Using medical coding to reduce claim denials

Nearly 20% of claims get denied, and as many as 60% of returned claims are never resubmitted—translating to massive financial losses.

It’s no secret that the healthcare industry faced many challenges over the past few years. With those challenges came regulatory updates and operational changes, leading to confusion and burnout—especially for medical coders and other HIM professionals.

This ever-changing landscape, including the rapid adoption of new care delivery models, prompted a litany of new coding guidelines, making it increasingly difficult for staff to keep up. When employees are unsupported, overwhelmed, and struggling to stay up-to-date on the latest rules, mistakes are bound to happen.

Mistakes on claims lead to denials, which can become a massive financial burden if left unchecked.

Considering that the number of claims denied on the first submission by medical practices doubled in 2021, it is now more important than ever for practices to prioritize quality and accuracy in their revenue cycle operations and, more specifically, their medical coding.

Why do claims get denied?

Let’s start with the basics. There are many reasons why a practice may receive a denied claim, but some of the most common reasons include:

Duplicate claims

A duplicate claim means a coder submitted a claim more than once for the same service performed on the same patient. This usually results when an HIM staff member accidentally resubmits a claim before the insurance provider has responded.

Bundled services

There are certain services that staff should not report separately. For example, some payers consider actions such as checking a patient’s heart rate as part of evaluation and management services. In this instance, they should only use one office visit code, even though pulse oximetry has its own CPT code. If two claims are submitted for these bundled services, also called unbundling, the payer will deny it.

Unbundling can also lead to overcoding, meaning staff submits a claim for a higher payment than allowed.

Filing limits

Each payer outlines filing timeframes that providers must follow. Some filing limits may be as short as 30-days and some as long as two years. If billing staff fail to submit a claim before the end of a payer’s filing limit, they’ll receive a denial and potentially have to write off those charges. With coding backlogs growing due to understaffing or lack of training, providers are more frequently encroaching or exceeding the filing limits.

Coverage issues

Practices may receive a denial stating that a service wasn’t deemed medically necessary according to a patient’s insurance. A common reason for this is miscommunication between providers and coding and billing staff. A patient may have received a covered service, but because they had an incorrect diagnosis listed on their documentation, payers interpret it as not covered.

Missing or insufficient information

Missing or insufficient patient information such as birth date or insurance details happens largely because practices still use manual processes. When staff members manually go through copious amounts of patient paperwork daily, small details can go unnoticed easily.

A common denominator between all of these situations is medical coding. Whether good or bad, the accuracy of a practice’s coding greatly impacts the number of denied claims they receive.

Using AI-automated coding technology to reduce denied claims

Many practices have employed technology solutions such as AI-automated coding to combat denied claims. These solutions use artificial intelligence to act as any human coding team member—imagine having hundreds of your best coders.

There are multiple ways a solution like this can impact denied claims. The first is through AI-powered coding audits.

Coding audits are a tool that often goes unused by practices—to their detriment. Revenue Cycle Managers should use them to take stock of your current coding operations and discover the source of your denials. This information is invaluable in preventing future denials. Regular audits give practices a deeper understanding of what they can improve and what they are doing correctly.

Another way to reduce denied claims is by automating routine coding to reduce staff workload. Let AI technology take on simple coding tasks like payment posting, insurance verification, or fully coding common provider encounters and charts. This allows coding personnel to focus on the more difficult aspects of their jobs like in-depth claims or resolving previously denied claims.

When staff members don’t have to devote their time to tedious tasks, they can instead spend the time on a few demanding tasks, leading to fewer inaccuracies and thus, reducing denied claims.

Practices don’t have to accept denied claims as a regular part of their business. Using AI-automated technology to boost coding quality and accuracy and to support team members will promote a healthier revenue cycle.

Amit Jayakar is the Vice President Commercial Operations of Fathom, a Tarsadia and Founders Fund backed company that uses deep learning to automate medical coding.