ACA Blog

Anthony Centore
Feb 22, 2011

17 Reasons Why Your Insurance Claims are Being Denied

Medical billing is a frustrating process for counselors who are often juggling too many business tasks, as well as trying to provide excellent clinical care. In fact, many counseling practices collect less than 85% of the monies that they’re rightly owed from insurance companies. However, with good planning, and a smart billing staff (in house or otherwise), your practice can reasonably expect to collect between 96-99% of claims.

Look out for these pitfalls! There are many reasons that claims can go unpaid, including:

You Waited too Long to File the Claim

The vast majority of insurance companies allow 90 days from the time of service to file a claim. However, some insurance companies allow only 30 days to file (and a very few, such as Medicare, allow a year—wow). When claims are filed too long after the date of service, they are rejected.

The Insurance Company Lost the Claim, and then the Claim Expired

Sometimes insurance companies misplace claims. If a misplaced claim doesn’t make it into the insurance company’s system before the deadline, the claim will be denied. Frustrated providers might find themselves talking to someone from the insurance company who says, “even though the error might have been on our end, there’s nothing we can do. The timeframe for filing has expired.”

You Lacked Preauthorization / Authorization

Preauthorization is a must for many insurance plans. Provide services without the proper authorization, and the claim will be rejected.

The Patient Didn’t acquire a Referral from a Physician

Some insurance plans require not just authorization, but a referral from the patient’s primary care provider (PCP) before services can be rendered. Provide services before a referral is confirmed by the insurance company, and the claim will be denied.

You Provided Two Services in One Day

With behavioral health, insurance companies have a strict “one service per day” policy. This means that even if a patient is authorized for 12 sessions of therapy, if you provide two sessions in one day, you won’t be paid for the second session. Clinicians who provide group therapy, psychological testing, or medication reviews beware—sometimes these services also fall under the one service per day policy.

You Ran Out of Authorized Sessions

When authorization is granted, it is for a limited number of services / appointments. Lose track of how many appointments were approved for, or how many sessions you have provided, and you might find that you’ve provided sessions you won’t get paid for.

The Authorization Timed Out

In addition to authorizations being for a specific number of sessions, they are also for a specific duration of time. Sometimes the timeframe is as short as 30 days. Provide services after the authorization expires, and your claim will be denied.

The Patient Changed His or Her Insurance Plan

If a patient changes his or her insurance plan, you will need to (a) be a provider networked in the new plan, and (b) get new preauthorization to see the patient / client. Fail to do either of these actions prior to providing services, and your claim will be denied.

The Patient Lost His or Her Insurance Coverage

If a patient loses his or her insurance coverage, your claim will be denied. This is not always evident, as some patients don’t know that they have lost their benefits, or may fail to inform you.

The Patient was Late to pay Their COBRA

COBRA is a government program where individuals can keep their health insurance after losing their job. However, those individuals need to pay 100 percent of the policy principle (a lot of money for someone out of work!). If a patient is behind on their COBRA payments, your claim could be denied.

You Sent the Claim to the Wrong Managing Company

Insurance companies often delegate the management of some of their plans, or some services within plans (such as behavioral health) to other companies. Fail to realize this, and send a claim to anyone other that the managing company, and your claim could be denied.

The Provider isn’t Paneled with the Insurance Company

If a provider sees a patient, but isn’t a paneled provider with the patient’s insurance company, the claim will be denied. This sounds like common sense, but with insurance companies merging, and having multiple panels within a single company (e.g., HMO, PPO, etc.), this happens somewhat frequently. Also, if a provider was working for a larger clinic, he (or she) might think that he is a paneled provider, when really he was working under his old employer’s contract with the insurance company.

Services Were Rendered at the Wrong Location

When a counselor is paneled with an insurance company, they list one (or multiple) practice addresses. It is important to make sure that providers have all the places they serve patients registered with all the insurance companies they work with. Provide services at an unregistered location, and the claim could be denied.

The Client’s Out-of-network Benefits Differ from In-network Benefits

Out-of-network benefits often differ from in-network benefits. For example, with out-of-network benefits, insurance companies often place a greater amount of the payment responsibility on the patient, including the potential for additional deductibles that need to be met. Fail to identify the actual amount owed by the patient for out-of-network services, and you may never receive payment for your work.

The Service was Already Rendered

With Behavioral health, insurance often covers an intake appointment (90801) only once per 3 month (or 1 year) period.  Depending on the plan, if your client went to see a therapist prior to you, and the previous therapist billed a 90801, your claim could be denied.

The Patient has an Out-of-State Insurance Plan

If your patient has an out-of -state insurance plan, even if the company is a company that you are networked with, you might find that your reimbursement rate is less, and (depending on the patient’s specific plan) your claims can even be denied.

The Patient Has an Unmet Deductible

Even if the patient’s insurance card says that their co-pay is $10, if he or she has not met their deductible, you might receive $0 from the insurance company when you file your claim. In addition, be on high alert in January, when deductibles often reset!

While there are pitfalls to look out for when working with insurance companies, being networked with insurance companies can help you build a full caseload of paying clients. In addition, the typical client today has insurance with mental health benefits, and expects to be able to use them when seeing their counselor.

Private practice looks a lot different than it did just a few years ago. Are you ready to evolve with the changes?


Anthony Centore is a counselor, and helps other counselors build successful practices. For more information on private practice and insurance panels go to http://thriveworks.com.

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