How do clean claims impact healthcare organizations?

When your organization focuses on improving the level of your clean claim it directly correlates to more revenue generated by reducing write-off rates and increasing profits.

It is estimated that around 80% of claims are denied due to no prior authorization being obtained from the carrier — a key part of the revenue cycle and insurance eligibility verification step.

We review data sources, data references and create a front end 'pre-processing' solution specific to each of our clients. We understand that out of the box solutions are not one size fits all and we are here to help you grow. Just by incorporating front end data validations, name normalizations, and updating reference data (ICD10, CARC, RARC, ect.) can easily increase the incoming revenue anywhere from 10-40%.

Over the past two decades, many studies have demonstrated that administrative expenses like billing and coding, insurance administrative costs, and physician administrative activities account for up to 25% of total national health care costs.

Emerging Claim Denial Trends

1. Rise of Artificial Intelligence (AI) in Claim Denial Management

   The integration of AI technologies is revolutionizing the insurance industry with payors using AI to lower their costs. This recently added component makes it critical for healthcare providers to adopt a similar approach to technology. AI-driven algorithms can analyze vast amounts of data to identify patterns, trends, and potential denial risks. By leveraging AI, healthcare organizations can proactively address denial issues, optimize coding practices, and enhance revenue cycle efficiency. However, it is critical that the data being utilized is clean, accurate and up to date to ensure the AI functional and that is where Hapogy LLC. Is here to help you, if it is just to help clean up your data or to putting together a team to assist with your implementations, integrations or everyday EDI needs.

2. Prior Authorization Challenges

   In 2024, prior authorization continues to pose challenges for healthcare providers. About 15 percent of commercial claims are initially denied, including many already pre-approved before treatment.

3. High-cost claim denials

   Payors are intensifying their scrutiny of high-cost claims. Denied claims are more prevalent for higher-cost treatments, especially for billed charges related to high-cost drugs, implants and complex diagnoses.

4. Compliance with Regulatory Changes and Scrutiny

   The evolving regulatory landscape significantly impacts claim denial trends.

5. Addressing Documentation and Coding Errors

   Documentation and coding errors remain primary contributors to claim denials. 2023 audit data revealed that 56% of coders failed audits.

Overturning and correcting denials is possible but comes with a high cost of rework and shifting resources away from other critical areas. Technology can help increase your first pass rate, however Hapogy LLC. Takes the approach that to be successful 'it takes a village'. We understand that the only way to account for denials, data issues or whatever may be plaguing your organization is to work together and to get everyone's input. From the Executives to those workers that have their PCs covered in Post IT notes detailing their workarounds. With the help of others and Technology solutions are achievable and will allow for the implementation of a successful strategy.

Here are some healthcare rejections and trends for 2024:

• Claim denials

  Nearly 15% of all claims submitted to private payers for reimbursement are initially denied. However, over half of these denials are ultimately overturned and paid. The average cost incurred by providers fighting denials is $44 per claim.

• Collaborative efforts

  In 2024, collaborative efforts between healthcare providers, payors, and technology vendors are gaining prominence in denial prevention strategies.

• Prior authorization or referral

  One common reason for claim denials is the lack of prior authorization or referral. Insurers often require preapproval for certain procedures or specialist visits.

• Administrative errors and coding errors

  Some typical causes behind rejected claims include administrative errors and coding errors.

• Political uncertainty

  2024 is a presidential election year, which is adding more political uncertainty into the picture.

Why Reducing Claim Denials Is Critical

It's important that everyone understands why reducing denials should be a key strategic initiative.

Here are the primary impacts that make this a financial imperative

• Revenue cycle disruption

  Claim denials create major issues and delays in the revenue cycle. Cash flow issues are most noticeable when payments are delayed pending appeal or rebilling.

• Loss of revenue

  Many providers simply turn to write offs of smaller balance denials rather than spending time or resources on appeals. Doing so will result in direct lost revenues and lower total revenues collected.

• Administrative costs

  Resources required to review denials, correct errors, manage appeals, and resubmit claims account for extra administrative costs.

Studies show that an estimated 9% of hospital claims are initially denied, another study shows that physician practices have an average 5-10% of charges denied, resulting in up to 3% in revenue loss.

Key front-end prevention include:

• Verifying patient insurance eligibility

  Lack of coverage or invalid member ID are frequent denial reasons. Utilizing real-time eligibility checks and storing accurate patient policy/plan details enables submitting “clean” claims from the start. Hapogy LLC. offers catered solutions for each organizations individual needs.

• Capturing complete patient demographic/insurance data

  Inconsistent, Invalid or missing data errors can be prevented via well-designed connectivity and requirement estimation workflows. Front-desk best practices like photo ID scanning and data quality checks reduce mistakes.

