Dealing With Claim Denials
| The provider has rendered the services to the patient and the completed claim form has been submitted to the third-party payer. You await the processing of the claim and anticipate payment in a timely manner. The explanation of benefits arrives and states the claim has been DENIED. What do you do now? The Department of Labor estimates that about one claim in seven made under the employer health plans that it oversees is denied initially - about 200 million claims out of the 1.4 billion submitted yearly. According to the Kaiser Daily Health Report, on average, national health insurers paid physicians in 33 days and denied 9.2 percent of claims. The report states that the payers are overruled in approximately half of such cases. The number of denials overturned varies by state, from a high of 72 percent to a low of 21 percent. "Denial management" is the phrase used to describe the process of following up on claims that have been denied for reimbursement from the health insurance company. Denial management can consist of manual review of explanation of benefits (EOBs), utilizing medical billing software or employing a Web-based system that reviews claims. These systems help to reveal denied claims and identify the cause for denial. They can be very effective in tracking individual payer denials, determining common patterns, generating productivity and analysis reports, as well as routing claims to specific staff for research, correction and re-filing. A medical claim can be denied for various reasons. The most common reasons are:
How do you work smarter, not harder when it comes to managing your denied claims? 1. Track information monthly, quarterly and annually. Prepare a spreadsheet documenting the following data:
Use this information to confirm or rule out that staff and/or providers need additional training. Determine if there is a need to meet with individual payers, especially if the provider is not being paid correctly, according to the contracted rate. Assess whether you need to modify your claims filing process. Example of a "Denial Analysis" report:
2. Appoint well-trained employees in the distinctive position of denial management. Not all billers and coders have been trained to analyze and abstract data correctly from the EOB. If EOBs are interpreted incorrectly, there is the potential for loss of revenue through incorrect contractual write-offs on the patient's account, oversight of an opportunity to appeal a denied charge or improperly balance billing the patient. 3. When the reason for the denied claim has been determined, timely action is required. Many payers have time limits on filing appeals. Sometimes the corrective action could simply be to call the payer. Be sure that the staff member calling is knowledgeable of the details of the reason for the denial, the medical necessity for the service(s) provided, and the original codes filed on the claim. This can help lead to a quicker denial resolution. 4. If a phone call to the payer is unsuccessful, a written appeal letter may be necessary. The appeal letter should be professionally written, with clear communication on why the charges should be reconsidered for payment. Send this by certified or registered mail to ensure it is received by the payer. Be sure to attach any necessary documentation to support your appeal. Progress notes, operative reports, laboratory and/or test results are very helpful in substantiating your case. 5. If after exhausting your appeal options, you do not attain a satisfactory outcome, contact your state insurance commissioner. Formal complaints against health insurance companies (with the exception of self-funded plans) can be filed with your state insurance commissioner. For additional information, visit the National Association of Insurance Commissioners at www.naic.org. 6. If you need to submit a corrected claim because of incorrect demographic information, invalid identification numbers, place of service or ICD-9-CM, CPT or HCPCS codes, be sure to make the correction(s) and note on the claim "Corrected Claim," or send a letter with the claim stating what you corrected. Avoid resubmitting the claim without this information: It may get denied again as a "duplicate claim." 7. Read and understand your managed care contracts. Be aware of each payer's appeal process. Many contracts require the provider to request a review of denied claims in writing. Specifically examine the contract language that relates to the timeframe for seeking reconsideration by the payer, the documentation required and the address and title of the person to whom to direct the appeal. Getting the right information to the right person often is the key to a successful appeal and obtaining payment quickly. 8. Implement automated systems for obtaining, tracking and monitoring data. Automation is more efficient and saves time. Use scanning devices for obtaining copies of insurance cards. This will help decrease data entry errors. Be sure to train staff properly on how to use the equipment and software programs. Remember: Garbage in = Garbage out. 9. Monitor results and report positive financial impact to the staff and providers. This will help to motivate everyone to continue to work on preventing future denials. 10. Clearly, the way to work smarter and get paid promptly is to submit a clean claim the first time. A clean claim is defined as "a claim free of any errors." Double check claims, either manually or via your computer software, for any simple errors. Check for codes that are billed, but not supported by documentation, incorrect dates of service, missing provider or patient data, etc. Most electronic claims processing software and/or clearinghouses have the capability to perform these proofreading functions. This will allow corrections to be made before the claim is submitted to the third party payer. A recent study conducted by the Commonwealth Fund foundation and Robert Wood Johnson Foundation's heath care research organization revealed administrative costs stemming from interactions between providers and insurers are estimated to total $31 billion a year. With this alarming data it makes sense for providers to focus their attention on this very important aspect of their practice. Denial management is a weak area for many health care facilities. In this day of uncertainty of our healthcare system and reimbursement, it is imperative that we continue to be diligent in strengthening our efforts to collect the maximum reimbursement due for services rendered. |
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