Common Types of Denials
There are numerous causes of claims denials, but we will concentrate on these common types: PRIOR AUTHORIZATION DENIALS: Occur when payors deny claims due to a lack of pre-authorization or timely payor notification. MEDICAL NECESSITY DENIALS: Occur when inpatient criteria are not being met, the emergency department is misused, an inappropriate level of care/services is provided, or there is a lack of documentation to support medical necessity. CODING DENIALS can occur due to:
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Code sequencing issue
• Incorrect MS-DRG or APR-DRG (diagnosis-related group) assignment • Incorrect principal or secondary diagnosis code(s) • Unsubstantiated CC/MCC or SOI/ROM • Incorrect procedure code(s)
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Truncated codes (missing characters)
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Missing or incorrect modifiers
• Incorrect present-on-admission (POA) indicators • Coding unsupported by clinical documentation
Another potential reason for coding denials is the use of cloned documentation (existing text that has been copied and pasted into a new location in the electronic health record). This documentation may or may not be relevant to the current encounter, and coding staff should be trained to ascertain the difference. To maintain the accuracy and integrity of the health record, it is recommended to conduct focused audits on cloned documentation. CLINICAL VALIDATION DENIALS: Occur when a payor determines that there is insufficient clinical evidence to support a reported condition, despite the presence of documentation in the patient’s record. This often occurs when payors use criteria that differ from providers. Beware of Untimely Appeals When dealing with complicated issues such as revenue loss due to denials, it’s best to prioritize and resolve more straightforward problems first. One such problem is untimely appeals, which occur when an appeal is submitted after the payor’s deadline has passed, resulting in an automatic denial. The payor assumes that no response from the organization indicates agreement with the denial. Revenue losses due to untimely appeals can be reduced by improving response times. While it may be possible to request an extension in some cases, doing so is risky. Even if the extension is granted, payment may be delayed, negatively impacting the organization’s cash flow. Common reasons for untimely appeals include:
√ Silos √ Staffing shortages √ Outdated or inefficient processes √ Misrouting of appeals to the wrong department √ Overwhelming volume of denials √ Lack of tracking tools √ Systems upgrades/conversions
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