• Managing authorizations and pre-certifications

  Concurrent utilization review processes, payer-specific requirements monitoring, and clear documentation of clinical appropriateness during care episodes supports obtaining proper authorizations to prevent denials.

• Coding quality and accuracy

  By working with your organization Hapogy LLC. Wiil assist with creating computerized coding solutions to help ensure coding to the highest degree of specificity to justify medical necessity.

• Internal/external self-audits

  Proactively identifying billing quality issues through self-audits enables targeted corrective action before denials occur from billing errors, insufficient documentation, etc.

Scrubbing rules with advanced analytics:

• Flag and identify historical denial patterns, payment trends, and identify root cause analysis
• Predict denial propensity for individual organizational claims or providers using mappings and building analytics and algorithms
• Identify re-submittable claims in real-time based on risk and revenue
• Automate low-value repeatable tasks
• Enable logic to prevent repeat denials

This injection of intelligence allows providers to move well beyond back-end denial management to true real-time prevention. And the analytics enable proactive identification of systemic issues to target for improvement.

Key Process Improvement Focus Areas

While technology enablement is crucial, providers must still rigorously analyze and refine revenue cycle processes to eliminate denial root causes. Data-driven cycles of root cause analysis, issue remediation, and process monitoring can continually drive down preventable denial rates.

Strategies for Preventing Claims Coding Errors

Coding accuracy and specificity are critical to minimizing coding-related denials. Strategies include:

• Certified coder workforce

  Ensuring professional coders maintain up-to-date CEU credits and proficiency with coding guidelines.

• Coder training and audits

  Routine educational sessions on coding updates and targeted auditing focused on top error areas.

• Coding algorithms & AI

  Adopting machine learning coding assistance tools to assign and validate codes based on documentation.

• Coding controls

  Edits and analytics to detect unbundled codes, invalid modifiers, inadequate number of diagnoses, etc.

Common Denial Codes

Hapogy LLC. has put together a list of common denial codes in medical billing. To help you get insight we have detailed some steps you can take for each denial.

CO 4 — Required Modifier Missing

Payers may reject your claim using code CO 4 when there's a discrepancy between the procedure code and the diagnosis code or if the necessary modifier is missing. It means that the medical treatment or service you provided doesn't align with the medical condition or diagnosis for which you're billing.

Further Actions

• Carefully examine the explanation of benefits to understand the reason behind the rejection.
• Collaborate with your coding team to thoroughly review codes submitted with the claim. Ensure that the procedure and diagnosis codes, along with any necessary modifiers, are accurate and align with the services provided.
• If the coding team confirms that the claim is correct, then reprocess the claim by contacting the insurance company's claims department.
• If the insurance representative refuses to reprocess the claim, you have the right to submit an appeal with medical records explaining the medical necessity of the provided treatment or service.

CO 11 — Error in Coding

Payers deny your claim with code CO 11 when the diagnosis code you submitted on the claim doesn't align with the procedure or service performed. This situation can arise for several reasons, such as:

• Making a typo in the diagnosis code.
• Using an incorrect diagnosis code.
• Submitting a diagnosis code that isn't supported by the patient's medical records.
• Billing a procedure or service that isn't covered by the patient's insurance plan for the submitted diagnosis code.

Further Actions

• Stay current with the latest American Medical Association (AMA) guidelines and Local Coverage Determinations (LCDs).
• Double-check all diagnosis codes for accuracy before submitting a claim.
• Craft a strong appeal letter that details the rationale for your claim, including the correct diagnosis-procedure code linkage, and provide any supporting documentation to substantiate your case.

CO 15 — Missing or Invalid Authorization Number

The insurance company will deny your claim with the code CO 15 if you enter the wrong authorization number for a service or procedure. You need prior approval from the health plan company to get coverage for certain services or treatments to patients. After approval, you need to enter the prior authorization number in block number 23 on the CMS-1500 form. Failure to do so will result in claim denials.

Further Actions

• Contact the billing department to check whether or not they submitted prior authorization requests.
• Recheck block number 23 on the insurance form to identify errors.
• If pre-authorization details aren’t available, place the claim on hold and try to get retro authorization.

CO 16 — Lacks Information Needed for Adjudication

Health plan providers deny claims with missing information using the code CO 16. One of the top reasons for such denials is missing or incorrect modifiers.

According to MDAudit's Final Benchmark Report of 2022, 34% of hospital claims were denied due to missing or incorrect modifiers.

