What Is the Difference Between a Denied and Rejected Claim?

what is the difference between a denied and rejected claim

 

Accurate medical billing is absolutely critical if you’d like to ensure your medical practice receives the correct payments from patients and insurers in a timely manner. There’s no doubt that denied and rejected claims have a detrimental effect on your revenue cycle, but you may not be aware that most are entirely avoidable.

What is the difference between a denied and rejected claim? PracticeForces, Florida’s trusted medical billing company, breaks down the definitions below and explains how your practice could prevent denials and rejections in the first place.

 

Denied Claims For Medical Billing

Has the insurance company received and processed your claim but deemed it unpayable? Those are denied claims. This denial triggers the claims department to send the bill back to the policyholder with an Explanation of Benefits, which details why they denied it.

The most common reasons for denied claims include the following:

  • A claim error discovered during processing, like an incorrect diagnosis code
  • Missing referrals
  • No pre-authorization for treatment
  • Submitting the claim outside the deadline
  • Medically unnecessary treatment, according to the insurer
  • Enrollment or credentialing issues

At this point, a patient can submit an appeal or reconsideration request. However, importantly, they cannot simply resubmit the same claim. If they do, the claims processor will consider it a duplicate claim and automatically deny it.

 

Rejected Claims For Medical Billing

So, what is the difference between a denied and rejected claim? We’ve seen that most denied claims fail during the processing stage. Rejected claims come back to the biller before the insurance company has processed anything, usually because they contain errors.

These rejected claims never make it into the insurance company’s system. In some cases, they never make it out of the medical biller’s clearinghouse, which reviews outgoing claims to ensure they are accurate. So, rejected claims do not appear on a patient’s EOB because the insurance claims processor never sees them, with the most likely reasons being the following:

  • Clerical errors, such as transposed digits in ID numbers
  • Incorrect patient data
  • Missing information
  • A mismatched diagnosis and procedure code pairing

From a medical practice’s perspective, rejected claims will bog down the billing process, which is inconvenient and stagnates revenue, but they don’t require an appeal for resubmission. All that’s required is correcting the error. From there, the claim can continue as normal.

 

How to Avoid Problems With the Medical Billing Claims You Submit to Payors

Excessive claim denials and rejections represent significant losses for your practice in the form of write-offs, limiting your ability to provide patients with enhanced services, like an advanced care planning program. Dealing with these problematic claims also takes time, slows down payments, and causes your patients unnecessary stress. Why not work with an experienced medical billing team to streamline your practice’s billing and coding processes?

What is the difference between a denied and rejected claim? How can your practice prevent both from occurring with a stricter eligibility verification procedure for accurate, timely billing? Learn more from PracticeForces at (727) 499-0355.

Parul Garg, CEO and co-founder of PracticeForces, has significantly contributed to the growth of over 1,000 U.S. medical practices through her expertise in medical billing and coding since the company’s inception in 2003. With a background in Computer Science and an MBA in Human Resources, her leadership and AAPC-certified coding skills have been pivotal in managing the company’s operations effectively.

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