How Much Are Insurance Denials Costing You?

by Ray Foxworth, D.C., FICC, MCS-P

President & Founder, ChiroHealthUSA

In the wake of COVID-19, many of us are experiencing heightened stress and hardship as business owners and chiropractors. Rather than focusing on the things we cannot change from day to day, it is time to focus on the things we can change and take steps to get back to better. One area of major financial concern in practices across the country is insurance denials.

Denied insurance claims are a constant hassle, but do you know how much your practice is losing because of them? On a national scale, the cost of insurance denials for U.S. hospitals is $262 billion per year, according to a recent survey.

In practices like ours, medical billing denial rates range from 5%-10%, with some organizations suffering denial rates on first billing as much as 20%. Reworking those denials isn’t free either, with some estimating an average cost of $25 each and a success rate of roughly 65%. Perhaps due to the cost, or to practices not wanting to deal with the insurance bureaucracy, only an estimated 35% of denials ever get reworked. Every denial, whether reworked or not, causes frustration and, ultimately, cash flow problems.

As business owners, we need to do what we can to keep denials to a minimum. There are hundreds of reasons for an insurance company to deny a claim, but here is a list of some of the most common.

1. Paperwork errors or missing details, such as a misspelled name or a field left blank. A single field left unfilled is almost certain to cause a denial, so some great attention to detail can minimize denials.
2. Questions about medical necessity, meaning the insurer isn’t convinced that the patient needs the procedure.
3. Cost control, meaning the insurer thinks there’s a less-expensive procedure or service that you should try first.
4. The service or procedure isn’t covered by the patient’s plan.
5. Provider network issues, meaning your practice might be out-of-network for the patient.
6. You didn’t follow the insurer’s rules; for instance, pre-authorization might be required for a particular test or procedure.

Reworking denied claims can sometimes be as simple as a call to the insurance company. If you make sure to document your call, note any reference number they give you, and take care to follow up in the time frame given, that can be enough to resolve a majority of your denials.

For the roughly 30%+ of denials that can’t be solved by a phone call, don’t just let them go. These require a written appeal, and it is an important step to take for a few reasons. First, your appeal shows that you made a reasonable effort to address the issues that caused the denial. Second, written appeals go to a different department in the insurance company, often staffed with more experienced agents. Also, by not filing an appeal, you are showing the insurance company that you’re not going to put in the effort to fight denials, which can make them more likely to deny other claims from you in the future.

These are all important steps in avoiding costly insurance denials or resolving the ones you can’t avoid. It can make a difference in cash flow, in minimizing your staff’s aggravation, and ultimately, in the overall health of your practice. In our efforts to get back to better, it’s time to focus on the things that we can change instead of focusing on the things we can’t.

To learn more about reducing and preventing insurance denials in your office, join us for a webinar with Wendy Lee on July 14, 2020, at 2:15 PM EDT. Register HERE.