4 Common Claim Rejection Mistakes

Medical billing is a headache. After all, you clicked on this video because of those pesky rejection codes, right? So what is a rejection code? A claim rejection is not a denied claim. That’s one of the biggest misconceptions about clearinghouse rejections. It's just not true.

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A claim rejection happens because you submitted the claim to a payer or your clearinghouse. From the payer's perspective, a rejected claim is something that wasn’t processed or was never entered into the system. For reference, denials are fully processed but inaccurate claims. From a clearinghouse perspective, a claim bounces back to you because of a preliminary step in the medical billing process. On both levels, rejections are the result of having incorrect or invalid information provided in a claim in comparison to the payer’s files. Here is the good news: since the claim wasn’t denied, the payer can still pay the rejected claim once it's fixed!

Claim rejections often happen because the billing provider’s name is missing or invalid in the paperwork. This error probably happened because someone submitted the claim with the wrong billing National Provider ID (NPI). The NPI of the billing provider communicates which billing entity is responsible for billing the patient for healthcare services.

Many insurance companies have the billing provider’s NPI because the provider shared it at some point in the files. When the payer receives a claim, they look up the NPI in their database to see if it matches anything in their files. If the payer doesn’t have the NPI on file, they’ll reject the claim. The insurance company will also have the tax ID number. The tax ID is another way to identify the billing provider, so if it’s incorrect on the claim, this type of rejection code would also apply. In summary, submitting a claim with the wrong NPI and/or tax ID leads to a clearinghouse rejection code.

Rendering Provider Name/Primary Identifier is Missing or Invalid. This claim rejection is due to the insurance provider failing to properly ID the patient. To go forward with the claim, there needs to be an assigned “insurance provider number” (PIN) or some other form of identification including… State License number… UPIN… Passport number… or Social Security Number. In other words, some form of legal identification of the patient needs to appear on the claim.

There are a few additional reasons why you might come across this type of rejection. Perhaps there was an update to the insurance company’s software that misplaced the patient’s information. It could be that the patient is no longer covered by that particular insurance plan. Or, you could have sent the claim to the wrong insurance company. That would explain why they can’t find the patient in their recordsT When you get the rejection letter, make sure you call the phone number on the copy of the insurance card you received from the patient.

Several different rejection codes surround the issue with zip codes and postal codes. This primarily happens when the zip code is invalid for the city or state entered alongside the address for the policyholder. If the zip code doesn’t occur in the state specified in the claim, you would get this kind of rejection claim. This could happen because there was a simple typo in the zip code. For example, someone may have… Double-clicked on the “7” without realizing it… Typed a “5” instead of a “2” on the keypad… or Forgot to type the last digit in the five-digit zip code. Either way, there was some sort of error made at some point.

This type of rejection applies to the insurance subscriber’s address and the responsible party’s address. No matter the reason why the zip code is invalid, you need to correct the error. The simplest way to do this is to visit the United States Postal Service’s (USPS) website to search for the correct zip code associated with the address on file.

Diagnosis Code or Supplemental Code Missing/Invalid/Duplicate. This rejection happens because of a missing, invalid, or duplicate diagnosis code. The “diagnosis code” is also known as an ICD-10 code or CPT code. If the four to seven-digit code doesn’t match the text explaining the diagnosis, then the clearinghouse will flag the claim with a diagnosis code error. The same goes for any supplemental codes used to better explain the primary diagnosis.

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