You negotiate great contracts. You submit claims that are clean and complete. And yet none of that much matters if your reimbursements are less than what they ought to be. You have two choices when you don't receive full and correct payment from third-party payers: accept or appeal. Here's how to file an appeal and get what's owed you.

What's due you
Remember this: Managed care companies expect you to accept payment and not recognize that you've been shortchanged. Some carriers estimate that only 10 percent of all incorrectly paid claims are appealed.

You can expect your payers to reimburse even the cleanest of claims incorrectly about half of the time. That's just how it is. We can argue whether it's an honest mistake or malicious conduct. But this isn't an indictment, only an observation and a call for facility managers everywhere to fight for what you deserve.

Most surgery centers either don't have the expertise to recognize the incorrect reimbursement or are unwilling to invest the employee hours required to collect all the money they're due. Capturing all of the dollars available to you is a labor-intensive process. We're going to cut it down to four manageable areas you and your business staff can tackle:

• posting payments according to contracted rates or fee schedules, and to correctly identify when to appeal;
• initiating the appeal process;
• tracking your appeals; and
• re-negotiating your managed care contracts using this information.

Posting Payments
As always, it's critical that your business office sends out a clean claim. This includes correct procedure codes, correct diagnosis codes, appropriate HMO or other authorization number, copies of the operative record and invoices for implants. Obviously, send the claim to the correct mailing address or, if you send it electronically, document verification of acceptance.

Assign only one or two employees to post payments. Consider them payment analysts, as their job goes far beyond simply posting the payments as they're received. If you spread this job among too many employees, the result will be errors due to lack of training or experience. And obviously, most of these errors will hurt your bottom line.

Develop a tool (what I call a "reimbursement matrix") for your payment analysts. See the example below. Identify the 20 to 30 most common procedures performed at your center. For each of your contracted payers, calculate the anticipated payment for these procedures. Remember that if your payment is linked to Medicare, you may need to adjust this matrix annually. If applicable in your state, add anticipated payments according to your workers' compensation fee schedule. Also include any contracts associated with workers' comp reimbursement. Include some way to jog your payment analysts into thinking about carve outs (see "Negotiating Carve Outs for Orthopedic Implants" on page 34) or exclusions for procedures where they may be important.

The next tab of the matrix should show contact information for a representative of each of the payers included in the above matrix. This contact person should be the one who will assist you with claim problems and appeals. Listing a specific name instead of simply a phone number is of obvious benefit in terms of consistency and building a relationship between your business office and that person.

A third tab should show each plan's billing timelines, appeal timelines, and contacts with addresses for first and second level appeals.

A fourth tab could be a comprehensive list of carriers who access particular contracts.

Your payment analyst can refer to this table for most of the payments you receive. When the payment falls short of the expected reimbursement, place a copy of the EOB (explanation of benefits) in a designated "appeals folder" for your appeals processor (to be discussed in the next step).

When you receive payments for procedures that aren't in the reimbursement matrix, the payment analyst should have a reference notebook with copies of the managed care contract reimbursement pages. This will let her know easily whether you've received the proper payment.

Another valuable tool for the payment analyst is a contract/workers' compensation matrix, which clearly notes exclusions for each contracted payer and each payer with a fee schedule. Exclusions include specifically carved-out CPT codes, implants, overnight stay, multiple procedures and any other situation that is excluded from the primary fee schedule.

Appeals Process
Once the payment analyst has determined that you've received an inadequate payment, another employee, the appeals processor, should initiate the appeal process.

This staff member must be thoroughly familiar with the managed care contracts and, if applicable in your state, the workers' compensation fee schedule. She must also have access to the reimbursement matrix and contract matrix.

There's usually a time limit to appeal an incorrectly processed claim; be sure your appeal reaches the payer within two weeks of receiving payment. The longer you take to collect your money, the more your accounts receivable will age.

You can streamline the appeal process with template letters where you fill in the amount owed, the amount received and an explanation for the difference. You must make clear the basis on which you expect additional payment.

Send all appeals certified mail with return receipt to the appropriate address for appeals. Most carriers have an address for the appeals department that is different from the initial submission address. When you receive the return certified receipt, document it in your appeal notes or on a checklist in the chart.

In addition to your appeal letter, the mailing should include the original claim form and other supporting documents such as operative note(s), implant invoice(s), and a copy of your contract or fee schedule highlighted to support your rational for additional reimbursement.

Keep a copy of all correspondence - not only yours, but the insurance carriers' as well. It's not unusual for them to lose all correspondence and claim that they have no record of your appeal. Similarly, it's not unusual for the carrier to initially send you a letter acknowledging that the appeal has been received, only to assert later that they never even received the original claim. You can put a quick end to those sorts of shenanigans when you send them back a detailed record of the claim and appeal process.

Appeals Log
Maintain a comprehensive log of all appeals. The log should let you quickly assess the status of each appeal that is in process. Also use the log to monitor problems and spot trends with particular carriers.

Work appeals at least every 30 days. Review your contracts. There should be explicit language stating the time limit for the carrier to either pay or deny an appeal. If not, your state may have a law concerning time limits for appeals. If you don't have such language in your contract, make sure to add it when you renew or renegotiate the contract. For example, you might add the following:

All appeals should be paid within 30 days of receipt of initial appeal. If not, Blue Star Insurance will pay 75 percent of billed charges.

If you need to do a second level appeal, you should again verify the correct mailing address. Many times the final appeal address will be different than the address used for the initial appeal. After 60 days with no results, I recommend calling your managed care contract representative and discussing your concerns.

Continue to diligently maintain a log of telephone calls, e-mails and written correspondences either in your billing and collection database or in a manual system.

The process is different for payers with whom you're not contracted. These payers will typically contract with bill-review companies who re-price claims received from out-of-network facilities. These savvy companies will comparison-shop at your center to see which employee gives them the best deal. Establish a policy in your business office whereby only one designated employee is empowered to talk to these bill-review companies. That employee should be one who is thoroughly familiar with your established payment guidelines and who can be hard-nosed when negotiating with these companies. Once they know that there are no sweet deals to be gotten at your center, the whole process will proceed more quickly.

Renegotiating Contracts
Use the data collected on your appeal logs during contract renegotiations. The log will let you identify the frequency of the problems with any particular payer. It can be a bit intimidating for a payer's contracting manager when you present data documenting that his company processes a significant percentage of claims incorrectly.

Furthermore, the appeals log will also identify the nature of repetitive problems with the payer's claim processing. For instance, maybe the carrier has difficulty processing implant invoices. This could give you additional leverage to include your average cost of implants to the new contracted rates. Or maybe the carrier processes claims with multiple procedures incorrectly. In this case you might consider negotiating for a percentage of billed charges.

Don't accept, appeal
It's amazing that many centers simply accept inadequate payments as payment in full. Don't let your center be one of them. By establishing a systematic method of analyzing payments and processing appeals, you can be fully compensated for the care that you're delivering. In most cases, these appeals will increase your collections by several thousand dollars per month.