Medical Claim Denials and Rejections in Medical Billing

Health Insurance Companies Process 1 in 5 Claims Wrong

Medical Claim Denials & Rejections

What’s the difference between a Claim Denial and Claim Rejection?

Insurance claim denials and rejections are one of the biggest obstacles affecting healthcare reimbursements.  Too often the terms “claim rejection” and “claim denial” are used interchangeably in the billing world.

This misunderstanding can create very costly errors and can have a significant, negative impact on your overall revenue cycle.  Proper education and management of accounts receivable and workflow are essential for timely cash flow.

Let’s spend a little time defining the terms and differences between a claim rejection and a claim denial.


Claim Rejections

Claims Rejections are claims that do not meet specific data requirements or basic formatting that are rejected by insurance according to the guidelines set by the Centers for Medicare and Medicaid Services.

These rejected medical claims can’t be processed by the insurance companies as they were never actually received and entered into their computer systems.  If the payer did not receive the claims, then they can’t be processed.

This type of claim can be resubmitted once the errors are corrected.  These errors can be as simple as a transposed digit from the patient’s insurance ID number and can typically be corrected quickly.


Claim Denials

Denied claims are altogether a different issue.  Denied claims are defined as claims that were received and processed (adjudicated) by the payer and a negative determination was made.  This type of claim cannot just be resubmitted. It must be researched in order to determine why the claim was denied so that you can write an appropriate appeal or reconsideration request.

If you resubmit this type of claim without an appeal or reconsideration request it will most likely be denied as a duplicate, costing you even more time and money the claim remains unpaid.


Why Are Claims Being Denied?

“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.”


Claim DenialAccording to the American Medical Association’s National Health Insurer Report Card (NHIEC), that provides metrics on the timeliness, transparency and accuracy of claims processing of insurance companies, there are 5 major reasons for denied medical claims:

  1. Missing information- examples include even one field left blank, missing modifiers, wrong plan codes, incorrect or missing  social security number
  2. Duplicate claim for service- when claims are submitted more than once for the same service provided, same beneficiary, same date, same provider, and single encounter
  3. Service is already adjudicated- (unbundling) services.  Benefits for a service are included within another service or procedure
  4. Services not covered by payer- before providing services, check details of eligibility or call payer to determine coverage requirements
  5. Limit for filing has expired- there are a set number of days following service for claim to be reported to the payer.  If outside of that time period, the claim will be denied.  Included in this period is time to rework rejections


How to Improve Claim Rejections and Denial Rates

Whether your practice manages its medical billing and coding in-house or outsources it to a medical billing company, there are steps that should be taken to manage denials:outsources it to a medical billing company

  • Management must track and analyze trends in payer denials and rejections.  Categorize these denials and rejections and work on how to fix these issues as quickly as possibly
  • Staff education is imperative.  Train billing staff to handle rejections quickly and provide training on how to appropriately handle denials
  • Schedule routine chart audits for data and documentation quality to identify problems and trends before claims are sent to the payer
  • Work with payers to discuss, revise or eliminate contract requirements that lead to denials that are overturned on appeal
  • Utilize automated software or external vendors to optimize claim management and perform predictive analysis to flag potential denials- addressing before claims are submitted.  A good clearinghouse will allow you to quickly resolve rejections plus provides a great tracking tool



Medical claim denials and rejections are perhaps the most significant challenge for a physician’s practice.  They have a negative impact on practice revenue and the billing department’s efficiency.

Educating your billers and collecting and analyzing claim data can determine trends in denials and rejections. Using up-to-date software or a 3rd party vendor can also prove invaluable.

By properly interpreting claims data, taking a proactive stance and paying attention to the details, a medical practice can prevent rejections and denials before claims are submitted and if claims are returned, make corrections in a timely fashion.

Stay current on billing and coding trends and educate yourself and your staff to optimize your claim reimbursement.


Let’s start a discussion on how your practice manages its denials.  What software are you using to help you with claim denials and rejections?  Do you outsource to a billing service and receive regular feedback?


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19 Responses to “Medical Claim Denials and Rejections in Medical Billing”

  1. Medical billing is a payment practice within the United States health system. The process involves a healthcare provider submitting, following up on, and appealing claims with health insurance companies in order to receive payment for services rendered; such as testing, treatments, and procedures. The information that you discuss in the article it’s very informative for any visitor. Thanks for sharing this information.

  2. In order to view an actual copy of any of the documents referenced below, please click on the hyperlink at the bottom of the page for the Federal Register. Once there, please select the year in which the final rule was published and click “GO”. Please continue to select the day on with the final rule was published. Scroll through the contents until you arrive at the “Centers for Medicare & Medicaid Services” section. Listed in this section will be the documents released for that specific date. Off to the side of the document title you will be able to select the formatting for your download (Text or PDF).

  3. Thankyou for sharing such a informative blog and you discuss a great topic about medical billing services.

  4. This one is nice article. This is helpful in medical billing software. Thanks for sharing such useful article for us.

  5. Nice article! Medical billing staff requires complete, accurate data to submit claims to payers. If crews can’t document and collect all necessary patient care data and forms during a transport, EMS billers will have to play catch-up. These delays will disrupt the entire EMS billing process and later revenue collection.

  6. How does one handle a non-billable insurance code when trying to get a prior authorization? Even if the claim is denied, I can work with the deniel. But, I must first get past the non-billable issue in order to get the claim denied.

  7. Great information about the Claim Denial and Claim Rejection.I have gain many new things thanks for sharing

  8. Great information regarding the difference between a Claim Denial and Claim Rejection. I have gained new things thanks for sharing.

  9. Very Nice!
    You discussed a great topic about healthcare billing services. These problems occur in the billing system of every organization. You’ve definitely clarified a basic topic of AR and Denials Management.

    • Glad to be of help! It’s such a key topic in our healthcare industry today.

  10. Seems as though workers are not doing 100% of their job, many just do enough to get by. I am seeing this more and more. This costs us in more ways than just claim denials and headaches.

    • It is really important to have a solid medical billing staff who can know how to work those denials and headaches. Here at Capture we get so many calls from people looking for help on these types of issues because their staff either do not know how to work them or do not have time to. It’s one of the main reasons why many of those practices choose to let us handle their billing. We have the time and experience to work on getting claims paid as quickly as possible.

  11. Great article my friend! Keep up the good work, always enjoy reading your articles about medical billing.


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