Another major reason for claim denials is overbilling, which has become a considerable threat in recent times. Some common overbillings activities include, up-coding, double billing, unbundling, and overutilization of services. To keep medical coding services free of overbilling and other fraudulent activities, there should be strict protocols set and adhered to.

Out-of-network Medical Billing: The rate of denied claims is higher in out-of-network billing when compared to in-network medical claims processing. The reason is many Payers do not accept AOBs or Assignment of Benefits between patients and Providers. Outsourcing out-of-network medical billing services to an experienced medical claims processing company will make a good solution.

These are some of the reasons why Payers deny claims. To avoid claim denials and attain a good first-pass ratio, healthcare entities should also consider outsourcing to reputed offshore medical billing companies like e-care.

About e-care India:

E-care India has 14 years of experience in the industry. E-care’s 3 offshore medical billing delivery centers have been providing end-to-end medical claims processing, insurance eligibility verification, denial management and medical coding services seamlessly to its clients. To know more about e-care and its services, log on to

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Joined: June 20th, 2011
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