Blog Post

Undoing Denials: Managing Claim Rejections and Appeals in PT Billing

Receiving claim denials? Here's how to manage them and stop rejections from happening. Click here to learn more and get ahead of the curve today.

Charlotte Bohnett
5 min read
October 20, 2016
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When the stakes aren’t high, people are more forgiving of flubs. If you have a bad hand, a missed stroke, or a poor toss, you may cry, “Mulligan!”—and get a do-over. But, what happens when the stakes are high—like when you’re billing for physical therapy services, and you suffer a denied claim? Do you get a mulligan? The short answer: yes. The long answer: I wouldn’t necessarily call appealing a denied claim a “do-over,” but the important thing is that if you suffer a denial, you can still get paid. Welcome to the world of denial management!

Why do claims get rejected?

A rejection is different than a denial. According to this AmeriHealth article, “Rejected claims are defined as claims with invalid or missing data elements. Some examples are illegible claim fields or missing or invalid codes and/or missing or invalid member or provider ID numbers.” This M-Scribe article further explains that these errors “prevent the insurance company from paying the bill as it is composed, and the rejected claim is returned to the biller in order to be corrected.” Two important things to note:

  • Rejected claims are returned to the healthcare provider or EDI source without registration in the payer’s claim processing system.
  • The healthcare provider then has a certain period of time—defined within the payer’s guidelines—to correct and re-submit the claim.
  • If the rejection occurs because the provider failed to submit the original claim or the corrected claim on time, he or she is out of luck. So, get those claims submitted promptly, and monitor your timely filing!

Why do claims get denied?

Moving on to denials: these occur after the carrier receives your claims, and they’re typically the result of errors. In her presentation at Ascend 2016 (which you can download here), Diane McCutcheon of Business Management Consulting Services listed the top eight denial errors:

  1. Data-entry mistakes
  2. Wrong insurance information
  3. Missing claim information (e.g., ICD-10 codes, G-codes, and modifiers)
  4. Missing or invalid referral/authorization
  5. Credentialing or provider issues
  6. Submission outside of timely filing window
  7. Wrong subscriber (a.k.a. beneficiary) information
  8. Failure to submit requested information

What should I do if I suffer a denied claim?

You’ll know your claim was denied, because you’ll receive notification on the ERA, on the EOB, or through a mailed letter. When you receive a denial:

  1. Identify the error code.
  2. Contact the payer to clarify the reason for the denial.
  3. Follow the payer’s instructions for correcting and rebilling the claim.
  4. Make sure you document this conversation—along with any and all interactions you have with the payer.

Appeals come into play when you don’t agree with the payer’s final determination. For example: you correct a claim and rebill, and you still receive a denial. In these situations—per Diane McCutcheon’s advice—you should appeal denied claims within seven days of the payer’s final determination, as they’ll have a 67% chance of getting paid. Conversely, if you wait any longer, the denied claims have a 60% chance of not getting paid (I doubt anyone likes those odds). Lastly, if you need to appeal your claim, make sure you provide the payer with a clear narrative, all related patient documentation, and documentation of all interactions you’ve had with the payer in relation to the denial.

To clarify, all of this is advice pertains to one-off denial scenarios. But, what happens when you receive a handful of denials, or your practice experiences a steady cadence of denials?

Enter: denial management.

The first rule of denial management in medical billing is to address every denial as soon as you get it. The second rule: for every denial received, you’ll want to:

  1. Denote the error code.
  2. Log said error code.

Why have a log? Because error codes indicate the root of the problem. For example, if a denial is due to lack of coverage or failure to obtain authorization, you know you’ve got a front office issue. If medical necessity isn’t demonstrated or carrier requirements aren’t met, you know it’s an issue with the provider. If the wong codes were billed or there are modifiers missing, you know it’s a billing-related problem.

Once you figure out the source of the denials, solve the problem! In addition to developing policies and procedures to eliminate future errors, make sure you train your staff thoroughly. Ensure that everyone understands carrier contracts, payer requirements, and the practice’s policies. Most importantly, create a culture of accountability. After all, what’s the point of having standard procedures if you don’t hold people to them?

How do I stop claim denials from happening?

There’s no need for a mulligan when you get it right the first time. So, the easiest way to manage denials is to stop them from happening in the first place. And while it’s nearly impossible to eliminate them altogether, you can significantly reduce their volume. Here’s how:

1. Create policies and procedures.

As I emphasized in the previous section, it’s important to develop policies and procedures for preventing, identifying, and resolving denials in your practice. You’ll want to outline procedures—steps staff should take to ensure proper intake and check-in, thorough documentation, and accurate billing—all across your practice, from the front office to the back office.  

2. Train your entire staff on denial management.

“Everyone has a responsibility,” McCutcheon explained in her Ascend presentation. It’s imperative that your front office staff, therapists, billers, and management all know the part they play in mitigating denials. Train your team regularly and often. It’ll benefit your business—and your retention rates.

3. Hire the right people.

When you find the source of the denial, you can fix it and stop the bleeding, right? Not if the person responsible for the denial doesn’t right his or her ways. And when that happens, you have to cut that person loose. As much as it may pain you to terminate an employee, you cannot waste time correcting and appealing denied claims—nor can you suffer lost revenue on failed appeals or missed rejections. Want to avoid terminations? Hire the right people. Here’s what to look for in a front office person and biller. And here are several additional hiring guides:

4. Implement software solutions.

We, as humans, are imperfect—and we know it. Fortunately, we’re also smart, so we build systems that solve for our shortcomings. Enter physical therapy billing software. Billing software—especially the kind that’s integrated with your electronic medical record (goodbye, double data-entry)—can eliminate many common claim denial errors through built-in checks and alerts. Furthermore, such systems make the process of generating and submitting claims—as well as managing their acceptance and reimbursement—much faster. And if and when denials happen, it’s easier to track and resolve the issue within a software. Unsure if your current billing software is doing right by you? Check out this article on PT billing software must-haves.

Mulligans have a place in family outings to the mini-golf green—but not in physical therapy billing. But, that’s not because do-overs aren’t allowed. As I’ve outlined above, they technically are—if you count correcting, rebilling, and possibly appealing denied claims as a “do-over.” But, that process is a huge suck on time, productivity, resource, and A/R. So, rather than creating a culture where do-overs on denied claims are acceptable—and expected—establish policies and procedures that stop denied claims before they start.

Special thanks to Diane McCutcheon for her incredible Ascend presentation, which served as the primary resource for this post. If you’re interested in connecting with Diane or enlisting her physical therapy billing consulting service, please visit her at


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