Few ASCs or office surgery centers have systems in place to appeal denied or partially paid claims. Most hospitals have such mechanisms but rarely pursue all the appeal avenues available by law or individual contracts, including arbitration, administrative hearings and litigation.

Surgical facilities write off tens or even hundreds of thousands in collectable revenue annually. Of $1.5 trillion in healthcare-claims transactions in 2002, $422 billion were denied, paid incorrectly or not paid promptly, according to industry estimates. But it doesn't have to be that way. Here's how you can minimize denials.

Steps you can take
1. Analyze payer contracts. Many contracts contain standardized language that seems harmless but increases denial risk. For example, do you have a meet-and-confer clause that allows discussion on disputed claims? How is medical necessity and appropriate care level determined? For example, if you perform disc-decompression surgeries, don't let your contract leave you prone to hold ups or denials stemming from disputed pre-op tests (such as discography interpretation by the insurer's medical reviewers) or level of care (if conservative treatments such as bed rest and analgesics fail, could you be denied because a reimbursed non-surgical treatment such as physical therapy may be more appropriate?). Have your legal counsel identify potential pitfalls and suggest language to optimize reimbursement.

2. Trend your denials. Track denials by insurer, denial rationale and monetary amount. You might spot vulnerabilities in your billing system and red flags with payers.

3. Articulate persuasive medical arguments. Airtight diagnoses and operative reports help defend the CPT code(s) used and the medical evidence backing the legitimacy of the claim that help overturn a denial. The resources you invest to educate your coding and medical personnel are small relative to writing off needless denials and glacial turn-arounds.

4. Be persistent. Perseverance is key to overturning denied claims. In my experience, about one-fourth of appeals are overturned on first appeal; another one-fourth on the second. The more vigilantly your denial management team pursues the payer - via daily phone calls and documented correspondence - the more likely the insurer will take corrective action. Go up the chain of command and insist on speaking to the representative's supervisor if you're told nothing further can be done to resolve the dispute.

5. Arbitrate or litigate. If a final written appeal has been rejected, many facilities feel they must accept the unfavorable decision. However, depending on contract provisions, many such denials can be overturned through binding arbitration and/or litigation in state and federal courts. For example, a national hospital system's Pennsylvania hospitals had exhausted all appeals for 24 disputed denials (for lack of medical necessity, untimely filing and disputes over payment at incorrect contractual rates) with one insurer. The hospitals filed collectively for arbitration; the insurer paid five claims in full before arbitration. After arbitration, the hospitals were awarded reimbursement for 16 more claims (with interest penalties added on three).

Taking action
Insurance companies deny thousands of claims a year with what appears to be substantial evidence to support non-payment. They know most denials are accepted because many providers don't have the manpower or experience to investigate denials and pursue appeals. But you can significantly improve your reimbursement with a modest investment of time and effort.