How to Handle Denied Claims Due to Coding Errors

 Denied claims are a common challenge in the healthcare revenue cycle, and one of the leading causes of denial is coding errors. From incorrect CPT or ICD-10 codes to mismatched diagnosis and procedure combinations, even a minor mistake can result in a rejected or unpaid claim. Fortunately, there are steps coders and billing teams can take to handle these denials effectively and prevent them in the future.

In this blog, we’ll explore why claims are denied due to coding errors and outline a step-by-step guide on how to resolve them efficiently.

Common Coding Errors That Lead to Denials

Before diving into how to handle denials, it's helpful to understand the most frequent coding mistakes:

Incorrect CPT or ICD-10-CM codes

Mismatched diagnosis and procedure codes (i.e., failing medical necessity)

Omitted modifiers or using the wrong modifier

Upcoding or undercoding

Duplicate billing

Failure to use current coding guidelines

These errors often stem from lack of documentation, misunderstanding of payer rules, or simply human oversight.

Step-by-Step Guide to Handling Denied Claims

1. Identify the Denial Reason

Review the Explanation of Benefits (EOB) or Remittance Advice (RA) from the payer. It usually includes a denial code and reason, such as “denied due to invalid procedure code” or “diagnosis does not support the procedure.”

2. Analyze the Coding Issue

Compare the claim with the clinical documentation. Was the procedure coded correctly? Does the diagnosis code support medical necessity? Were any modifiers missing? Use tools like coding software or payer policies to verify.

3. Correct the Coding Error

Once the issue is pinpointed, make the necessary corrections:

Update the CPT, ICD-10, or HCPCS code

Add or revise modifiers

Ensure diagnosis and procedures are accurately linked

Make sure the documentation supports any changes made.

4. Submit a Corrected Claim or Appeal

Depending on the payer:

Submit a corrected claim electronically or on paper if allowed.

If correction isn’t allowed, file an appeal with supporting documentation, including:

A letter explaining the correction

Updated claim forms

Relevant clinical records or reports

Payer guidelines if applicable

5. Track and Monitor the Reprocessing

Once resubmitted, monitor the claim status regularly. Use practice management software or claim tracking systems to ensure timely payment and follow up if there’s no response within the payer’s standard timeframe.

Preventing Future Coding Denials

Conduct regular coding audits to identify recurring errors.

Use coding and billing software with real-time validation and payer-specific rules.

Provide ongoing training for coders on CPT/ICD-10 updates and payer policies.

Encourage detailed provider documentation, which supports accurate coding.

Build a denial management workflow that ensures quick action on rejected claims.

Final Thoughts

Denied claims due to coding errors can significantly impact revenue, delay payments, and increase administrative burden. However, by implementing a structured denial management process, identifying the root cause, and resubmitting clean claims quickly, healthcare providers can recover lost revenue and improve billing accuracy over time. Coding may be complex, but with the right systems in place, denials don't have to be a persistent problem.

Learn : Medical Coding Training Course

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