Understanding Claim Denial vs. Claim Rejection in Medical Billing
Learn the key differences between claim denial and claim rejection in medical billing, including when each occurs and what factors contribute to them.
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Claim Denial vs Rejection Whats the difference Medical Billing
Added on 09/26/2024
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Speaker 1: Alright. Today, we are answering a question from someone in our community. So, one of our listeners asks, what is the difference between a claim denial and a claim rejection? So, very, very good question. So, they are two very different things. So, claim rejection happens before a claim is accepted for adjudication. So, that is happening before the insurance company receives your claim and processes your claim for payment or denial or so on. So, the claim rejection is when the claim is being transmitted or submitted from your office through your clearinghouse, ideally, and to the payer's clearinghouse. At that moment, when the payer receives that claim in their clearinghouse, they might reject it out. So, there are really two types of rejections with most clearinghouses. You'll find that your clearinghouse might have a scrubber that it is applying to your claims in which case the clearinghouse itself might have a rejection where it's looking for certain edits. So, it might be something as simple as a format of a date of birth or any special characters that are present that should not be where the patient's name is, any special characters in the ID, and so on. Okay. So, that might be a clearinghouse rejection from your clearinghouse. And then on the other side of that, you might have after claim gets processed by your clearinghouse and then the payer receives the claim, then the payer might kick the claim back out and that is what we would call the payer rejection. So, the payer, instead of opening up the gates and allowing the claim to come through, they looked at your claim and said some element was not present that was required. So, I'll go a little bit deeper into what the insurance companies are looking for for most insurance carriers when they are reviewing a claim and accepting it for processing or adjudication. I'll go into that in a separate video because it's a little bit longer than explaining the differences between rejection and denial. So, that being the rejection, both either clearinghouse or payer, and then on the other side of that, after the payer opens up the gates and lets the claim through, then the payer receives the claim and says, okay, it has what it needs, basic review, it opened up the gates and let the claim in for adjudication. And then it reviewed the claim, the insurance company reviewed the claim and adjudication and said, okay, let's take all of the claim data, match it up with what the patient's benefits are and then their own internal medical policies according to the payer, the provider contract. They then put those things together and then they said, if they said there was something that did not match up, maybe the patient doesn't have benefits, maybe you build a service that's not allowed according to their medical policy, those things could then cause the denial. So, that is the product after adjudication, after claims processing, then out shoots the claim for denial versus money in the bank. Okay? So, two different things, rejection and denial, very different things. One happens before, the other one happens after processing. All right. Thanks guys. Look forward to seeing you next time.

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