5 Common Reasons Medical Claims are Denied – Part 4: Service Not Covered by Insurance


graphic with title of the article and photo of medical biller in front of a computer

Reducing denied medical claims is the goal for every practice manager and healthcare executive. Denied medical claims is at the top of the list of reasons practices today aren’t realizing as much profit as they should.

This article is part 4 in our blog series about common denials where we dig deeper on why these denials are experienced by most practices. In each article, we outline the reasons for claims denials with solutions to better streamline the operations for improved financial stability.

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

Service is Not Covered by Insurance: Insurance Coverage and Exclusions

Health insurance plans typically outline services covered under the policy and any exclusions. For practices to receive payment from insurance plans, their services must be covered. In many cases, the patient has a deductible with their plan that hasn’t been met and the medical services, while covered by the insurance plan, are the patient’s responsibility for payment.

Here’s a breakdown of these key terms:

  • Coverage: This refers to the specific medical services financially supported by the insurance plan, typically within designated limits. These services may include in-patient care, outpatient services, diagnostic tests, and medications.
  • Exclusions: These are services explicitly not covered by the insurance plan. This could include cosmetic procedures, experimental treatments, or services deemed unnecessary based on plan guidelines.

Why it’s Important to Verify Patient Insurance Benefits

Verifying patient insurance eligibility and benefits before providing services is a critical step in preventing claim denials. Knowing the specifics of a patient’s coverage allows you to:

  • Choose Treatment Options Within Coverage: By understanding what’s covered, you can tailor treatment plans to maximize insurance reimbursement and minimize out-of-pocket costs for the patient.
  • Identify Potential Exclusions: Knowing the exclusions upfront helps avoid providing services that may not be covered, preventing unpleasant surprises for both the patient and your practice.
  • Set Expectations for Financial Responsibility: Transparency regarding potential out-of-pocket costs allows patients to make informed decisions about their care.

Understanding Coverage Limits and Pre-Existing Conditions

Some insurance plans have limitations on covered services, such as annual visit limits or copay requirements. Additionally, some plans may have specific exclusions for pre-existing conditions, meaning services related to a pre-existing condition might not be covered or have limitations.

The Pitfalls of Not Understanding Coverage: Main Reasons for Denial

Failing to consider a patient’s specific insurance coverage can lead to claim denials. Here are some common scenarios:

  • Services Not Covered by the Plan: If a service is not included in the patient’s coverage, the insurance company will likely deny the claim.
  • Exceeding Coverage Limits: If a service exceeds the coverage limit (e.g., annual number of therapy sessions), the portion exceeding the limit may be denied.
  • Lack of Prior Authorization: Certain services require pre-approval from the insurance company before being performed. Failure to obtain this authorization can result in denial.

Ensure Patients Understand Their Benefit Coverage

Clear communication with patients regarding their insurance coverage is essential. Here are some recommendations:

  • Verify Coverage Before Treatment: Always verify a patient’s insurance eligibility and benefits before providing services.
  • Discuss Potential Out-of-Pocket Costs Upfront: Be transparent about potential out-of-pocket costs for services not fully covered or exceeding coverage limits. Outline the patient’s payment responsibility for services that will count toward their deductible.
  • Offer Payment Options: Consider offering patients flexible payment options to help manage out-of-pocket costs.

Why Some Practices Outsource their Medical Billing Processes

Some practices choose to outsource their RCM services which include patient verification and eligibility of benefits where they have access to advance technology that integrates with their EHR/EMR system. This streamlines the operation while reducing claims denials and increases revenue collections.

Lower Your Medical Claims Denial Rates: How Unislink Can Help

At Unislink, we understand the complexities of insurance coverage and its impact on claims processing. Our team can efficiently verify patient insurance eligibility and benefits before services are rendered. We can also help educate patients on their financial responsibility and work with them to develop feasible payment plans.

By working together, we can ensure informed decision-making, maximize coverage for your patients, and minimize claim denials for your practice.

This approach fosters a smoother billing experience for your patients and ensures your practice receives appropriate reimbursement for the services provided.

Gain Control of Your Finances: Discover how KPIs and denial rate tracking improve revenue cycle visibility. Download our free Power of KPIs eBook!

Next in this series:
5 Common Reasons Medical Claims are Denied – Part 5: Missing Deadlines for Claims Submission