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What is a Denied Claim vs. a Rejected Claim?


In some ways it is unfortunate that we live in a highly semantic society. But in other ways, being focused on the definition of words can be clarifying. When it comes to billing for the mental health industry, semantics can make or break a claim. That is why it is important for biller and providers to understand the semantic difference between a rejected claim and a denied claim.

Understand the difference between a rejected claim and a denied claim will help in your efforts to follow-up on claims that don't reimburse. We will outline for you the definition of both of these terms and what you can do to maximize your ability to collect.

1. Rejected Claims

Rejected claims are those claims that are submitted to a clearinghouse and are not forwarded to the insurance company. The clearinghouse decides that a claim is missing key information and therefore wouldn't be paid by an insurance company. This is helpful because it minimizes the time that it would take to resubmit a claim if it went straight to the insurance company.

What do I do now?

When you receive word of a rejected claim the best course of action is to check all the patient demographic and insurance information. The most rejections are a result of misspelling a name, incorrectly typing an ID number, or an incorrect date-of-birth. These are relatively easy fixes.

Usually, this information is obtained from the insurance card and from the intake paperwork. It is important that you use clear and simple documentation to ensure that you have the right information.

2. Denied Claims

Claim denials are those claims that are submitted to the clearinghouse and are sent to the payer. At the payer's end there is an issue and the claim is denied for payment. It is important to note that denied claims are a result of an algorithm with logic embedded in the program. This means that sometimes there are mistakes, but these are infrequent.

What do I do now?

At the point of receiving a denied claim, the EOB or ERA will come with a denial code. The most common denial codes are; deductible, coordination of benefits, incorrect/not enough information to process the claim, or medical necessity.

When you get a denial code it is a good idea to do some research. Check the patient's eligibility and benefits and see if they have a primary insurance. It is important to note that Medicaid and Medicare are always the payer of last resort.

The other action item you can take is check to see if the diagnosis code is reimbursable in your area. This can be found by calling your provider representative from the respective payer.

Conclusion

Overall, denials and rejections can be fixed. If a claim is denied and the patient owes a deductible amount be sure to make a good faith effort to collect per your financial policy. Follow these simple steps and you should be able to resolve most of your claim rejections and denials.

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