Call Now 703-327-1800

Contact    Blog       About     Resources      Medical Billing Services


Medical Claim Denials and Rejections in Medical Billing

Health Insurance Companies Process 1 in 5 Claims Wrong

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.”


According 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?


Additional Resources




is a 20 year veteran of healthcare having managed medical practices. He advises medical practices, physicians and practice administrators on how to run their practice and manage their medical billing and revenue cycle management. Manny speaks, blogs and makes videos at www.CaptureBilling.com, a blog that is tops in the medical billing and coding field. READ MORE

If You Liked This Post You Will Love These

3 Responses to Medical Claim Denials and Rejections in Medical Billing

  1. 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.

  2. 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.

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

Leave a reply

Who Are We?

Capture Billing helps medical practices by reducing their insurance accounts receivable and getting claims paid faster, allowing doctors to focus on providing quality healthcare to their patients without the stress of doing their own medical billing.

That’s why we developed Capture Billing’s Rapid Revenue Recovery System to keep our clients’ Accounts Receivables down and their revenue flowing.

Learn More


The analysis of any medical billing or coding question is dependent on numerous specific facts -- including the factual situations present related to the patients, the practice, the professionals and the medical services and advice. Additionally, laws and regulations and insurance and payer policies (as well as coding itself) are subject to change. The information that has been accurate previously can be particularly dependent on changes in time or circumstances. The information contained in this web site is intended as general information only. It is not intended to serve as medical, health, legal or financial advice or as a substitute for professional advice of a medical coding professional, healthcare consultant, physician or medical professional, legal counsel, accountant or financial advisor. If you have a question about a specific matter, you should contact a professional advisor directly. CPT copyright American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association.

Learn how to outsource your Medical Billing today

CALL NOW  703-327-1800

Client Testimonials

Bob Laird


I would recommend Capture Billing to anyone who needs a billing company they can trust.

Bob Laird

Steve Rex

Family Practice

In a six month period Capture Billing increased our Practice’s income by over $100,000.

Steve Rex

Julie Reed-Humeniuk

Family Practice

Capture Billing goes over and beyond the call of duty for their clients to maximizing reimbursement.

Julie Reed-Humeniuk

CaptureBilling.com - Medical Billing Services

Capture Billing is a Medical Billing Company based in South Riding Virginia.

Join the other Doctors and Practice Managers that have benefited from our expert medical billing services.

Capture Billing & Consulting Inc.
25055 Riding Plaza #160
South Riding, VA 20152
Phone: (703) 327-1800