How to Handle Insurance Claim Denials

One of the most important parts of billing is handling denials. Thousands of dollars a year can be lost in providers’ offices that don’t handle denials. In fact, I saw a statistic once that said 47% of denied claims don’t ever get appealed. That is outrageous!

We find that there are three reasons that denials don’t get appealed. The first is that the denial is correct and there is nothing to appeal.

The second reason is that the person responsible for handling the denials doesn’t have the time to handle them. This problem can be rectified.

Develop a Denial Management System
If the right systems for handling denials are put into place, then they can be handled in less time. Most time spent on denials is figuring out what to do about them, which brings us to reason number three.

The third reason that denials don’t get appealed is that the person responsible doesn’t know what to do about it. Many times they understand what the denial is for, but aren’t sure what steps to take to rectify it.

One denial that is very common is “denied for no coverage or coverage terminated.” Seems pretty straightforward, but many billers do not know what to do. There are actually a couple of things to do right away.

Check for Payer Errors
First of all, receiving this denial does not mean that it is correct. Our local Blue Cross Blue Shield (BCBS) denies claims for this reason more often than I use a restroom. Many times it is just because BCBS issued the patient a new ID number or changed just the 3-letter prefix. It can actually be quite frustrating.

If we receive a denial from BCBS for this reason we go to the BCBS website and do a search on the patient. In most cases we can pull up the correct ID number by doing a name and date-of-birth search and resubmit the claim.

If the denial is for an insurance carrier that does not have those issues, the next thing I do is look at the patient’s claim history. Has the payer been making payments but suddenly stopped?

In some cases the payer may have paid claims before and after the date of service they are denying. In that situation, a call must be made to the insurance carrier to question the denial. Hard to believe, but they actually do make mistakes!

Contact the Patient
Lastly, if the denial appears correct, or if we cannot find any additional information through the website or a phone call, then the patient must be contacted.

We are a billing service, so we usually send out a patient statement with the charges, and a note stating: “Your insurance carrier states your coverage was terminated. Please contact our office with updated insurance information.”

Many times patients forget to notify the provider when they do have an insurance change. Receiving a bill will prompt them to notify you. Usually they call us and give us the updated information over the phone and the claim can be resubmitted.

If you are billing from a doctor’s office you may find it easier to just call the patient or responsible party to find out what happened.

The most important thing here is that you come up with a system that you will use every time you receive this denial. That way you won’t waste time trying to figure out what to do each time, and the denial will get handled promptly.

If you do this for each denial you receive, all denials will be handled promptly and it will cut down on losses.


Alice Scott and Michele Redmond are medical billing experts, co-owners of Solutions Medical Billing Inc in Rome, N Y., and coauthors of 13 books on medical billing and medical credentialing. This mother-and-daughter team maintains two medical billing websites, a free newsletter and an active forum. Alice and Michele are on the editorial staff of BC Advantage and are regular contributors to the magazine. Their latest book, Denials, Appeals & Adjustments, is on medical insurance denials.

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