A claim denial occurs when an insurance company refuses to pay or approve a request for coverage or reimbursement submitted by a healthcare provider. This can happen for various reasons, and it often involves a careful review of the submitted claim against the terms and conditions outlined in the insurance policy.
Common reasons for claim denials include:
Incomplete or Incorrect Information: If the submitted claim lacks necessary details or contains errors, the insurance company may deny it.
Lack of Coverage: If the services or treatments listed in the claim are not covered under the insurance policy.
Expired Policy: If the patient's coverage or eligibility has lapsed or expired at the time the claim is submitted.
Failure to Obtain Authorization: For certain medical procedures or treatments, pre-authorization from the insurance company may be required.
Billing Errors: Incorrect coding or billing mistakes by healthcare providers can result in claim denials, such as wrong DX or procedure code.
A claim rejection refers to the refusal by an insurance company to process or accept a submitted claim. Unlike a claim denial, which typically occurs after a review of the claim, a rejection happens at the initial stage of processing, often due to basic errors or issues with the submission, you will get the rejection in the clearing house or EDI processor you use to submit the claims.
Common reasons for claim rejection include:
Incorrect Information: Errors in patient details (DX, DOB, Address), policy numbers, or other critical information such admission code, type of bill, etc.
Duplicate Claims: Submitting the same claim more than once, either intentionally or due to an administrative error, can result in rejection.
Policy Ineligibility: If the member's coverage or eligibility is not active at the time of claim submission, the claim may be rejected.
In the event of a claim rejection, carefully review the rejection notice, rectify any issues, and promptly resubmit the corrected claim. On the other hand, in the case of a claim denial, thoroughly examine the denial letter, ensuring understanding of the specific reasons behind the decision.
