4 Common Causes of Low Clean Claim Rates (and How to Fix Them)

 
With financial pressures rising across the healthcare industry, maximizing revenue through efficient claim processing has become essential. 

A key factor in this efficiency is a practice’s clean claim rate—the percentage of claims submitted to payers that are processed and paid without any errors or rejections on the first attempt. When claims are rejected, they add administrative burden, delay payments, and reduce margins, making it harder for practices to stay profitable. 

Practices should aim for the industry standard of a 95% clean claim rate, meaning 95% of submitted claims are processed without errors or rejections. However, many fall short, with most averaging between 75% and 85%. This leaves up to a quarter of claims rejected on the first submission, requiring costly rework that slows down reimbursements. 

To improve financial performance, it’s critical to understand what’s driving these lower clean claim rates. Whether it’s inaccuracies in coding, incorrect patient information, or outdated technology, identifying these issues is the first step toward boosting revenue. 

Let’s dive into four key factors that could be preventing your practice from reaching the 95% clean claim rate—and how to address them head-on. 

Calculating Clean Claim Rates 

Before we dive into the common factors preventing you from hitting your clean claim rate, it’s important to know how to calculate it so you can track and measure your own progress—and understand how urgently you need to address any issues. 

The clean claim rate is determined by the percentage of claims that are processed without errors or rejections on the first attempt. It’s calculated by dividing the number of clean claims by the total number of claims submitted during a specific period, then multiplying by 100. 

The formula is: 

Clean Claim Rate = (Number of Clean Claims / Total Number of Claims) x 100 

4 Factors Impacting Clean Claim Rates 

Clean claim rates often fall below the 95% industry standard due to several factors. Here are four common reasons practices struggle to hit the mark: 

Factor #1: Incomplete or Inaccurate Patient Data 

Data inaccuracies can significantly disrupt your revenue cycle. In fact, a recent survey found that 45% of respondents cited missing or inaccurate information as a leading cause of claim denials. 

There are three common causes for data inaccuracies: 

Staff can make mistakes when entering patient information into the system, whether due to rushing or misreading handwritten forms. When patients complete forms just before their appointment, staff often have to input data quickly, which can lead to errors. Illegible handwriting adds another layer of risk, as staff may misinterpret what’s written and enter incorrect details. 

Practices using digital intake solutions can avoid many of the issues associated with paper forms. However, it's crucial to ensure that the digital intake solution integrates seamlessly with the EHR. If the connection relies on outdated methods, like CCDAs or HL7 interfaces, staff may still need to upload PDFs or manually rekey data—reintroducing the risk of human error and slowing down the process. 

Pro Tip: You can overcome data inaccuracies from numbers 1 and 2 by using a digital intake solution that integrates bi-directionally with your EHR. This type of integration allows demographic, clinical, consent, financial, and informational forms to sync directly with the EHR in real-time. Not only does this eliminate the need for staff to decipher patients' handwriting, but it also enables automatic data mapping, significantly reducing the risk of human error. 

Sometimes, patients unknowingly provide incorrect information on forms, either because they misunderstand the questions or don't have the necessary details on hand. For example, a patient might enter the wrong birthdate or insurance policy number. While staff review form entries before inputting them into the EHR, certain errors can be difficult to catch right away, leading to issues later in the claims process. 

Pro Tip: Optical Character Recognition (OCR) technology can reduce critical patient errors by automating data extraction. It converts images of text—such as ID cards, driver’s licenses, or insurance information—into a machine-readable format. Patients can use their mobile device to upload clear photos of their documents, and the details are automatically extracted from the image. 

OCR technology lightens the paperwork load for both patients and staff. Patients save time by not having to manually enter information, while staff no longer need to decipher illegible handwriting or worry about entering inaccurate data into the EHR. 

Factor #2: Failure to Meet Payer Submission Requirements 

Each insurance payer has its own set of claim submission requirements, and failing to meet these can lead directly to claim denials. To avoid unnecessary delays or rejections, it’s essential to ensure compliance with these requirements before submitting claims. 

