When a claim is denied, one of the first questions you should ask yourself is whether prior authorization was obtained for the services listed on the claim. If the answer to this question is “yes,” then you have to dig deeper to determine why it was denied—and how to prevent such denials in the future.
Unfortunately, claims with prior authorizations are denied more often than you might think. There are five common reasons for these denials that you should take into account and ways to avoid them:
- The prior authorization number isn’t on the claim. Because many claims are processed using an automated system, the absence of a prior authorization number on the form may raise a red flag and cause the system to kick out the entire claim. Without a manual check, the payer may not realize prior authorization was granted. Avoiding this type of denial is a relatively easy fix; before submitting any claim, double-check that the prior authorization number is clearly included. (Authorizations can be found in Box 23 on the CMS-1500.)
- The practice is unable to get prior authorization before treating the patient. This can happen for a variety of reasons, including some that might be out of your control. For example: when a patient is seen on an emergent basis and there’s not enough time to obtain prior authorization. Although payers sometimes are flexible with regard to emergency situations, they’re often hesitant to extend the same flexibility to non-emergent care. So, focus your efforts on gaining authorizations prior to patient visits whenever possible.
- Prior authorization was received for only a portion of the claim. This is another “fixable” issue. Make sure staff pays attention to all of the different services listed on each claim. Staff should be working closely with the providers who perform those services to make sure: a) they understand which services need prior authorizations and b) all authorizations are obtained before proceeding with the service.
- Modifiers are missing. Talking with the payer can help uncover this issue, especially since payers may have their own specific guidelines that can impact payment. Even if you have a modifier in place, claims may still be denied if the payer does not recognize the modifier. For example, some Medicaid payers don’t recognize the 59 modifier, so they deny claims where it is listed. If this type of error occurs on a regular basis, take steps to educate staff on the need and appropriate use of the specific modifiers in question.
- The insurance company doesn’t process the claim correctly. To determine whether this is the case, contact the insurance company whenever you receive an unexplained denial to identify the underlying reasons—and whether they’re warranted. If an insurance company doesn’t process a claim correctly, they may be using outdated or restrictive bundling guidelines that will require some explanation. Try working through the issue over the phone with your payer rep to avoid future errors.
Before contacting a payer about a denied claim, check for the correct and complete authorization. If all looks to be in order, don’t hesitate to reach out to the payer and get to the bottom of any unresolved issues.