Efficient Appeals Improve Income

December 15 2002
Practice Management
John W. McDaniel

The federal Centers for Medicare & Medicaid Services recently announced that it would reduce the time physicians have to file an appeal from six months to 120 days. At the same time, many insurance companies are often denying claims or refusing to pay them.

Physicians are increasingly frustrated by such practices on the part of insurance companies because resubmitting claims requires staff time and further delays payment. But there are strategies physicians can use to speed up the process of getting paid promptly and in full for each claim.

Submitting Clean Claims
This year, a review of Medicare denial rates by specialty shows that an alarming percentage of claims have been returned to physicians unpaid. But the review also shows that physicians can prevent most claim denials by submitting clean claims, since most denials are caused by administrative errors related to eligibility and authorization issues. The second most common reason for a claim to be denied is incomplete physician documentation and coding, according to CMS.

Successful claims recovery strategies involve persistence in appealing denials and an increasing awareness about the reasons for denials. Physician practices also need to be diligent about establishing internal procedures that can help to focus on this important area of revenue cycle management.

Common strategies include developing a spreadsheet to track the status of denials and to provide feedback to physicians and other staff involved so that once a reason for a denial is identified, those involved can correct the problem so that it does not happen again.

The staff may also want to keep track of any trends in denials by CPT codes and revenue center. Identifying these trends can be a good way to prevent such denials in the future.

Before sending claims to any payer, the staff should make a duplicate copy of all paperwork and implement a package-tracking system (such as overnight delivery or certified mail) to ensure that the paperwork arrives on time and that the staff has a record of receipt. When sending claims to payers, staff should be sure to attach any reference paperwork that the payer may find useful, such as intermediary and carrier guidelines, standards of care, or a copy of the patient chart, if needed.

Process Improvement
When a physician group has received a specific explanation for a denial from a payer, it should develop an improvement process and employee education program so that it can prevent such denials from happening.

Physicians also should track results of claims recovery by keeping a denial rate report and by recording the turnaround time from claim filing to payment.

An expert on billing and collections, Elizabeth Woodcock, FACMPE, offers several suggestions for physician practices seeking to improve their billing and claims processing procedures. For example, physicians should develop a system to follow up on appeals to avoid any wasted time in the appeal process, she says. Using the calendar function in most software programs (such as Microsoft Outlook) would be an easy way to establish such a system, she points out. Also, the group should develop standard appeals letters that can be easily customized with information about the particular patient and situation involved in every denial.

Physicians also should compare the money collected in appeal against the amount appealed for. If the group is doing better with some payers than it is with others, staff should try to determine why, she adds.

Staff should not appeal very low dollar claims by setting a minimum such as $10 for first appeals, and $20 for second appeals, Woodcock says.

Physicians should use the appeal process when a payer has denied a payment and when a payer has made an underpayment, Woodcock advises. If an insurer routinely downcodes claims, they should appeal for the code that was submitted originally and include supporting documentation, she adds.

Getting a Return
Physician practices should group chronic denials together for a collective appeal, Woodcock says. For example, if an insurer consistently refuses payment for a certain code, staff should not keep sending appeal letters. Instead, the physicians should request a meeting with the insurer to discuss the situation and bring along supporting documentation.

Before signing any contract with a payer, physicians should make sure that the appeals process is explained clearly, Woodcock says. They should determine, for example, what happens if an initial appeal is denied. What additional steps can the physician group take after a denial? Is mediation allowed or would there be a grievance hearing? If a claim is denied for medical necessity, can the group request a physician peer review?

Although appeal strategies may not always work, most practices find that at least 50% of their appeals get paid. This kind of return is well worth the time and effort involved in pursuing appeals, particularly if the practice’s appeal processes are efficient.

When payers shorten the time physicians have to file appeals, it creates a significant demand on the staff of most practices, particularly for the collection of claims that might take longer than four months to appeal. Typically, such claims involve getting documentation from another physician or practice that was involved in a consultation or pre-operative exam, or assisted in a surgery, for example. The billing physician may need documentation from a physician who has already been paid and may therefore not feel an urgency to respond to the request for supporting documentation. In these cases, practices may lose money on these claims if they cannot persuade other physicians to forward documentation in a timely manner.

Steps to Success
Deanna Holmes, MPA, a consultant in Mesa, Ariz., has developed the following four-step process for physicians to review pending claims.
First, physicians or staff should check aging reports around the 15th of each month to avoid the month-end crunch. Any Medicare claims outstanding after 31 days should be examined closely.

Second, staff should print any problem transactions and look for medical necessity errors. Also, the staff should review the explanations of benefits (EOB) as they arrive, a step that can help identify problem claims immediately and shorten the time before an appeal goes out. They should look at each line of the EOB to determine if diagnosis codes match the service. Also, they should determine if the patient’s address and Zip code are missing, since these details may trigger a claim denial.

Third, the telephone appeal should be planned. Staff should take advantage of the first level of appeal by calling the insurer’s appeal line. They should have the original EOB denial in hand and know the correct diagnosis for the procedure. Also, they should have the patient’s identification number (for CMS, they should use the HIC number), the physician’s pin number, the date of service, and the patient’s name. Staff should also know the patient’s date of birth.
This information is not required but insurers often request it during a telephone appeal.

Fourth, staff should make the call. Armed with these documents, staff should read from the EOB, not from the corresponding documents in the physician’s billing system. The EOB is the record the insurer’s representative will have. Staff should know the limit on the number of appeals that can be requested during a phone call but should not mention this number in the conversation.

While these methods offer no guarantee of success, the investment of time in a claim denial management process may yield a return that makes the effort worthwhile.--Reported and written by John W. McDaniel

Reasons for Claims Denials
The top 10 reasons CMS and other insurers deny medical claims are as follows:
1. Beneficiary not covered
2. Medical necessity
3. Service provided not covered
4. Duplicate billing
5. Unbundled code
6. Modifier not provided
7. Diagnosis procedure code does not match service provided
8. Procedure code inconsistent with modifier used
9. Procedure code inconsistent with place of service
10. Diagnosis is inconsistent with age, sex, or procedure.

Source: Centers for Medicare & Medicaid Services, Baltimore, 2002.