Even with the sort of state-of-the-art RCM system described in the last post, practices still need to have people working on their behalf who have deep experience in working with payors to ensure appropriate payment is made 100% of the time. Payors update their systems, they change the rules without notification, they make mistakes - in short claims that should not be denied or underpaid or downcoaded, often are. Systems can flag these instances but they often require knowledgeable, experienced people to resolve these sorts of problems. Most practices struggle to attract and afford these sorts of resources.
Time and time again, practice and billing managers say they struggle with denials. In her recent webinar about managing denials, Elizabeth Woodcock of the Medical Group Management Association (MGMA), said it can cost as much as $15 per denial to follow up. This explains why only 35% of practices appeal denied claims. The other 65% just give up if a claim isn't paid the first time around.
Working denied claims is a complex process that requires considerable knowledge. Medical groups need experienced staff to work denied claims using established denial management strategies. Due to payer denial deadlines, this work needs to be effective, efficient and timely or a practice will waste time and resources appealing denials that have already passed the appeal deadline with no prospect for potential financial return.
Different payers have unique appeal processes. Successful resolution of a denial requires knowledge of these idiosyncratic processes. For example, many payors have several levels of appeal and reviews by an appeals committee or board. Understanding these steps and the information and channels required for each level is not trivial. Some may only accept appeals via letter while others accept appeals via their website. Having this sort of in depth process knowledge is critical to effective denial management.
At a minimum, staff working denials for your practice need to understand how to:
- Ensure that proper contractual adjustments are made to each line item.
- Verify that CPT and ICD-9 codes selected are for covered services.
- Check modifiers with a focus on measuring global periods, unrelated procedures on the same date of service, and separately identifiable evaluation/management services.
- Review insurance authorization and physician referral requirements to determine if an authorization is (or needs to be) in place.
- Determine when the bill should be moved to a secondary insurance or the patient.
An important part of the claim appeal process is gathering data. The insurance company or payer that denied your claim should have already disclosed to you the nature of the decision to deny the claim. That communication should clearly state the reason for the denial or partial payment including the following:
- Reason(s) for the denial
- References to the plan provision on which the denial is based
- A description of the information/documentation required to appeal the claim
- Procedures for appealing a decision
You may also request additional documentation, including copies of the patient’s benefit manual or any specific plan rules, rate tables, fee schedules and criteria used to ensure that the plan rules were consistently applied to your claim. But payors will not often make this an easy or transparent process. Understanding how to get the data needed to understand the nature of the denial and how to effectively appeal is three quarters of the battle.
These issues represent just a few of the complexities of managing an effective denial handling process. An effective denial resolution process can be expected to successfully resolve denials 75-80% of the time but the expertise and experience that is the difference between success and failure in this process is non-trivial. For a practice to have these sort of professionals and maintain their training would require a significant investment. Having adequate capacity and redundancy with this type of staff would be beyond the reach of most practices. Partnering with a company with the right degree of specialization, expertise and scale is something most practices should consider.