03 May

What is the difference between denied claims and rejected claims?

Denied claims are claims that were received and processed by the payer and deemed unpayable. A rejected claim contains one or more errors found before the claim was processed. Medical claims that are rejected were never entered into their computer systems because the data requirements were not met. 

The medical biller’s goal is to ensure the provider is reimbursed for their services. Unfortunately, both human and electronic errors are inevitable. It’s important to reduce as many of these errors as possible since the process of medical billing involves health and money. When an insurance company denies a claim, they have a record of that claim in their system. They do not keep a record of that claim in their system if they reject a claim. 

DENIEDDenied Claims
Denied claims are claims that were received and processed by the payer and deemed unpayable. These claims may violate the terms of the payer-patient contract, or they may just contain some sort of vital error that was only caught after processing. A denied claim cannot simply be resubmitted. It must be determined why the claim was denied.

Denials normally come back on an Explanation of Benefits or Electronic Remittance Advice (ERA). Payers will include an explanation for why a claim is denied when they send the denied claim back to the biller. Having that information available allows an appropriate appeal to be written or a reconsideration requested.

Most denied claims can be appealed and sent back to the payer for processing. This process can be time-consuming and costly, so it’s important to get as many “clean” claims the first time you submit a claim. If a denied claim is resubmitted without an appeal or reconsideration request it will most likely be considered a duplicate and denied, and the claim will remain unpaid, costing your practice even more time and money.

If the claim was denied, in general, you would need to send a corrected claim. If a claim was denied and you resubmit the claim (as if it were a new claim) then you will normally receive a duplicate claim rejection on your resubmission.

RejectedRejected Claims
A rejected claim contains one or more errors found before the claim was processed. Medical claims that are rejected were never entered into their computer systems because the data requirements were not met. Errors will prevent the insurance company from paying the bill and the rejected claim is returned to the biller to be corrected. A rejected claim may be the result of a clerical error or a mismatched procedure and ICD code(s).

Rejections (when the claim was submitted electronically) usually come back as an EDI Rejection (electronic claim error) and will not show up on an Explanation of Benefits or Electronic Remittance Advice that you receive from the insurance company. These errors can be as simple as a transposed digit from the patient's insurance ID number. A rejected claim can be resubmitted once the errors have been corrected; since it was never entered into their system.

Related post: 5 steps to lower your practice's denial rate

Learn how to reduce claim denials and rejections

Denials and Rejections

Written by Jason Gerber

As the Executive Vice President of Business Development, Jason provides the strategic leadership of the operational management team. This encompasses the oversight of all aspects of client account services, revenue cycle management, IS/IT services, and electronic health record/practice management deployment services. With more than 16 years in the industry, Jason has an in-depth working knowledge of full revenue cycle and is an active participant in national and regional FQHC/CHC trade associations.

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