An analysis of Medical Insurance and Rejections in Medical Billing

An analysis of Medical Insurance and Rejections in Medical Billing

One of the biggest hurdles faced by the healthcare industry is the medical insurance claim rejections. Too often the words “medical claim rejection” and “medical claim denial” are used interchangeably.

However, this acute misunderstanding can have a serious consequence on the revenue generation cycle of hospitals and clinics. Medical insurance and rejections are known as the claims that are not meeting the basic formatting or specific data requirements that are rejected by insurance as per the guidelines set by the Centers for Medicare and Medicaid Services.

Such rejected medical insurance claims can not be processed by the insurance companies as they had never actually received such claims and they never entered them into their computer systems. They can not be processed if the payers will not receive the claims.

These refused claims can be resubmitted only once all the errors that caused the rejection of the claims are corrected. The errors that can occur are as simple as the patient’s insurance ID number being wrongly transposed. However, these small errors can be quickly rectified.

Reasons Due to Which Medical Insurance Claims Get Rejected in Medical Billing

Below are listed a few reasons which increase the chance of claims being rejected-

  1. The longer waiting period to file the claim- Most of the insurance companies require 60-90 days within which the claim should be filed with the company. When claims are filed after the service has been taken, the chances of the claim getting rejected are high.
  2. Missing of proper codes– If the procedure code or the diagnostic code is missing, invalid, incomplete, or are not corresponding to the treatment rendered by the doctor or physician.
  3. The insurance company has lost the claim, and eventually, the claim expired- Irrespective of how the claim was misplaced, if a claim is misplaced and is not found in the electronic records of the insurance company before the deadline, there are very high chances that the claim gets denied.
  4. No referral was taken from the physician- Some of the insurance plans require not only the authorization but also a valid referral from the physician of the patient stating that the appropriate medical services were rendered. If the referral was not confirmed by the insurance company and the services were provided to the patient, the claim might get rejected while getting the bill done.

How can the rate of these medical claim rejections in medical billing be reduced?

Whether the practitioner or healthcare provider is doing the medical billing in-house or getting it outsourced, there are a few steps that should be taken to manage such claim rejections:

  • Healthcare management should track and analyze the trends of medical insurance denials and rejections. These rejections should be categorized and the management of the hospital should work on how to fix these rejections as soon as possible.
  • Imparting education to the staff is quite imperative. The billing staff of the hospital or clinic should be well-trained to handle the rejections effectively and quickly. Further, training should be provided o handle the rejections appropriately.
  • Routine chart audits for appropriate documentation and data should be scheduled to identify trends and problems before claims are sent to the payers.
  • Proper discussions, revisions, and elimination of contract requirements that lead to rejection of the claims should be worked out with the payers within the right timeframe.
  • External vendors and automated software should be utilized to optimize medical insurance claim management. In addition to this, predictive analysis can be performed to flag potential rejections- addressing the claims even before they are submitted to the payers. An experienced clearinghouse will allow you to resolve all the rejections quickly and it will also provide a great tracking tool for your convenience and error-free medical billing.


Medical insurance and claims rejection is perhaps the most significant challenge for a physician or doctor. It creates a negative impact on the revenue practice of the hospital or clinic and also poses a question mark on the efficiency of the billing department. 

Educating the billers and analyzing the claim data can adequately determine the trends in medical insurance and claim rejections. Also, using the services offered by third-party vendors or up-to-date software can prove to be invaluable for the medical billing cycle. 

By paying attention to the details, taking a proactive stance and properly interpreting the claims data, rejections can be prevented in the medical billing before the claims are submitted. Even if medical insurance and claims are returned, corrections can be made in a timely fashion.

Lastly, stay current on coding and billing trends and also educate yourself and your staff to optimize the claim reimbursement procedures.