Denial management basics for small practices

A denied claim is not lost money. It is unfinished work. Most small practices do not have a denial problem so much as a time problem: nobody has a set hour each week to work the denials. This guide covers the basics.

Rejected and denied are not the same

A rejected claim never entered the payer’s processing system. A clearinghouse or the payer’s front-end checks found an error, such as a missing or badly formatted field. A rejected claim can be corrected and sent again.

A denied claim was received and processed, and the payer decided not to pay it. Depending on the reason, it needs a corrected claim or an appeal.

The difference matters. Rejections are quick fixes that are easy to miss. Denials take more work and have their own deadlines.

Read the reason first

Every denial comes with codes on the remittance advice. Claim Adjustment Reason Codes (CARCs) say why an amount was adjusted or not paid. Remittance Advice Remark Codes (RARCs) add detail. Read both before doing anything else. The fix depends on the reason.

Common reasons for denials

• Coverage was not active on the date of service.
• Patient, subscriber or provider details are missing or do not match the payer’s records.
• A prior authorization or referral was required and is missing.
• A coding problem, such as a diagnosis that does not support the procedure, or a missing modifier.
• The payer sees the claim as a duplicate.
• The claim was filed after the payer’s timely filing limit.
• The service is not covered under the patient’s plan.

Know your deadlines

Each payer sets its own limits for filing claims and for filing appeals. They differ between payers and sometimes between plans, so check the provider manual or your contract. Once a deadline has passed, the claim usually cannot be recovered.

A simple weekly routine

1. Log every denial: date, payer, reason and amount.
2. Sort the list by deadline, not by size.
3. Correct and resubmit, or appeal with the supporting documents.
4. Follow up until the payer gives a final answer.
5. Once a month, count denials by reason and fix the most common cause at its source.

Prevention is cheaper than appeals

Many denials start before the visit. Checking eligibility before the appointment, confirming whether an authorization is needed, and reviewing claims before they go out all cut down the number of denials you have to work later.