What Is Denial Management?
Denial management is the process of identifying unpaid or denied insurance claims, determining why payment was not made and taking the appropriate next action.
A denial should not automatically be treated as a lost claim.
The appropriate response depends on the payer's explanation and the underlying circumstances.
Why Are Mental Health Claims Denied?
There isn't one universal list of denial reasons.
Common categories include:
Eligibility
The patient's coverage may have been inactive or the claim may have been submitted using incorrect insurance information.
Authorization
The payer may require prior authorization for the service.
Provider Enrollment
The provider's enrollment or participation status may need attention.
Claim Information
The claim may contain incorrect or incomplete information.
Coding
The submitted coding may not meet the payer's requirements for the service.
Filing Limit
The claim may have been submitted after the payer's applicable filing deadline.
Medical Necessity or Coverage
The payer may determine that the service does not meet its coverage or medical-necessity requirements under the applicable policy.
CMS coverage articles, for example, emphasize that claims need to meet applicable coverage and medical-necessity requirements.
Step 1: Identify the Denial Reason
The first step is understanding why the payer did not pay.
Don't simply look at the dollar amount.
Review:
- EOB
- ERA
- Payer portal
- Claim status
- Denial code
- Remark code
- Payer message
Step 2: Determine Responsibility
Ask:
> Is this a billing error? > > Is this a payer issue? > > Is additional documentation required? > > Does the patient have another payer? > > Is the provider properly enrolled? > > Is the claim subject to an authorization requirement?
Step 3: Determine the Correct Action
Depending on the situation, the next action may be:
Corrected claim
Resubmission
Reconsideration
Appeal
Additional information
Payer inquiry
Not every denial should be handled the same way.
Step 4: Track the Claim
Once an action has been taken, the claim should be tracked.
The billing team should know:
- What was done
- When it was done
- Who it was submitted to
- What the next deadline is
- What response is expected
Step 5: Look for Patterns
One denial may be an isolated problem.
Twenty similar denials may indicate a workflow problem.
For example:
> 40 claims denied for the same authorization issue
is not simply 40 individual claims to work.
It may indicate that the practice needs to change how authorization is handled before appointments.
This is where denial management becomes a revenue-cycle improvement tool.
Mental Health Denial Management
Mental Health Medical Billers can help identify and work outstanding claim issues as part of an overall revenue-cycle process.
The goal is not simply to work denials.
It is to understand why they occurred and how recurring problems can be reduced.
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