Claim denials can be a major source of frustration for physicians and their practice managers, and can have a real impact on cash flow and the financial performance of a practice. “Depending on the office doing the billing, we have seen as many as 35% or more of the claims denied for various reasons,” says Michele Redmond, vice president of Solutions Medical Billing in Rome, New York.
"If office procedures are good in gathering correct information and submitting clean claims, you can still expect to see at least 5% of denials for claims,” Redmond says.
Redmond and Alice Scott, president of Solutions Medical Billing, who have co-authored 15 books on medical billing, are also noticing more errors by insurance carriers than in the past. “Claims can be denied incorrectly,” Redmond explains. “If the person responsible for reading the explanation of benefits (EOBs) doesn’t understand or recognize the error, the provider may lose out on that money.”
Claim denial trends
On a broader scale, research by the American Medical Association (AMA) indicates that claim denials dropped by 47% in 2013 after a sharp increase in 2012 among most commercial health insurers.
Overall, the denial rate for commercial health insurers decreased from 3.48% in 2012 to 1.82% in 2013. Among all insurers last year, Medicare had the highest denial rate at 4.92%, while Cigna had the lowest denial rate at .54%.
“The National Health Insurer Report Card is the cornerstone of an AMA campaign launched in June 2008 to lead the charge against administrative waste by improving the healthcare billing and payment system,” Ardis Dee Hoven, MD, president of the AMA, told Medical Economics. “The campaign has produced noticeable progress by health insurers in response to the AMA’s call to improve the accuracy, efficiency and transparency of their claims processing.”
Hoven says that the health insurance industry’s efforts to address claims efficiency have a long way to go, and that the AMA report card has consistently demonstrated the inconsistency and confusion that results from each health insurer using different rules for processing and paying medical claims.
“This variability requires physicians to maintain a costly claims management system for each health insurer. The high administrative costs associated with the burdens of processing medical claims should not be accepted as the price of doing business with individual health insurers,” Hoven says. “Although the AMA has advocated for a standardized system, “insurers continue to hold on to their complex proprietary rules that create a variety of paperwork bottlenecks.
“We must move toward an automated approach for processing medical claims that will save precious healthcare dollars and free physicians from needless administrative tasks that take time away from patient care,” she adds.