What Causes Claim Denials? The Top Four Reasons for Rejection and How to Avoid Them

Denials are a given in rehab therapy; even the most operationally efficient practice is going to run into some claims that come back just by the nature of the insurance machine. But that doesn’t mean practices have to simply throw their hands up at their current rate of denied claims as something they can’t change. Yes, some denials have to be chalked up to the inscrutability of ever-changing payer rules, but many denials are preventable with a bit of attention to critical points in the process. 

Your patient ran out of authorized visits—and you had no idea. 

One of the most common early concerns during a patient’s initial visit is the dreaded authorization check. Payers keep a tight grip on the number of permitted visits, and practices should be aware of that number as care progresses. Unfortunately, it’s not always as simple as checking every time and having a plan of care that aligns with the prescribed visit limit. 

Sometimes your front desk doesn’t obtain authorization prior to treatment or fails to track the number of visits, leading to authorizations that expire in the middle of a plan of care. Without attention to authorizations from the beginning and throughout treatment, you’re going to end up with denied claims.  

You can avoid running up against authorization limits by :

• Identify authorization requirements at intake
• Track visit counts and expiration dates throughout the episode of care
• Communicate authorization status consistently between the front office and clinicians

A claim is saddled with eligibility and demographic errors.

Failing to collect the patient information you need, collecting incorrect information, or entering those details incorrectly at your front desk will eventually derail otherwise clean claims. It doesn’t help that many patients are switching insurance carriers more frequently than in the past, and others are carrying secondary insurance in addition to Medicare.  If any of that relevant information is missing or wrong on the claim, you’re looking at a surefire denial.  

Making sure you have the right patient insurance and demographic information takes a bit of diligence on the part of your front office staff, like:

• Verifying eligibility and benefits before the first visit
• Confirming demographics regularly
• Communicating insurance changes promptly to your billing team

Your notes aren’t demonstrating medical necessity. 

When it comes to writing, it’s easy to fall into your own shorthand or assume understanding on the part of the reader. You may be hitting your marks every time when it comes to including objective measures, goals, and activities, but if your documentation doesn’t clearly support the need for skilled therapy services or fails to convey key elements like a patient’s functional improvement and progress, payers may not see medical necessity.

Clearly communicating to payers why skilled intervention is essential requires providers to:

• Ensure documentation supports medical necessity across the entire episode
• Complete progress notes on time with consistent language
• Align daily notes with goals and the plan of care

You’re using incorrect codes and modifiers.

Parsing through ICD-10 and CPT codes can be a challenge for clinicians looking to get through their notes in a timely fashion. Granted, there are a few greatest hits that you’re using more often, but you can also run the risk of not coding to the greatest specificity of the activity you're performing — or, put another way, not accurately capturing what you’re doing with a patient. Modifiers only add to the complexity; missing a necessary modifier for services billed under another provider or provided by a PTA or OTA is a recipe for a denial.     

How can you avoid coding and modifier mistakes? For a start, you can take advantage of our AI documentation tools that help you align coding with the care documented in your note, and our blog on modifiers that helps clarify which ones you should use, and when you should use them. 

As a practice-wide effort, you should also stress:

• Aligning charge capture closely with documentation
• Training on payer-specific coding rules
• Monitoring denial trends by code and modifier

Your focus is on fixing denials, not preventing them.

Because claims denials ultimately land on the desk of your billing team, it’s easy for practice leaders, clinicians, and staff to think of it as a billing issue. The truth is that while your billing team does scrub and submit claims, denials often happen well before they get to the back of house.  And if you’re putting your time and energy into reworking denials more quickly rather than addressing the systemic issues, you’re dooming your clinic to a consistently high rate of denials. 

The most effective prevention strategies focus on:

• Strong intake and authorization processes
• Clear, consistent documentation
• Communication across teams
• Visibility into denial trends by payer 

Preventing denials should be a shared, clinicwide responsibility — and it has to be if you want to make significant progress.

Reducing denials is about more than revenue.

The upshot of fewer denials is a more stable, reliable cash flow for your clinic, but that’s not the only reason to make it a priority.  You want to reduce the administrative burden and stress on your staff that comes with rework and chasing down information, and you certainly want to give your patients a straightforward experience without interruptions to care or unexpected out-of-pocket expenses. 

If you’re tired of seeing claims come back unpaid, it’s probably time to invest in that ounce of prevention, so you’re not paying for that pound of cure.