How to Improve Claim Approval Rates in Dermatology Practices

How to Improve Claim Approval Rates in Dermatology Practices


In dermatology practices, getting claims approved on the first submission is not just about speeding up cash flow, it’s about protecting revenue and reducing administrative headaches. Yet, claim denials remain a frustrating reality for many clinics, with dermatology often seeing higher-than-average rejection rates due to complex coding, cosmetic exclusions, and payer-specific rules.

After working with dermatology billing for over 20 years, I’ve seen that improving claim approval rates is not about one “magic fix.” It’s about consistent, well-structured processes — from accurate coding to proactive denial prevention. Let’s break down how to do it right.

Why Dermatology Claims Get Denied More Often

Compared to other specialties, dermatology billing faces unique hurdles:

  • Coding complexity: Procedures such as Mohs surgery, excisions, and photodynamic therapy often require precise CPT/ICD-10 pairings.

  • Cosmetic vs. medical distinction: Many payers exclude cosmetic procedures unless medical necessity is clearly documented.

  • Prior authorization gaps: Certain treatments require pre-approval, and missing this step can lead to automatic denials.

  • Data mismatches: Even a small demographic or insurance ID error can cause rejections.

Industry benchmarks show that every denial costs time, resources, and sometimes even lost revenue if not followed up promptly.

Step 1: Get Coding Right the First Time

In my experience, over 40% of dermatology denials stem from coding errors. Investing in well-trained coders who understand the nuances of dermatology is non-negotiable.

  • Provide regular training on CPT updates and payer-specific coding policies.

  • Use claim-scrubbing software that flags mismatched or incomplete code combinations before submission.

  • Keep an internal “coding scenarios” library for recurring procedures.

Step 2: Strengthen Prior Authorization Processes

Many denials are avoidable with a robust prior authorization workflow. For example, excimer laser therapy or certain biologics almost always require pre-approval.

  • Create a checklist of procedures and medications that require prior authorization.

  • Assign a dedicated team or staff member to handle prior auth requests.

  • Track approvals digitally to prevent “lost” confirmations.

Step 3: Improve Documentation Quality

No amount of coding expertise can overcome weak clinical documentation. Dermatology notes must show clear medical necessity for each billed service.

  • Use EHR templates tailored for dermatology procedures.

  • Include detailed lesion descriptions, sizes, locations, and treatment rationale.

  • Link documentation directly to billed codes so that auditors can easily verify compliance.

Step 4: Analyze Denial Patterns

Don’t just correct denials — learn from them. Running a denial trend report every quarter reveals recurring issues.

Key metrics to monitor:

  • First Pass Claim Acceptance Rate (FPAR) – Aim for 95% or higher.

  • Denial reason frequency – Identify the top 3 causes and address them with targeted training.

Step 5: Speed Up Resubmissions

Time kills revenue. The longer a denied claim sits, the less likely it is to be paid.

  • Set a goal to resubmit all correctable denials within 48–72 hours.

  • Keep a quick-reference “denial reason guide” for staff to handle repeat issues efficiently.

Step 6: Leverage Technology

Artificial intelligence (AI) and robotic process automation (RPA) have revolutionized the way billing teams operate. AI tools can now predict which claims are most likely to be denied and recommend fixes before submission.

  • AI-driven claim scoring: Highlights high-risk claims for extra review.

  • Automated eligibility checks: Reduce the risk of patient coverage errors.

  • RPA for follow-ups: Automatically checks payer portals for claim status updates.

Partnering with Experts

For practices that lack the time or staff to overhaul their billing workflows, partnering with a specialized billing service can be a game-changer. Companies like Annexmed’s dermatology billing services bring in-depth industry knowledge, payer-specific expertise, and denial prevention strategies that consistently improve claim approval rates.

Final Takeaway

Improving claim approval rates is not a one-time project — it’s an ongoing commitment to accuracy, compliance, and proactive process management. Dermatology practices that combine skilled coding, solid documentation, denial tracking, and the right technology see faster payments, fewer write-offs, and better financial health.

References

  1. Becker’s ASC Review – Healthcare Claim Denial Statistics & Trends – Link

  2. MGMA – Revenue Cycle Management Benchmarks – Link

  3. CMS – Medicare Billing and Coding Guidelines – Link

 

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