Why Do Insurance Companies Take So Long to Pay Claims?

For behavioral health professionals, waiting for insurance reimbursements can feel like an eternity. Delays in payment can disrupt cash flow, create administrative headaches, and even discourage providers from accepting insurance. Understanding the claim submission and payment process can help shed light on why delays occur and how to address them.

The following steps outline the insurance process, from submitting a claim to receiving payment. It also includes areas that may cause delays. Many reasons exist why insurance companies may take longer to process claims. Understanding each phase of the process is important.

1. Claim Submission

• Timeline: 1-2 business days
• What Happens: Behavioral health professionals or their billing team send claims electronically. They use an EHR system or send them directly to a clearinghouse. You must code claims correctly with CPT codes and ICD-10 diagnostic codes. This includes important client and clinician information.
• Potential Delays:
  • Missing or incorrect client information (e.g., date of birth, insurance ID).
  • Errors in coding, such as mismatched CPT or ICD codes.
  • Delays in batching claims occur when submissions lack automation.

Pro Tip: Use integrated EHR, clearinghouse, and billing software to automate your claim submissions. This will reduce errors and speed up the process.

2. Clearinghouse Processing

• Timeline: 2-3 business days
• What Happens: The clearinghouse reviews the submitted claims for basic errors before forwarding them to the payer. It acts as a gatekeeper, ensuring that claims have the proper format and contain the required information.
• Potential Delays:
  • Claims flagged for missing data or formatting errors are sent back to the provider for corrections.
  • Clearinghouses with high volumes of claims may experience temporary backlogs.

Pro Tip: Choose a reliable clearinghouse and monitor claim rejection reports daily. Address errors quickly to avoid bottlenecks.

3. Insurance Company Review

• Timeline: 7-30 business days
• What Happens: Once claims reach the insurance company, they undergo several layers of review:
• Initial Review: Verifies client eligibility and coverage for the services provided.
• Medical Necessity Review: Ensures the treatment aligns with the client’s diagnosis and insurance policy.
• Pricing and Contractual Adjustments: The payer calculates reimbursement amounts based on contracted rates.
• Potential Delays:
  • High claim volumes can slow down processing.
  • Requests for additional documentation, such as progress notes, to substantiate the claim.
  • Manual reviews for flagged claims, especially those with unusual or new services.

Pro Tip: Double-check client eligibility and authorization before appointments. Submit complete and clear documentation upfront.

4. Payment Authorization

• Timeline: 5-10 business days
• What Happens: Once the claim passes all reviews, it is approved for payment. The insurance company sends an explanation of benefits (EOB) to the provider and the client. This document shows the approved amounts and what the client must pay.
• Potential Delays:
  • Issues with provider credentials or NPI mismatches.
  • Delays in EOB generation or errors in the payment system.

Pro Tip: Regularly update your provider credentials and verify payer contracts to prevent denials or payment holds.

5. Payment Issuance

• Timeline: 3-10 business days
• What Happens: After approval, funds are disbursed via electronic funds transfer (EFT) or check. EFTs are generally faster, while checks may take additional mailing time.
• Potential Delays:
  • Incorrect banking details for EFT payments.
  • There can be delays in postal service for mailed checks.

Pro Tip: Opt for EFT whenever possible to receive payments faster and avoid mailing delays.

Common Reasons for Delays

• Claim Rejections: Caused by errors in client information, coding, or coverage.
• Payer Backlogs: Seasonal spikes or staffing shortages can slow processing times.
• Documentation Requests: Missing or unclear clinical notes can trigger reviews.
• Credentialing Issues: Outdated credentials or incomplete provider enrollment can result in claim holds.

Ways to Accelerate the Process

• Submit Claims Daily: Avoid batching claims weekly or biweekly.
• Verify Eligibility in Advance: Confirm client insurance details and prior authorizations before appointments.
• Utilize Technology: Invest in an EHR with integrated billing to automate claims and track them in real time.
• Follow Up: Monitor claim status regularly and address rejections immediately.
• Build Relationships: Establish strong communication with payers and clearinghouses for quicker resolution of issues.

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The claim reimbursement process involves multiple steps, each with potential for delays. Behavioral health professionals may not be able to control everything in this process. However, being proactive can greatly lower waiting times. By automating workflows, keeping submissions clean, and following up regularly, you can reduce delays and keep cash flow steady.

For more tips on handling insurance claims well, visit trusted sources like the American Medical Association. You can also ask your EHR provider for best practices. If your team is looking for a behavioral health EHR to automate your billing, reach out to our team at CheckpointEHR today!