How do coders handle rejected insurance claims?

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When insurance claims are rejected, medical coders and billers follow a structured process to identify and resolve the issue so the claim can be resubmitted and reimbursed properly. Here’s how it’s typically handled:

1. Review the Rejection Notice

• The insurance company sends a rejection Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) that includes denial codes and reasons.

• Coders and billers examine these codes to understand why the claim was rejected.

2. Identify the Error

Common reasons for claim rejection include:

• Incorrect or missing ICD-10, CPT, or HCPCS codes

• Mismatched patient data (e.g., name, DOB, insurance ID)

• Lack of medical necessity

• Expired insurance coverage

• Duplicate claim submission

• Missing documentation

3. Correct the Issue

• Coders verify and correct any coding errors (e.g., invalid or outdated codes).

• Billers may need to fix demographic or policy information.

• If documentation is insufficient, additional clinical notes may be requested from providers.

4. Resubmit the Claim

• Once corrected, the claim is resubmitted electronically or manually, depending on the payer’s process.

• Some systems flag resubmissions as corrected claims.

5. Track and Follow Up

• After resubmission, coders or billing staff track the claim status.

• If still denied, it may require appeal, especially for denials related to medical necessity.

6. Appeal if Necessary

• A formal appeal includes supporting documents, a provider letter, and possibly legal review.

🔁 This cycle is part of Revenue Cycle Management (RCM), and efficient handling ensures faster payments and fewer lost revenues.

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