Insurance Denials

Top 10 Reasons for Insurance Denials: How to Avoid

In the intricate world of healthcare, insurance claim denials can throw a wrench into the smooth operation of medical practice. A denied claim isn’t just a setback—it’s a missed opportunity for a healthcare provider to get compensated for their services, which can impact the practice’s financial health. But what exactly are insurance denials in medical billing, and how can they be prevented? Let’s delve into these issues to highlight this pivotal aspect of healthcare management.

What Are Insurance Denials

Insurance denials, in the context of medical billing, refer to the refusal of an insurance company or carrier to honor a request by an individual (or their provider) to pay for healthcare services obtained from a healthcare professional.

When a healthcare provider submits a claim to the patient’s insurance company for the services rendered, the company may deny the claim for various reasons. These reasons could range from errors in the claim submission, such as incorrect patient information or coding errors, to more complex issues, such as the insurance company’s belief that the treatment was not medically necessary or covered under the patient’s specific policy.

When a claim is denied, the healthcare provider typically receives an Explanation of Benefits (EOB) or a Remittance Advice (RA) from the insurance company, outlining the reason for the denial. Depending on the circumstances, the provider can correct the issue, resubmit the claim, or appeal the decision.

Understanding the reasons for insurance denials and how to avoid them is crucial for healthcare providers, as these denials can lead to delays in payment, increased administrative costs, and potential financial hardship for patients if they are left responsible for the cost of services

10 Reasons for Insurance Denials

Incorrect Patient Information

Misentered patient information accounts for a significant portion of insurance denials. Simple errors, like misspelled names, incorrect birth dates, or wrong policy numbers, can lead to claim rejection. For instance, a 2019 survey by CAQH showed that data quality issues contributed to a whopping 33% of initial claim denials.

Services Not Covered

Not all services are covered under every insurance policy. A study by the American Medical Association (AMA) found that coverage limitations accounted for about 15% of claim denials in 2020. Healthcare providers must ensure they understand the specifics of each patient’s policy before initiating treatment.

Out-of-Network Provider

Insurance companies have network agreements with specific providers. If a patient receives care from an out-of-network provider, their claim might be denied. The Kaiser Family Foundation reported in 2021 that about 18% of emergency visits led to at least one out-of-network charge.

Lack of Prior Authorization

Some procedures or treatments require prior authorization from the insurance company. Failure to secure this can result in denial. AMA’s 2020 survey indicated that initial authorization issues led to nearly 20% of claim denials.

Late Claim Submission

Insurers have deadlines for claim submissions. Late filings can result in outright denials. The Healthcare Financial Management Association noted in 2022 that 14% of denials were due to late submissions.

Duplicate Claim or Service

Submitting duplicate claims for the same service can lead to denial. According to a 2020 CAQH report, duplicate claims accounted for approximately 10% of denials.

Unbundling of Charges

Unbundling refers to billing each procedure step as if it were separate. Insurance companies often deny these claims. A 2021 AMA report showed unbundling was the cause of 8% of claim denials.

Upcoding and Overcharging

Overstating the severity of a patient’s condition, known as upcoding or charging for more expensive services or procedures, can lead to claim denial. Upcoding accounted for nearly 5% of insurance denials, as per a 2022 report by the Office of Inspector General.

Invalid or Incomplete Procedure or Diagnosis Codes

Using outdated, invalid, or incomplete diagnosis or procedure codes can result in claim denial. The AMA found in 2020 that coding errors were responsible for 12% of denials.

Insufficient Medical Necessity

The claim can be denied if an insurer deems a procedure as not medically necessary. In 2021, the American Hospital Association found that approximately 9% of denials were due to insufficient medical necessity.

Strategies to Avoid Insurance Denials 

Certainly! Avoiding insurance denials is essential for the smooth functioning of healthcare facilities and practices. Here are some practical strategies to reduce the likelihood of insurance denials:

Verify Insurance Coverage

Always verify a patient’s insurance coverage before providing services. This process should confirm that the patient’s policy is active, the benefits are covered, and the provider is in-network.

Obtain Prior Authorizations 

Obtain a procedure or service before delivering the care if it requires prior authorization. This process involves getting pre-approval from the insurance company, verifying that the procedure is medically necessary and covered under the patient’s plan.

Accurate and Complete Coding

Use the correct and up-to-date procedure and diagnosis codes. Coding errors are a common cause of denials. Regularly train your staff on the latest coding standards, such as ICD-10, CPT, and HCPCS.

Timely Filing of Claims 

Each insurance company has a filing deadline. Submit claims as soon as possible to avoid denials due to late filing.

Avoid Duplicate Claims 

Be careful not to submit duplicate claims for the same service, as this is a common reason for denials. Implement a system to track claims and their status.

Thorough Documentation

Document all services thoroughly and accurately. Include details about the patient’s condition, the treatment provided, and any communications with the patient. This documentation can be crucial in case of an appeal.

Regular Auditing

Conduct regular audits of your billing process to identify and correct common errors. This can help you spot patterns and address problems proactively.

Educate Patients

Make sure patients understand their insurance coverage, including their responsibilities for copayments, deductibles, and non-covered services. This can help avoid confusion and disputes later on.

Follow Up On Denials 

Not all denials are final. If a claim is denied, review the reason, correct any errors, and resubmit the claim. If the denial is due to a coverage issue or a dispute about medical necessity, you may need to submit an appeal.

By implementing these strategies, healthcare providers can significantly reduce the number of insurance denials, leading to a more efficient billing process, improved cash flow, and better patient satisfaction.


Navigating the complexities of insurance denials can be daunting for any healthcare provider. These denials interrupt the revenue cycle and consume valuable time and resources that could be better spent on patient care. Understanding the common causes of denials and implementing effective prevention strategies is crucial for maintaining a healthy, efficient practice.

However, managing all this while providing top-quality patient care can be challenging. That’s where the expertise of a professional medical billing service like BellMedex comes in. With a deep understanding of the insurance landscape and a commitment to accuracy and efficiency, BellMedex can help you minimize insurance denials, streamline billing processes, and maximize revenue.

Don’t let insurance denials slow you down. Reach out to BellMedex today and let us take care of your billing needs, so you can focus on what you do best: providing exceptional patient care. Act now to transform your practice’s financial health. BellMedex is here to help you every step of the way.

Call Now Button
%d bloggers like this: