Denial Reasons in Small Practices

Denial rates commonly run 5–10%. The most common denial reasons in small practices include eligibility and coverage issues, missing prior authorization, coding errors, insufficient documentation, and timely-filing-limit misses. For instance, a practice may submit a claim without verifying the patient's eligibility, resulting in a denial with a CO-16 code, which indicates that the claim lacks information. This can be prevented by verifying eligibility at the front desk using online tools or by contacting the payer directly.

Eligibility verification is a critical step in preventing denials. By verifying eligibility, practices can ensure that they are submitting claims for services that are covered by the patient's insurance plan. This can be done by checking the patient's insurance card, contacting the payer, or using online eligibility verification tools. For example, a practice may use a tool like Availity to verify eligibility and receive real-time feedback on any issues that may cause a denial.

Coding errors are another common denial reason in small practices. These errors can occur when the wrong code is used or when a modifier is missing. To prevent coding errors, practices can use coding tools and resources, such as the official CARC/RARC code list, to ensure that they are using the correct codes. For instance, a practice may use a coding tool to verify that they are using the correct CPT code for a particular service. Additionally, practices can provide ongoing training to their staff on coding guidelines and updates to ensure that they are using the most up-to-date codes.

Practices can also use technology to help prevent coding errors. For example, they can use electronic health records (EHRs) with built-in coding tools to help ensure that the correct codes are used. They can also use claim scrubbing tools to identify potential coding errors before the claim is submitted.

Prior authorization is another critical step in preventing denials. By obtaining prior authorization, practices can ensure that the services they provide are approved by the payer. This can help prevent denials with a CO-197 code, which indicates that the service requires prior authorization. For example, a practice may need to obtain prior authorization for a patient who requires a high-level of care, such as inpatient treatment. By obtaining prior authorization, the practice can ensure that the services are approved and that the claim will not be denied.

Prior authorization can be a time-consuming process, but it is essential in preventing denials. Practices can use online tools or contact the payer directly to obtain prior authorization. They can also use electronic prior authorization tools to streamline the process and reduce the risk of errors.