Denied Claim

A healthcare claim that has been reviewed and rejected by an insurance payer due to errors, missing information, lack of coverage, or failure to meet medical necessity or authorization requirements.

A denied claim is a claim that the payer has refused to pay. Denials can be clinical (the payer determined the service was not medically necessary) or administrative (something was wrong with the claim submission itself). Administrative denials are the most common and the most preventable. They include: patient not eligible on the date of service, provider not enrolled with the payer, timely filing deadline missed, duplicate claim, missing or incorrect information, and prior authorization not obtained. Most of these can be caught before the claim is submitted through eligibility verification and claim editing software. Clinical denials happen when the payer's medical reviewer determines that the service did not meet their criteria for medical necessity, or that a less expensive alternative was available. These denials are harder to prevent but can often be overturned on appeal with proper documentation. Every denied claim costs your practice money, not just the lost payment, but the cost of identifying the denial, researching the reason, correcting the issue, and resubmitting or appealing. Industry estimates put the cost of working a denied claim at $25 to $118 per claim. Track your denial rates by reason code and by payer. If you are seeing a pattern, like a specific payer consistently denying claims for the same reason, address the root cause. It might be a billing process issue on your end, a system configuration issue at the payer, or a credentialing problem that needs to be resolved. Do not write off denied claims without investigating. A significant percentage of denials are recoverable through correction and resubmission or through the appeal process. Having a dedicated denial management workflow ensures money does not fall through the cracks.