Denied claims cost healthcare organizations 1 to 3 percent of their total revenue, according to the Advisory Board Co., a healthcare management firm based in Washington, D.C. Put another way: Payors deny about 1 in every 7 claims you submit. A denied claim sitting on your coder's desk is uncollected revenue and a harbinger of the expense of dealing with the denial in order to recoup the money owed to your facility. We talked to experts and came with these 13 denial management tips.
1. Act quickly
Submit your claims as soon as possible. There's much to be said for showing up on time. If you do, you're already ahead of almost one-third of the healthcare providers in the country. In 2006, about 29 percent of claims submitted to health insurance companies were submitted more than 30 days after the date of service. This includes 15 percent of all claims submitted more than 60 days after service, according to America's Health Insurance Plans (AHIP) Center for Policy and Research, based in Washington, D.C. Similarly, be just as quick when addressing denied claims. Your goal should be to respond within two weeks of the claim bouncing back, says Debbie Mack, RN, MSA, CNOR, CASC, the area vice president of operations for National Surgical Hospitals in Walnut Creek, Calif.
2. Follow protocol
You have contracts with the payors, which outline your rights and responsibilities. Make sure that you know your end of the bargain as well as the payor's responsibility. Part of your responsibility is to submit claims and subsequent appeals the way the payor wants them. Don't fight them on this one, says Judy Veazie, CPAM, a senior consultant at Forum Health in Youngstown, Ohio, and editor of the Health Care Biller newsletter. "If they want it with a blue ribbon, then I'll get a blue ribbon."
3. Keep ????-??em clean
About 70 percent of all initially denied claims are related to authorization for service, according to AHIP. The best way to prevent claims from bouncing back is to verify as much information as possible before treatment. "Verify benefits, claims mailing address and check to see if an authorization is needed, or if the one the doctor's office gave the center will cover the center," says Dawn Gray, CPC, CCP, director of operations at Serbin Surgery Center Billing in Fort Myers, Fla.
4. Pay the payors a visit
If possible, create a solid relationship with the payors by visiting them. "Find out who the key supervisors in the claims processing department are," says Ms. Veazie. While you're there, ask if the center has a backlog of claims to process. If you can't visit the payor, create a relationship with someone with whom you can work with to fix minor problems.
Reasons for Denied Claims
Lack of necessary coverage
No coverage on date of service
Service not covered
Coordination of benefits
Pre-existing condition review
Invalid codes submitted
* Medicare as primary payor, incorrect provider ID, no provider, ineligible provider, possible third-party liability, provider watch, member alert, multi-surgery manual pricing or high-dollar claim.
5. Speak to God, not his saints
If you have no success with the person processing your claims, ask to speak with a supervisor. If you're appealing a denial based on medical necessity, ask that the payor's medical director or clinical review department review the claim. If you still have no luck, speak with your provider relations representative, says Ms. Gray. If you have no luck with the provider relations rep, keep going up the chain of command.
6. Write a letter
Correspondence is the heavy lifting of denial management. Make writing letters part of your weekly routine. Create form letters for different situations, says Michelle Banks, director of business revenue cycle management at Regent Surgical Health in Westchester, Ill., which owns, operates and manages 15 surgery centers and two hospitals in seven states. Make sure that your letters include all the relevant information and data to argue your case effectively. Include photocopies of insurance cards, medical records, referrals and whatever else will help your appeal. "I don't go with weak data," says Shiryl Foster, RN, MSN, MBA, manager of clinical denial management at High Point Regional Health System in High Point, N.C.
If you have several similar denials from the same payor, deal with them as a batch. It will save you time and can help make your point. "I sent 44 cases with one appeal letter," says Ms. Foster. Finally, send the letter by certified mail with a return receipt so that you have proof that the payor received it on time.
7. Hold your ground
These days, many providers and payors have contracts that require timely submission of claims, sometimes within 30 days of service. If the payor has lost a claim and asks that you re-submit it, make sure that they don't reset the clock to the date of your resubmission because this may lead to yet another denial. If you submitted the claim in time, make sure that the documentation reflects that, says Ms. Veazie.
8. Map it out
Track the different payors, including their quirks and denial history, on a spreadsheet. Record the reason for denial, dollar amount, type of service, CPT code and method with which the denied claim was submitted. With the new Medicare payment system taking effect this month, Ms. Banks is paying extra attention to claims denied by Medicare. She's looking for trends in denials because as Medicare evolves, so do private payors.
9. Get the patient involved
Sometimes you'll need the help of the patient. This is especially true when it comes to denials based on coverage, a pre-existing condition or coordination of benefits. "They may be able to provide the insurance company with information that we don't have," says Ms. Gray.
Often the payor will send the patient a coordination of benefits form. Just as often, the patient never fills out or returns the form. In these cases, ask the patient if you can submit the information to the payor, says Ms. Banks.
10. Make a formal appeal
Often a denied or pending claim can be dealt with quickly by supplying more information or fixing an error on the part of the provider or the payor. Use a formal appeal only when it's warranted. Don't make a formal appeal for a payor's error. Get the payor to admit its mistake and fix it. "If they do something wrong, it shouldn't be appealed," says Ms. Veazie.
However, sometimes, you really need to make a formal appeal. Often these are the foggier areas of medical necessity. Depending on the payor and the state, most payors have two or three levels of appeals. Usually, you can learn about payors' appeals processes on their Web sites. Often payors have forms that you can download that describe everything you'll need for an appeal.
Make sure that you know the proper format and timeline for appealing. Include the patient's personal information, the explanation of benefits or denial letter, medical records, OR reports and, if necessary, an explanation of any deviation from evidence-based guidelines used by the payor.
If you do make a formal appeal, you have a decent chance of winning. A 2004 study of New York HMOs found that 39 percent of all formal appeals reversed a denied claim, according to the New York Department of Insurance.
11. Take it to the top
If your first appeal is denied, take it to the next level. "We never stop," says Ms. Mack. The second or third level is often reviewed by an outside consultant. With Medicare, you can appeal all the way to an administrative law judge. If you feel that you're not being treated fairly, bring it up with your provider's representative.
12. Stay tough
Don't let your guard down. Deal with every claim that the payors deny or send back. Let them know you're serious. "It's like being a private detective," says Ms. Foster. Ask if you can record your phone conversations with the payors and keep tedious records. "It sends a consistent message."
13. Get over it
Denied and underpaid claims are a fact of life these days, and they're not going away. You'll need to plan, train your employees and track your progress. Incorporate it into daily life at work. If you're not doing everything possible to deal with your denied claims, you are indeed in denial.
Deal with it
In some hospitals and surgery centers, denial management is a full-time job. No matter how much time you devote to this usually frustrating task, it's most important to be thorough, systematic and coolheaded. If you can do this, you'll win appeals and decrease the number denied and underpaid claims you receive each month.