Medical billing isn’t easy. But you already knew that.
If it was, you wouldn’t have found this blog post.
As you know, there is a ton of work that goes into submitting medical claims.
There are the actual, tangible steps like scrubbing the claim, sending it to your clearinghouse and (hopefully) receiving reimbursement.
Also, let’s not forget about the post-submission steps that include, tracking the claim and reaching out to the payer about its status for forecasting.
There are also the worst-case scenario response processes that kickoff if what you submitted comes back to you as a denial, like writing your appeal letter, submitting it to the payer and following up with it.
Oh, let’s not forget about the pre-submission, front-end steps like ensuring eligibility, keeping track of payer timely filing limits and keeping patient information accurate and up-to-date.
That’s a lot, isn’t it? With so many steps, it makes sense why over 200 million claim rejections happen every day.
Yet, I have to confess something to you. I purposefully withheld one of the most important steps during the submission process…claim rejections.
I know what you’re thinking, “Ugh…ANOTHER step? How am I supposed to help get my organization paid if there are so many steps involved?”
That’s a valid question. But, what if I told you that claim rejections exist to make your life easier? You read that right. They’re one of the most helpful steps involved with the entire medical billing process.
Table of Contents
What are claim rejections?
Before anything else, we need to define what claim rejections are in the first place.
One of the biggest misconceptions is that a rejected claim is a denied claim. That’s simply not true.
A claim rejection comes as the result of submitting to a payer or your clearinghouse.
On a payer level, a rejected claim is one that wasn’t processed or never entered its system. For comparison’s sake, denials are fully processed, inaccurate claims.
On a clearinghouse level, they come back to you as the result of a preliminary step in your medical billing process.
On both levels, they’re the result of having incorrect or invalid information provided in a claim when compared to what’s on file with a payer.
Since they’re not denials, receiving a rejected claim doesn’t mean that the payer determined that it isn’t payable.
They’re the result of submitting your claim to your clearinghouse. That’s the true process, receiving a rejection is the potential result of that process.
Submission on a clearinghouse level should happen before you send any of your claims to insurance payers.
Why should I submit claims to my clearinghouse before my payer?
Clearinghouse level rejections are better than payer level rejections. Here’s why.
Insurance payers are massive organizations that receive and process hundreds of thousands if not millions of claims every year.
Let’s run some quick numbers on that statement.
Aetna estimates on its website that 39 million Americans rely on its services. According to the National Center for Health Statistics, 83.4% of adults and 94% of children visited the doctor in 2020. Let’s assume that Aetna isn’t including children/dependents in its estimated number.
If you take the number of Americans that rely on Aetna and multiply it by the percentage of adults who went to the doctor in 2020, you get 32,526,000. That’s the total number of claims that Aetna processed in 2020 based on those assumptions.
If you took 32,526,000 and divided it by the total number of days in a year (365), you’re left with an estimate of 89,112 claims submitted to Aetna every day.
Even as an organization that has over 45,000 employees (per my Google search), staying on that heaping pile of claims to process leads to delays.
Thus, counting on your payers to provide you with your rejections prior to processing leads to delays. What’s worse, sometimes payers (usually smaller ones) don’t provide rejections and all of the claims you submit go straight to processing.
If you submit your claim to a payer, it usually takes around two days before you’d receive a rejection status. Denials usually take between two weeks and a few months before they come back.
Although rejections happen faster, two days is still a lot longer than clearinghouse level rejections.
What’s worse is that payers don’t keep a record of rejected claims since it never processed them within its system. In other words, you only have one opportunity to reveal why your payer rejected your claim. After that, it's gone.
You see, your clearinghouse exists as the middleman between you and the payer. They should act as your right-hand person when it comes to claims. Thus, you should be able to submit your claims to your clearinghouse for its review before you do anything with the payer.
Submitting claims for clearinghouse review leads to claim rejections, but that’s not a bad thing. You see, clearinghouse level claim rejections act as another layer of the medical billing process to ensure that you don’t receive denials. Think of it as a spell check before you submit a final paper to a teacher.
Clearinghouses can provide your rejections back to you instantly AND a history of your rejections exists within the system. Much better than payer level rejections.
Most Common Claim Rejections
Since our clearinghouse has been in business for over 20 years, naturally we have connections with thousands of payers.
As you likely know from experience, the majority of those payers have different claim submission rules and requirements…that’s likely the reason you ended up reading this in the first place.
