Revenue Cycle Management Blog | GroupOne Health Source

5 Things You Must Know About Denied and Rejected Claims

Written by Kaitlyn Houseman | July 1, 2015

As the ICD-10 deadline approaches, you might be wondering how your practice is following up on denied and rejected claims. According to CMS, 1 in 5 practices will see Medicare denials double for 6 months after October 1, 2015. Understanding how your practice is following up on denied and rejected claims now is critical to the success of your revenue cycle. Investing time into your denial management strategy can minimize the impact of ICD-10 on your practice.

If you're wondering where to start, you need to first understand what denied and rejected claims are and common errors that cause them.

1. What are denied insurance claims?

Denied claims have been deemed unpayable by an insurance company. Usually, insurers explain why a claim was denied in the explanation of benefits (EOB) statement associated with the claim. Missing information, billing errors, and questions about patient coverage are some of the main reasons claims are denied. However, denied claims can be appealed successfully in some cases. Clearly it is better to avoid them in the first place, though.

2. What are rejected insurance claims?

Rejected claims are sent back because of errors, not because the insurer concluded they were unpayable. For example, if your medical billing software provides incorrect information that your billing staff doesn't catch, the claim will be rejected. Correcting errors and resubmitting rejected claims is common, but as with denied insurance claims, preventing claim rejections in the first place is the preferable option.

3. What are the common errors with denials and rejections?

Something as simple as incorrect medical provider information can result in a rejected claim, as can incorrect patient information. When an incorrect diagnosis or point-of-service code is entered into medical billing software, a claim can end up with errors. Also, treatment and diagnosis codes that don't match properly can result in claim rejections or denials. Insurers are exacting about their requirements, and medical billing software that can work with the demands of different insurers can provide a measurable return on investment by increasing clean claims.

4. How can my practice discover and correct errors quickly?

Good communication between medical billing and coding staff and clinicians is essential to ensuring the right codes are put on claim forms. Keeping the lines of communication between the practice and insurers can be effective, too. Verifying patient coverage when an appointment is made, or at least during patient sign-in, can prevent errors caused by patient contact information changes or changes in insurance coverage. Vigilance at every step, from appointment booking through claims submission is necessary to hold down error rates.

5. Why should I monitor denials and rejections for trends?

If there is an unexpected uptick in denials and rejections, taking the time to assess what's going on and see if there are trends is important. You may find, for example, that claims with one particular insurer are rejected more often. Or you may find that a particular diagnosis code leads to more rejections. A simple change in insurer requirements that goes unnoticed could be responsible for an increase in rejected claims, and uncovering that reason can help you quickly and substantially increase your clean claims rate.

How Your Medical Billing Software Can Help

The best medical billing software for your practice works with your established workflows and integrated with your EMR. It should accelerate the billing process while providing accurate information for insurance claims and patient out-of-pocket charges. Even if your medical billing software is known for being easy to use, investing in training is still wise, so staff members can learn to use all the helpful features and make the most of the investment. Exceptional medical billing software, combined with training and a conscientious staff can go a long way to reducing the number of denied and rejected claims your practice deals with.


Denied and rejected claims are a major cause of lost revenue for medical practices. Maintaining a high clean claims rate requires attention to detail at every step of the patient journey, and having good medical billing software can also make a clear, positive difference.

At GroupOne Health Source, our revenue cycle management experts understand the causes of denied and rejected claims and how to prevent them. Our goal is to maximize revenue for your practice, by assessing all stages of the revenue cycle, seeing where there's room for improvement, and helping you put a plan into action.

We would be happy to answer your questions about improving clean claims rates and preventing denials; we encourage you to contact us at any time at or 800.769.5288.