Common Causes of Medical Billing Denials: Identifying Issues from Coding Errors to Authorization Failures

Medical billing denials are a recurring issue for healthcare providers across the United States. These denials disrupt cash flow and add to administrative workloads. Recent data shows that around 11% of claims are denied upon initial submission, leading to about $260 billion in losses for healthcare providers each year. It is important for medical practice administrators, owners, and IT managers to know the common causes of these denials, including coding errors and authorization failures, to improve revenue cycle management.

Key Causes of Medical Billing Denials

1. Incomplete or Inaccurate Documentation

A major cause of medical billing denials is incomplete or inaccurate documentation. Documentation is essential in the claims process as it provides the necessary evidence for services rendered. Incomplete records lead to insurance providers lacking information to process payments.

A survey by Experian Health identified missing or incorrect data as significant obstacles to claim acceptance. These issues can arise due to:

• Lack of specificity in claims, which can result in refusal when diagnoses cannot be coded accurately.
• Missing key information like dates of service or medical conditions requiring treatment.
• Patient identification errors, where typos or incorrect details lead insurers to question the claim’s validity.

Healthcare practices need to ensure accurate and complete documentation during the claims submission process. Regular audits can help identify and fix existing documentation gaps.

2. Authorization Failures

A frequent reason for claim denials is the failure to obtain proper authorization for services provided. Many insurers need pre-authorization for certain procedures to confirm that they are medically necessary. When healthcare providers do not follow up on authorization requirements or fail to obtain them before providing the service, claims can be denied.

Research shows that missing prior authorizations accounted for 48% of the top denial reasons in a recent survey. Healthcare providers should establish effective communication with payers to ensure timely authorizations and compliance with specific guidelines.

3. Coding Errors

A report indicated that inaccurate coding was responsible for 42% of denials. Even small mistakes in converting diagnostic information into codes can lead to denials, so ongoing training for coding staff is essential. Automating coding processes can also help improve accuracy by reducing human error.

4. Duplicate Billing

Automation tools, like automated claim review processes, can assist organizations in identifying duplicate claims before submission. By using technology, practices can enhance their billing processes and lower the chances of duplicate submissions.

5. Timeliness of Claims Submission

6. Lack of Medical Necessity

7. Insufficient Staff Training

The Role of Technology in Reducing Denials

Automation and AI: Streamlining the Billing Process

1. Prior Authorization Software

2. Claims Management Solutions

3. Enhanced Data Analytics

4. Patient Engagement Technologies

Statistical Overview of Claim Denials

Conclusion: