Part 5: Denials and Appeals – Fixing the Cycle

Part 5: Denials and Appeals – Fixing the Cycle

Denials are an everyday reality in durable medical equipment (DME) billing. Industry data consistently shows that DME has one of the highest denial rates in healthcare billing, often caused by issues that could have been prevented. Understanding why denials happen, how to appeal them effectively, and—most importantly—how to prevent them is critical for providers and suppliers.

Why DME Claims Get Denied

The most common reasons for denials include:

1. Missing or Incomplete Prior Authorization – A top reason for DME denials, especially for braces and high-cost items.
2. Insufficient Documentation – Clinical notes that don’t meet payer requirements for medical necessity.
3. Coding Errors – Incorrect HCPCS codes, missing modifiers, or mismatches with documentation.
4. Same or Similar Issues – Medicare and some commercial payers deny if a patient received a comparable item within the coverage period.
5. Eligibility Errors – Incorrect or outdated insurance information at the time of dispensing.

• Source: WonderWS – Common DME Claim Denials

The Cost of Denials

• Cash Flow Delays – A denied claim can delay payment for weeks or months.
• Administrative Burden – Staff must rework, appeal, and resubmit claims.
• Revenue Loss – Many denied claims never get refiled, resulting in permanent write-offs.
• Audit Risk – Frequent denials may trigger closer payer scrutiny.

According to a Change Healthcare study, nearly 9% of claims across healthcare are initially denied, and DME often exceeds this rate.

• Source: Change Healthcare – 2022 Denials Index

How to Appeal a Denial Effectively

1. Understand the Reason – Review the Explanation of Benefits (EOB) or remittance advice for denial codes.
2. Gather Strong Documentation – Include all relevant clinical notes, orders, and supporting materials.
3. Submit Within Timelines – Each payer has strict deadlines for appeals. Missing them forfeits payment.
4. Write Clear Appeal Letters – Focus on medical necessity, compliance with payer policies, and attach supporting evidence.
5. Escalate When Necessary – If the first-level appeal fails, move to higher levels when supported by documentation.

• Source: American Medical Billing Association – Denials and Appeals Guide

Best Practices to Prevent Denials

• Front-End Eligibility Checks – Verify insurance and coverage before dispensing.
• Prior Authorization Tracking – Use tools to monitor approvals and renewals.
• Documentation Templates – Ensure providers capture all payer-required details.
• Coding Audits – Regularly review claims for accuracy before submission.
• Same or Similar Verification – Check payer portals (like Medicare’s DDE or Noridian portals) to avoid duplicate coverage denials.
• Source: KnackRCM – DME Billing Challenges

Why This Matters

Denials are not just an inconvenience—they are a direct threat to revenue and compliance. Providers who implement strong preventive workflows and maintain effective appeal processes are better positioned to protect reimbursement and reduce administrative waste.

👉 Next in the series: Part 6 – The Administrative Burden: Why DME Billing Overwhelms Staff