Common payer requirements include: 

Prior Authorization 

Some procedures and medications require prior approval from the insurance provider. Without this authorization, even necessary treatments may be denied coverage. Practices should proactively fill out prior authorization paperwork to avoid denials that not only delay reimbursement but can also leave the patient responsible for the full cost of care. Implementing automated workflows for prior authorization requests can streamline this process and reduce the risk of oversight. 

Submission Deadlines 

Each payer enforces strict deadlines for claim submissions, ranging anywhere from 15 days to a year after the date of service. Missing these deadlines results in automatic claim denials, which means lost revenue. It’s critical to track these deadlines carefully, ideally using technology that alerts staff when claims are approaching their cutoff dates. Establishing a routine review process for pending claims ensures nothing falls through the cracks. 

Billing Practices 

Billing codes and requirements vary by payer and type of service. The complexity of juggling multiple payers and billing types often leads to errors, which can cause claim denials. Regular audits of claim submissions and the use of integrated software that checks claims for accuracy and compliance before submission can help avoid costly errors. 

Coordination of Benefits (COB) 

When a patient has multiple insurance policies, it's essential to follow coordination of benefits rules to ensure the correct payer is billed first. Failure to comply with COB rules can result in claim rejections or delays. Practices should verify a patient’s primary and secondary coverage before submitting claims to avoid these issues. 

Factor #3: Failure to Verify Eligibility 

One of the top reasons claims are denied—and clean claim rates fall—is due to insurance eligibility not being confirmed before a patient’s visit. In fact, 24% of claims are denied due to eligibility issues. Practices that skip or delay eligibility checks until the day of or after the visit risk submitting claims that are rejected due to inactive policies or coverage limitations. This is especially true for complex plans like Medicare and Medicare Advantage, where patients may not know their exact plan type. Filing with the wrong payer or missing plan-specific rules, like frequency limits on covered appointments, can lead to costly denials. 

To avoid these issues, eligibility should be verified multiple times before the appointment, such as when the appointment is made, two weeks prior, and on the day of the visit. Frequent checks ensure patients have active coverage and reduce the risk of seeing patients without proper insurance. 

Integrating automated eligibility verification into the intake workflow reduces errors, improves efficiency, and supports a higher clean claim rate by keeping the revenue cycle running smoothly. 

Factor #4: Lack of Staff Training 

Insurance verification trainings align staff on managing the eligibility process from data collection to claim submission. Specifically, healthcare staff need training to remain current on billing requirements, understand the different insurance providers and plans, and learn how to properly submit claim documentation. 

Understanding Providers and Plans 

A common challenge in insurance verification is that patients don’t always know the specifics of their insurance plans, and healthcare staff may lack the confidence to differentiate between similar plans, like Medicare and Medicare Advantage. Without clear pre-verification, this can lead to claims sent to the wrong insurer, resulting in denials. For example, if a patient on Medicare Advantage mistakenly believes they have traditional Medicare, staff might submit a claim to the wrong payer, only for it to be rejected. 

Learning Payer Requirement and Billing Procedures 

Navigating payer requirements is crucial to maintaining a high clean claim rate. Unfamiliarity with the latest billing procedures or outdated medical codes can lead to claim denials. With codes and billing guidelines constantly evolving, it’s essential to stay current. Submitting claims that don’t meet payer specifications is a quick route to denials and delays in reimbursement. 

Patient Engagement Technology & Clean Claim Rates 

Clean claim rates indicate how well your practice manages claim submission. Rates of 95% or above show that your team has a strong handle on claims. On the other hand, rates below the industry standard suggest that improvement is needed. If your clean claim rates are low, you can start to improve them by creating a plan to overcome the four factors we’ve discussed in this blog.  

Insurance verification is traditionally a manual process. It involves collecting the patient’s insurance information via intake forms, contacting the insurance company either by phone or email, asking a list of insurance-related questions, and verifying the patient’s eligibility for each service.  

Thankfully, patient engagement technology can automate certain steps in the claim submission process to save staff time, increase accuracy, and ultimately ensure a higher clean claim rate. 

Learn more about how InteliChart can be used to increase claims accuracy and get paid faster!