Some reasons for CO 16 denials include:

• Demographic and technical errors
• Incorrect modifier
• Missing social security number
• Invalid Clinical Laboratory Improvement Amendments (CLIA) number

Further Actions

• Pay attention to accompanying remark codes and make changes accordingly.
• Recheck clinical notes to find missing information.
• Contact a clearinghouse to scrub claims before submitting them to payers.

CO 18 — Duplicate Claim

Insurance companies use the code CO 18 in conjunction with RARC N522 to deny duplicate claims. They mark claims as duplicates if you:

• Submit the same claim for a service or treatment twice.
• Resubmit the claim without indicating that it's corrected.
• Provide the same service multiple times on the same day without a modifier.

When you send a claim to both primary and secondary payers, there's a risk of denial if your primary insurer has already submitted it to the secondary payer. You should check the electronic remittance advice to know whether or not the primary insurance provider crossed the claim over to the secondary one. If they did, you don't need to resubmit the claim.

Further Actions

If you received the CO 18 denial, you should:

• Contact the insurance provider to uncover duplication reasons.
• Verify the claim processing status.
• Request the health plan company to reprocess the claim if you're certain you submitted the claim only once.
• File an appeal if the health plan provider doesn't provide a reasonable cause for the denial.

CO 22 — Coordination of Benefits

When dealing with patients who have multiple payers, it's crucial to establish primary, secondary and tertiary insurance providers through coordination of benefits rules. If you bill tertiary insurance companies for procedures covered by secondary providers, they'll deny your claim with code CO 22. You should always submit the claim to the primary health plan provider first. Then you can send the bill for the remaining balance to secondary or tertiary providers. CO 22 denials can occur due to failure to update patients' insurance details and incorrect coordination of benefits information.

Further Actions

• Perform insurance eligibility checks to identify primary insurance providers.
• Update clients' coordination of benefits data.
• Know where to file the claim — Medicare, an employer-sponsored group insurance plan, private insurer or Medicare Advantage Plan.

CO 27 — Expenses Incurred After the Patient's Insurance Expired

If you provide services to patients past their insurance expiration date, health plan providers will reject your claims with code CO 27. It's challenging to fight these denials. You should perform insurance eligibility verification checks before appointments to avoid such rejections. Prevention is better than cure!

Further Actions

• Contact the claims department to confirm the insurance policy's effective and termination dates.
• Reach out to patients to check if they have any secondary insurers.
• Send the claim back for reprocessing if the policy is still active because even insurance providers can make mistakes.
• After conducting insurance verification, if you find out that patients don't have any active insurance, you'll need to bill them directly.

CO 29 — Limit for Filing Expired

Each insurance carrier has its claim submission time frame. And if you send them claims after submission deadlines, they'll reject them using the denial code CO 29.

Further Actions

• Check the date you submitted the initial claim to the health plan provider.
• Calculate whether or not you submitted the claim before the filing deadline. You can use the following formula to calculate the same.
  • Time taken to submit original claim = Date insurance received the initial claim - date service provided to the patient
• If you have proof of timely filing, file for an appeal.

CO 45 — Charges Exceed Fee Schedule

Insurance companies deny your claim with code CO 45 when charges for the medical services you provided exceed the fee schedule maximum allowable or contracted amount that the insurance company has agreed to pay you.

Further Actions

• Review the bill and verify that the charges align with the agreed-upon rates in your contract with the insurance company.
• Confirm that the fee schedule in question is accurate and up-to-date.
• If the charges do indeed exceed the fee schedule and the patient is responsible for the difference, work with the patient to arrange a reasonable payment plan.

CO 97 — Service Already Adjudicated

Health plan providers deny claims using CO 97 when you file multiple claims for bundled services — procedures performed in a single care episode. Evaluation and management (E&M) services billed within the global period fall under this category as insurance companies don't reimburse you for each performed service; they pay an overall amount for performed procedures. Some common examples of bundled services that aren't payable separately include:

• Collecting blood samples during patient encounters.
• Transferring specimens from the lab to the doctor's office.
• Using extended codes even though your practice runs 24 hours daily.

Further Actions

• Check whether the procedure code falls under the inclusive, exclusive or bundled category.
• Once you determine the type of procedure code, contact the coding department and ask them if they can use a modifier and resubmit the claim.
• Call the claims department and ask them about the procedure for filing an appeal.

CO 167 — Diagnoses Not Covered

Payers don't cover every procedure. They use the denial code CO 167 to reject claims that don't fall within their coverage area.

Further Actions

• Review diagnosis codes (ICD-11) to identify errors.
• Contact the insurance provider to determine which diagnoses aren't covered.
• After revisions, resubmit the claim as a corrected claim.

We Will Help You Avoid and Correct Denials

Denials can be financially damaging to your practice or organization. We look forward to working one on one with your team to identify, predict and prevent denials.

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