Medical coding denials are a significant challenge for healthcare providers, revenue cycle managers, and billing departments. Not only do they disrupt the cash flow of healthcare organizations, but they also result in increased administrative costs and delayed patient care reimbursements. According to industry data, nearly 9% of claims are initially denied, and a substantial portion of these are due to coding-related errors.
In this comprehensive newsletter, we will examine the top 10 most common medical coding denials, explore the reasons behind them, and offer practical strategies to prevent these denials from affecting your bottom line.
1. Missing or Invalid Diagnosis Codes (ICD-10)
Why it happens:
When the diagnosis code submitted is invalid, expired, missing, or does not justify the procedure performed, the claim is likely to be denied. Sometimes coders may use unspecified codes (like “NOS” or “NEC”) or outdated ICD-10 codes no longer in use.
Example:
Using a general diagnosis code like M54.5 (low back pain) without further specificity when a more detailed diagnosis is available.
How to Avoid:
- Keep your ICD-10 code set updated annually.
- Train staff to select the most specific and relevant diagnosis code.
- Use coding tools or software with real-time validation features.
- Perform internal audits to catch common errors in diagnosis coding.
2. Unbundling of Services
Why it happens:
Unbundling refers to the incorrect practice of billing multiple individual procedure codes when a single comprehensive code should have been used. Payers view this as a way to inflate reimbursement.
Example:
Billing separate codes for components of a procedure that is already included in a comprehensive CPT code.
How to Avoid:
- Use Correct Coding Initiative (CCI) edits to identify when services should be bundled.
- Train coders on NCCI guidelines and payer-specific bundling rules.
- Leverage automated claim editing tools to detect unbundling errors before submission.
3. Upcoding
Why it happens:
Upcoding is when a provider assigns a billing code that reflects a more severe diagnosis or a more extensive procedure than what was actually performed. This may be done to receive higher reimbursements but is considered fraudulent by payers.
Example:
Coding a level 5 office visit (99215) when the documentation only supports a level 3 visit (99213).
How to Avoid:
- Ensure thorough and accurate documentation that justifies the level of service billed.
- Conduct regular audits and compliance training.
- Implement pre-bill reviews for high-risk services.
4. Invalid or Mismatched Modifiers
Why it happens:
Modifiers are used to provide additional information about a procedure or service. When they are used incorrectly, or when they don’t match the procedure or diagnosis, claims can be denied.
Example:
Using modifier -25 to indicate a significant, separately identifiable E/M service when one is not documented.
How to Avoid:
- Educate staff on the proper use of modifiers, especially common ones like -25, -59, -76, -91.
- Cross-check that modifiers align with payer-specific requirements.
- Maintain a modifier usage guide and update it regularly.
5. Duplicate Claims
Why it happens:
Duplicate claims are often submitted unintentionally due to miscommunication, system issues, or human error. Payers reject them outright, even if the original claim is under review.
Example:
Submitting a claim twice because the first claim was still being processed or appeared to be missing.
How to Avoid:
- Implement a robust claim tracking system.
- Train billing staff to check claim status before resubmission.
- Use clearinghouse tools that alert for potential duplicates.
6. Mismatched Provider Information (NPI/Taxonomy)
Why it happens:
Claims are denied when the National Provider Identifier (NPI) or taxonomy code submitted doesn’t match what’s on file with the payer or is entered incorrectly.
Example:
The rendering provider’s NPI is not registered with the payer or does not match the billing provider’s taxonomy.
How to Avoid:
- Keep provider enrollment files updated with payers.
- Validate NPI and taxonomy data regularly.
- Conduct enrollment audits annually and verify new provider credentials before billing.
7. Lack of Medical Necessity
Why it happens:
A service is deemed medically unnecessary if the payer determines the documentation does not support that the service was essential based on their policies.
Example:
Ordering advanced imaging (MRI or CT) for non-specific symptoms without prior conservative treatment.
How to Avoid:
- Review payer policies on medical necessity and incorporate them into clinical workflows.
- Ensure documentation clearly supports the rationale for tests or procedures.
- Use pre-authorization when required for services that are frequently denied.
8. Prior Authorization Not Obtained
Why it happens:
Certain procedures or medications require prior authorization. If it is not obtained, or if it is obtained incorrectly (e.g., for the wrong date or provider), claims are denied.
Example:
Failing to obtain prior auth for an MRI when it is required by the patient’s plan.
How to Avoid:
- Establish a centralized prior authorization process.
- Keep a matrix of services that require authorization by payer.
- Use automated tools that alert for prior auth needs during scheduling.
9. Timely Filing Exceeded
Why it happens:
Most payers have a strict timeline within which a claim must be submitted. If this window is missed, the claim will be denied regardless of accuracy.
Example:
A claim submitted 120 days after the date of service when the payer only allows 90 days.
How to Avoid:
- Implement real-time claims tracking and alerts for approaching deadlines.
- Train staff on payer-specific timely filing rules.
- Routinely monitor unbilled encounters and resolve coding issues promptly.
10. Coordination of Benefits (COB) Issues
Why it happens:
When patients have multiple insurance plans, COB must be correctly determined to avoid denials. If payer records show the wrong order of benefits, the claim may be rejected.
Example:
Billing a secondary insurance first when the primary should have been billed.
How to Avoid:
- Verify insurance information at every visit, including COB status.
- Use electronic eligibility verification tools.
- Keep updated policies and communicate with patients regarding insurance changes.
Impact of Coding Denials on Practice Revenue
Even a small percentage of denied claims can have a large impact. Here’s how:
- Increased AR Days: Denials lead to delays in payment, inflating accounts receivable.
- Higher Operational Costs: Staff time is wasted on rework and appeals.
- Revenue Loss: Some denials are never appealed or are rejected even after rework.
- Patient Dissatisfaction: Billing errors can lead to confusion and reduced trust.
Proactive Strategies to Prevent Coding Denials
1. Continuous Education and Training
Hold regular training sessions for coding staff, focusing on:
- CPT/ICD-10 updates
- Modifiers
- Compliance regulations (HIPAA, CMS)
- Payer-specific guidelines
2. Internal Coding Audits
Conduct quarterly audits to:
- Identify coding trends and errors
- Evaluate documentation quality
- Provide feedback to providers
3. Use of Technology and AI
Leverage:
- Computer-Assisted Coding (CAC) software
- Denial management platforms
- Automated pre-bill review tools
These can flag potential issues before claims are submitted.
4. Collaboration between Coders and Providers
Foster a culture of collaboration:
- Encourage coders to query providers for clarification.
- Train providers on documentation best practices.
- Schedule regular provider-coding staff meetings.
5. Denial Analytics
Track denial trends using reports and dashboards to:
- Pinpoint recurring issues
- Adjust coding practices
- Optimize workflows
Code Smart, Get Paid Faster
Coding denials are preventable with the right mix of education, technology, and process optimization. A proactive approach to documentation, coding accuracy, and payer compliance can drastically reduce denial rates and improve revenue integrity.
Healthcare is complex—but your revenue cycle doesn’t have to be. By addressing the Top 10 Medical Coding Denials outlined above, you can:
- Reduce rework
- Shorten reimbursement timelines
- Improve compliance
- Protect your bottom line
Need Help with Denial Management?
Our experts can audit your claims, train your team, and implement denial-prevention technology tailored to your organization. Let us help you turn denials into dollars.
Contact us today to learn more.