How to handle a denied Medicaid claim

November 29, 2021
Last updated on November 29, 2021
5 min read
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Denied Medicaid claims are frustrating for everyone involved. They’re stressful for medical billers, who then have to figure out what went wrong, and they’re stressful for the patient, who is now at risk of having to pay for a potentially costly service. Denials aren’t the end all be all of the claim process though. There are a few things billers and patients can do when a Medicaid insurance claim is denied. Every situation is different and should be treated as such. First, it’s important to understand where denials come from. 

What causes a claim denial?

Denials can happen for all sorts of reasons, but there are two main reasons medical billers typically see Medicaid claim denials: the patient’s income is too high to receive Medicaid benefits, or the patient is currently in a penalty period because they violated the look back rule. Less often, a patient may be denied because Medicaid does not believe the service they’re requesting is necessary to their overall health. Medicaid denials can be broken up into three different categories: denied incorrectly because of an applicant error, denied incorrectly because of a biller error, or denied correctly. 

How to challenge a denial 

When it comes time to challenge a denial, there are a few different ways to go about the process. Each is dependent on the specific situation, so as the biller, you should discuss options with the patient before moving forward with one. The following are three approaches you might take when fighting a Medicaid denial. 

Request a reversal 

Requesting a Medicaid denial reversal can be super effective and quick, given that it's the least formal way of challenging a denial. During a reversal, the patient should simply reach out to their case worker and explain why they believe the denial was granted incorrectly. This could be because the Medicaid recipient made an error in their paperwork, which they can then correct and resubmit, or it could be that the case worker made an error in their calculations or paperwork, which could have also caused the denial. A successful reversal may take only days, meaning it’s a fast way to get the insurance problem sorted out if appropriate for the specific scenario. 

Re-applying for Medicaid 

If a patient was correctly denied on their claim due to being ineligible for Medicaid, they can re-apply for the program. A patient might be denied because the assets required to cover the service are in excess of what they are allowed. Additionally, a claim could be denied because a patient’s income is more than is allowed for Medicaid beneficiaries. If a person falls into these categories, re-application may be a good route for the patient to take. This method is most successful for patients who were correctly denied and who have made an effort to change their financial situation.  

Appealing the denial

When a claim is denied, the appeal process in the patient’s state will be specified in the denial letter. On average, a patient has 45 days to request an appeal, but could also have as few as 30 or as many as 90. Once an appeal request is received, a hearing date will be set by a local Medicaid office. This entire process could take months, so appeals should be a last resort when possible. However, if successful, an appeal is well worth the effort. 

How to prevent future denials 

Denials are frustrating, but they can also be prevented with the right processes. Billers can do a number of things to reduce the amount of denials they see. The following are some of the changes billers should make at their practice to reduce claim errors. 

Code to the highest level of specificity 

There are thousands of different medical codes, making medical billing a complex process for all involved. Coding up to the highest digit possible, usually the 4th or 5th, is a good way to ensure no code is confused for another. 

Verify coverage and eligibility ahead of time

Too often, insurance eligibility isn’t verified before a patient’s appointment, leading to denials and other issues. Fixing this issue is as simple as asking your front-end staff to verify a patient’s insurance coverage and information before the appointment begins. This is one of the biggest ways your practice can prevent insurance denials from happening. 

File claims on time 

All claims have a deadline, so it’s important to make sure you file before that date. It’s going to be difficult to appeal a claim on the basis of not meeting the deadline properly. Put simply, make sure you have a good way to track schedules and deadlines, and get your claims submitted on time. 

Stay up to date on payer requirements 

Medical billing rules and regulations are always changing, so staying current on any updates is a great way to keep your claims clean. Make sure you’re using the most up-to-date codes, training your staff regularly, and keeping in touch with Medicaid and other payers to ensure you meet their standards. 

Avoid claim denials with the right software 

When all is said and done, human error is always a potential when billing is conducted manually. Switching to automated NYS Medicaid billing software is a surefire way to speed up the billing process, reduce errors, and run an overall better operation. Don’t wait for another batch of denials to come your way. Book a free demo with BillPro today to learn more about our product. 

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About the author

Emmy Kolbe is a copywriter at NY BillPro, where she spends her days writing about Medicaid billing software solutions and NEMT industry. She creates content for both emerging and existing transportation companies. She has a bachelor’s degree in journalism and mass communication from St. Bonaventure University. 

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