Since we have two decades worth of experience with submitting claims on behalf of healthcare providers, we’re very familiar with claim submission requirements. In other words, I’m able to provide you with a list of the most common claim rejections we see at the clearinghouse-level.
| Edit Description / Payer Name | Claim Count |
|---|---|
| Claim Charges Not Balanced with Line Payment + Adjustments. | 62,201 |
| Claim Charges Not Balanced with Line Payment + Adjustments. | 62,201 |
| Practice must enroll with Payer before claim submission. | 45,053 |
| Invalid Subscriber ID format. | 26,568 |
| ICD-10 Code is not valid after date, check for further specificity. | 14,825 |
| Prior Payment + Adjustment must equal total charges for MSP claims. | 11,045 |
| COB Claim, adjudication date required for this payer id. | 10,642 |
| POA Yes/No Condition or Response code can only contain a value of Y, N, U or W. | 10,066 |
| Subscriber Group or Policy Number (2000B*SBR03) must be alphanumeric. | 10,040 |
| Invalid ZIP code on Subscriber Loop. | 9,719 |
| Commercial Claim for Review. | 9,368 |
| Primary Payer Paid Amount Mandatory for MSP Claims. | 7,088 |
| Review Rendering Provider for Supervisory Level for Commercial Payers. | 6,977 |
| COB Claim, adjudication date required for this payer id. | 6,851 |
| The original ICN number required on all corrected claims. | 6,373 |
| Validate Procedure Codes. | 5,499 |
| Validate Policy Number Size. | 5,444 |
| (ICD10) Invalid diagnosis code found. | 5,441 |
| Primary Payer Paid Amt not balanced with Primary Payor Paid Amt Line Totals required for MSP claims. | 5,242 |
| Group Number and Policy Number Must Be Different. | 4,980 |
| Subscriber Group or Policy Number (2320*SBR03) must be alphanumeric. | 4,677 |
Understanding Claim Rejection Reasons
On a payer level, claim rejections happen when what’s provided on the claim doesn’t match with what the payer has on record. They also happen when the information submitted isn’t in alignment with the payer’s electronic filing guidelines.
In either case, the claim will come back to you with a description that the payer couldn’t accept it for processing.
You would run into the same type of claim rejection on the clearinghouse level, except you’re able to change it and resubmit it instantly.
As you might’ve noticed from the table of the most common claim rejections that we see, there are a few commonalities.
Member / Group / Patient/ Subscriber
All three of those words identify the same person, but they change based on the payer. This field identifies the patient.
Luckily, when it’s mentioned on a claim rejection, it’s an easy fix. It tells you that you need to review the patient’s member ID card. The claim you submitted in this case likely has an error in the accuracy of what was entered about the patient’s insurance information.
ICD / CPT / Diagnosis Codes
Unlike the previous identifiers, these types of claim rejections aren’t interchangeable. However, they are all related.
Insurance payers stay attuned to diagnosis codes and their updates. Sometimes more specific ICD codes take the place of generic ones. When this happens, the old gets replaced with the new.
On the CPT code side of things, sometimes insurance payers will reject a claim if it contains an unauthorized CPT code or modifier combination. Payers identify those unauthorized codes within their claim filing guidelines.
Naturally, claim filing guidelines differ between payers. So, you’ll either want to follow up with the payer directly to see if the codes you included fit within their criteria or have a clearinghouse partner who already has all of the claim filing guidelines for the payers you work with on file.
What do you do if you receive a claim rejection?
Again, claim rejections aren’t bad. They save you from denials…which are the real enemy. But that doesn’t mean that you should ignore them.
Rejections tell you that you need to make an edit to your claim before officially submitting it to the payer for processing. In other words, you need to establish a process to handle your rejections.
Since I’ve mentioned that clearinghouse level rejections are better throughout this entire blog post, I’ll explain the process involved within that scope.
Navigate to where your clearinghouse stores your rejections
Review each claim and adjust the incorrect information accordingly
Resubmit each claim for another clearinghouse level review
Submit accepted claims to payers to receive payment
It’s that easy. The pessimist would say that sending your claims to your clearinghouse for its review is an added step. Going through your rejections from its review saves your organization from an increase in denials.
Key Takeaways
Rejected claims aren’t denials
A denied claim is one that’s fully processed by the insurance payer
A rejected claim isn’t processed the payer’s system
Payer’s don’t keep rejected claims in their system
Rejection messages tell you what you need to adjust within the claim such as:
Member ID card
Diagnosis codes
Coordination of benefits (COB)
If the rejection message relates to the Billing Provider, Rendering Provider, or Tax ID, you’ll have to verify provider credentials with the payer
Clearinghouse-level rejections happen instantly, provider-level rejections take at least two days
Your clearinghouse also stores a repository of all of your rejections for you to work through individually or in bulk
If you call a payer to discuss claim rejection, note the following:
Representative name
Number you called
Call reference number
Your clearinghouse should be able to act as the middleman between you and the payer so that you don’t have to worry about claim submission requirements
