Denied Before It's Billed? How Patient Intake & Prior Authorizations Can Lead to Claim Denials

You bill a claim for a session you know was clinically sound, and BAM—denied. The reason code points to an obscure technicality, and you’re left with a sinking feeling, hours of follow-up ahead, and a claim that now feels a lot less likely to get paid.

It’s a feeling every private practice owner knows well. But what if the problem started long before you ever clicked "submit"? While we often focus on the claim itself—the CPT codes, the diagnoses, the modifiers—the truth is that many of the most frustrating and costly denials can be traced back to what happens before the claim is ever created.

Think of your Revenue Cycle Management (RCM) as a game of dominos. If the first three dominos are out of alignment, the whole line won't fall, no matter how perfectly you set up the ones at the end. Here are three crucial pre-billing steps that, if mishandled, can lead to denials that can be incredibly difficult to resolve.

It All Starts at the Front Door: Patient Registration

One of the early steps in the RCM process is gathering patient information. This seems simple, but it’s often the source of denial headaches. A claim is essentially a letter to the insurance company that needs to be delivered to a specific address. If the address is wrong, the letter gets returned to you.

The denial risk here is high. A single typo in the patient's name, a transposed digit in their insurance ID number, or an incorrect date of birth can cause an immediate, hard denial from the payer if it somehow makes it past the clearinghouse without rejecting. These are often easy to fix, but they require administrative time and delay payment—which is the opposite of a healthy cash flow.

To get this right, you need a meticulous intake process. Don’t assume the information on a previous intake form or in an outdated EHR profile is correct. Always ask for a copy of the patient’s driver's license and a photo of their most recent insurance card. Verify the spelling of their name and that the ID number is correct, and double-check it against what you see on the insurance card.

Don't Assume Coverage: The Importance of Eligibility & Benefits (E&B)

Just because a patient has an insurance card doesn't mean their plan covers your services. And even if it does, it doesn’t mean they don’t owe you money. The crucial step of verifying Eligibility and Benefits (E&B) is what separates a potential claim from a financially sound one.

The denial risk for neglecting E&B is significant. Your claim could be denied because the patient’s coverage was terminated, the plan requires a different type of provider, or your specific services aren’t covered. Even if the claim gets paid, you could be setting yourself up for a nasty surprise later. For instance, if you didn’t collect the correct copay or deductible, you'll be left chasing a patient for a balance they may have never expected to owe.

Our advice is simple: make E&B checks a non-negotiable part of your patient intake process. Call the payer or use an online portal like Availity or the payer’s portal to confirm the patient’s eligibility and understand their financial responsibility. Get a clear picture of their deductible, copay, coinsurance, and out-of-pocket maximum. In our book, Insurance Billing Basics, we provide a detailed checklist of questions you need to ask during every E&B call to ensure you don't miss a thing.

The Biggest Barrier to Entry: Prior Authorizations

The most frustrating pre-billing denial is often one for Prior Authorization (PA). Many insurance companies require a PA—a form of pre-approval—for specific services. If you bill a claim for a service that requires a PA without one, it will be denied. While these denials are appealable, they can be one of the most time-consuming and difficult battles to win. It is a costly, uphill battle for your time, energy, and revenue.

Prior authorizations are insurance companies' way of acting as a "gatekeeper" for care they consider expensive or not medically necessary. An "unauthorized" denial is a costly message that your claim has hit a wall that's hard to climb.

To avoid this, you need a system for checking PA requirements and tracking them meticulously. Before the first session, you must check the patient’s plan to see if a PA is required. If so, you will need to complete and submit the necessary paperwork and receive a formal authorization from the payer. Once you have it, you must track the authorized number of sessions and the effective date range. A PA for ten sessions won't magically cover the eleventh.

Take Preventative Action with your Billing

Insurance billing and reimbursement do not have to be the elusive creature you may fear. The ultimate goal is for you to feel confident and in control of your practice’s financial health. By focusing on these three crucial steps—getting patient registration right, verifying E&B, and securing prior authorizations—you are building a strong foundation for your revenue cycle.

Stop chasing denials and start preventing them. If you’re not sure where to start, you can take a look at our book, Insurance Billing Basics, or if you're ready to hand off these tasks, our expert team can help you build the systems you need.