Claim rejections and claim denials can feel like barriers that prevent you from getting paid on time. 

While these terms are often used as if they mean the same thing, they are actually quite different. 

Knowing how to handle each can help streamline your revenue cycle and boost your cash flow.

What Is a Claim Rejection?

A claim rejection occurs before the claim even reaches the insurance company for review. 

Think of it as a red flag at the gate—the claim bounces back due to mistakes or missing information, failing to meet the payer’s standards. 

Common reasons for rejections include incorrect patient information, inaccurate insurance policy numbers, or coding errors.

For instance, if the patient’s name is misspelled or the insurance number is entered wrong, the claim never makes it to the payer. 

It’s like sending a letter with the wrong address; it gets returned to you without even being opened. 

The silver lining is that rejected claims are usually easy to fix. Once you correct the errors, you can resubmit the claim without too much delay.

How to Handle Claim Rejections

The key to managing claim rejections is to act quickly and accurately. 

Review the rejection reason provided by the clearinghouse or payer, and make the necessary corrections. 

Double-check all patient information, insurance details, and coding before resubmitting the claim.

What Is a Claim Denial?

Unlike rejections, claim denials occur after the insurance company has received and processed the claim. 

The payer has reviewed the claim and determined that it will not be paid, either partially or in full. 

Denials are often more complex and can be harder to resolve than rejections.

Common reasons for claim denials include lack of coverage for the service provided, missing prior authorization, or non-compliance with the payer’s policies. For example, if a patient receives a non-covered service or visits an out-of-network provider, the claim may be denied. These issues often require more investigation and possibly communication with the payer to resolve.

Addressing Claim Denials

When facing a claim denial, your first step should be to thoroughly review the explanation of benefits (EOB). 

This document will provide the specific reason for the denial and guide your next steps. 

You may need to gather additional documentation, appeal the decision, or in some cases, bill the patient directly.

Preventing Future Rejections and Denials

Proactive measures can significantly reduce both claim rejections and denials. 

Implement a robust verification process to check patient eligibility and benefits before services are rendered. 

Regularly update your coding practices to align with the latest guidelines and payer policies.

Staff training is crucial in preventing errors that lead to rejections and denials. Educate your team on proper documentation, coding practices, and the importance of accurate data entry.

 Consider implementing automated tools that can catch common errors before claims are submitted.

The Impact on Your Revenue Cycle

Both claim rejections and denials can significantly impact your revenue cycle. They delay payments, increase administrative costs, and can negatively affect cash flow. 

By addressing these issues promptly and efficiently, you can improve your financial health and focus on patient care.

Leveraging Data for Improvement

Analyze patterns in your rejections and denials to identify recurring issues. 

Use this data to refine your processes and target problem areas for improvement. 

Regular audits can help you stay ahead of potential issues and maintain a healthy revenue cycle.

FAQs

How long do I have to correct and resubmit a rejected claim? 

Most payers allow 90 days from the date of service to submit a clean claim. However, it’s best to correct and resubmit rejected claims as soon as possible to avoid timely filing issues.

Can I appeal a denied claim? 

Yes, you can appeal denied claims. Most payers have a specific appeals process. It’s important to follow their guidelines and provide any additional documentation that supports your case.

What’s the difference between a soft and hard claim denial? 

A soft denial is temporary and can be reversed with additional information. A hard denial is final and cannot be reversed, though it may still be appealed if you believe it was made in error.