5 Common Reasons Medical Claims are Denied – Part 1: The Pitfalls of Coding Errors


graphic with title of article and medical coder looking at computer

A practice can’t achieve an efficient revenue cycle process without understanding the intricacies of medical billing and claim submission. Medical claim denials are one of the top reasons why healthcare practices don’t realize all the revenues they’ve earned from the medical services they’ve delivered.

This article is part 1 in our blog series about common denials where we go in depth about the typical denials experienced by practices. In each article we outline the reasons for those denials and offer practical solutions to minimize claim rejections so you’re optimizing your reimbursements.

Blog Series: 5 Common Reasons Medical Claims are Denied
Part 1: The Pitfalls of Coding Errors
Part 2: Lack of Medical Necessity
Part 3: Missing or Incomplete Documentation
Part 4: Service Not Covered by Insurance
Part 5: Missing Deadlines for Claims Submission

Smooth Practice Management Requires Accurate Medical Coding

There’s no doubt the cornerstone player in a smooth revenue cycle operation is medical coding. While it may seem like a simple task to translate medical services into standardized codes, in reality it’s a complex system with significant implications for claim processing and reimbursements. And it’s a priority to get it right the first time.

To ensure coding accuracy, and ultimately secure the financial stability of a practice, it’s important to employ a top notch team of medical coders and billers. Executives must also prioritize accurate medical coding in their routine practice management for consistency and stability.

Considering the complexity of the process and its importance, more practices are outsourcing medical coding to improve accuracy and reduce denials. We’ll explore outsourcing as a viable and profitable option further in the article.

The Language of Healthcare Reimbursement: Understanding Medical Coding

Every doctor dreams of a simpler system where their notes for insurance purposes might simply state “treated patient for illness”. But, that lack of clear communication would make it impossible for health insurance companies to assess the medical services rendered by the provider and determine appropriate reimbursements.

This is where medical coding comes in. Medical coding is the universal language for the system of healthcare, transforming diagnosis, procedures, and medical services into standardized alphanumeric codes. These codes are then utilized by insurance companies to understand the services provided and determine coverage and payment amounts.

These codes are also used in reporting for government agencies to better understand population health.

The Essential Medical Coding Systems: A Breakdown

There are two main coding systems that form the backbone of medical coding in the US healthcare industry:

  • ICD-10-CM (International Classification of Diseases, Tenth Revision, Clinical Modification): This system assigns diagnostic codes for diseases, injuries, and other health conditions. It provides a detailed and specific classification system, ensuring accurate representation of the patient’s diagnosis.
  • CPT® (Current Procedural Terminology): This system assigns procedure codes for medical services and interventions performed by healthcare providers. It outlines a standardized way to describe the specific services rendered, allowing for consistent and accurate billing across different practices.

Medical Coding Pitfalls: Common Errors and Their Impact

While seemingly simple, medical coding is very susceptible to errors. Here are some common pitfalls to be aware of:

  • Incorrect Procedure Codes: Selecting the wrong code for a service performed is a frequent error. This can lead to automatic denials if the insurance company identifies a mismatch between the coded procedure and the documented service.
  • Missing Modifiers: Modifiers provide additional context about a procedure, such as unusual complexity or location. Omitting them can result in incorrect payment or denial of the claim if the insurance company deems the service incompletely described.
  • Unbundling Errors: Improperly billing for separate components of a single service can trigger denials. For example, coding a surgical incision separately from the suturing that follows might be considered unbundling and lead to denial.

Typos and Inconsistency: Inaccurate information can have a domino effect. Typos or inconsistencies in coding can confuse the insurance company and delay or even deny claims while they attempt to clarify the information.

The Price of Inaccuracy: Why Accurate Medical Coding Matters

Inaccurate medical coding can have a significant financial impact on your practice. Here’s how it can hinder your reimbursements:
Confusion and Misinterpretation: Insurance companies may not understand what service was provided if the medical code is incorrect. This can lead to denials or incorrect payment amounts, resulting in lost revenue for your practice.

Denials for Services Not Matching the Coded Diagnosis: If the coded procedure doesn’t align with the diagnosis, the insurance company may deny the claim, assuming it’s not medically necessary. This highlights the importance of accurate medical coding that reflects the actual services rendered in conjunction with the patient’s diagnosis.

Potential Penalties: Repeated coding errors can raise red flags for insurance companies. This can lead to audits and potential fines if they suspect deliberate or negligent coding practices.

Building a Fortress Against Denials: Strategies for Accurate Coding

Staffing that stays up-to-date with coding guidelines and best practices is essential to minimize denials and ensure smooth claim processing. Here are some proactive steps your practice can take:

  • Invest in Staff Training: Regularly train your staff on proper medical coding procedures and the latest coding updates. This can involve attending workshops, webinars, or utilizing online coding resources. Employ Certified Medical Coders to reduce the potential for errors due to lack of education.
  • Utilize Coding Resources: Equip your staff with reliable coding manuals, online databases, and up-to-date coding software and artificial intelligence. These resources provide detailed guidance on code selection and ensure you’re using the most current coding sets.
  • Implement Internal Coding Audits: Conduct regular audits to identify and address any medical coding errors within your practice. This internal review process should be a regular and integral part of the coding practices at the clinic. It helps catch mistakes before they reach the insurance company and potentially lead to denials.

Partnering for Success: How Unislink Can Help Reduce Claims Denials

At Unislink, we understand the complexities of medical coding and its significant impact on your reimbursements. Our experienced billing team stays current with ever-evolving coding regulations and utilizes advanced technology to ensure accurate and compliant coding for your claims.

The professional coders and billers at UnisLink use advanced technology with industry expertise and a steadfast commitment to precision. We operate our own premier coding institute graduating certified medical coders who work with our clients around the country. With this extensive education, training, and experience, our team is guaranteed to reduce the medical coding errors and claims denials for your practice.

Interested in learning more about how understanding and tracking denial rates (and other key metrics) give you more visibility into your practice’s revenue cycle capabilities? Download our Power of KPIs eBook.

Next in this series:
5 Common Reasons Medical Claims are Denied – Part 2: Lack of Medical Necessity