Review all contracts and compile a list of reimbursement terms. Be sure to include carve-outs, implant coverage (note if the contract requires a copy of the invoice with the claim), multiple procedure reimbursement, and, if applicable, maximum payment.

Review the OR record and operative report for implants and review charges to ensure that all appropriate charges were captured. Did the patient have implantables? If so, were they charged and reimbursed? Does the payor require a copy of the invoice for reimbursement? Were you paid for multiple procedures when you billed more than one CPT code?

For this audit, use the patient's chart, not a computer-generated report, to unravel the process from the scheduling of the case to final payment. This will help identify the need for new procedures and determine if there is a breakdown in your existing systems.

Document the number of days it took to send the claim, the number of days to payment from primary payor, days before secondary was billed and date patient was billed. This will alert you to delays in getting claims out the door, the length of time before payment is received from the payor, and the collection of patient payments for deductible and co-pays. If the account is still open, note the activity on the account. Track the results of your audit using a spreadsheet. Include the items you'll find in "Sample Audit Spreadsheet" below). While only a snapshot, this audit will help you determine areas that need further evaluation. Keep in mind you have 12 months to rebill and collect for unpaid services.

Depending on your findings, you may want to audit a specific payor and determine the amount of underpayment. If the amount is large, you may need temporary help to expedite the process. Let the payor know that you have identified a significant number of incorrectly paid claims that you will package together for delivery. Discuss the process and agree upon timing for payment. You'll need persistence to move your unwilling payor along.

If you have identified potholes in your procedures, develop an action plan to address them. Give your team the authority to identify problems and develop solutions through group meetings designed to improve each department's quality and performance. Some of the more common internal procedures that break down:

• Including your implant invoice with the bill for those carriers that pay from invoice. Ensure your coder is checking the patient's chart for implants and that the invoices are attached to the claim.
• Denials from lack of preauthorization. Ensure you receive preauthorization, including out-of-network patients. If the insurance carrier is reluctant to provide you a preauthorization number for out-of-network patients, inquire why the patient is being denied a choice for which he is paying.
• Unbilled accounts past 48 to 72 hours because of physician dictation delays. Make one person accountable for medical records and outstanding dictation of operating reports.
• Contractual write-offs driven by insurance carrier rather than contracted terms. The person posting payments needs to know the expected reimbursement to compare to the EOB.

Understand denials
You also need to track denials and underpayments. Here are key factors in developing your denial management program:

• Study your denial information. Categorize denials by payor, date and billing code so you can uncover system breakdowns (such as denied implants, denied diagnosis codes or delayed billing).
• Measure the financial effect of denials. They can cost your facility thousands of dollars each year.
• Identify trends by payor and cause of denial. Identify internal processes that lead to such problems as late claims, lack of preauthorization and incomplete claims.
• Establish denial management goals. Set up by what percent you can reduce current denials and how to curtail future denials.

Train staff to respond

If the posting clerk completes and gives to the collections clerk an appeals/denial log, the collections team would know that there is a claim to review. Set up parameters to handle write-offs for non-contracted payors, workers' compensation and commercial accounts.

• Create a bank of appeal letters. Several organizations provide sample letters that are specifically based on the types of denial issued by the payor. Most of them have legal language for slow payment, usual and customary appeals, and pre-authorization. The Web site appealsolutions.com is an excellent resource for state-specific letters.
• Who's accountable? Make one person responsible for reviewing and resolving denials.

Overturn denials
OK, you're now prepared to overturn denials. Before you initiate the appeal, use these four steps to determine the basis for reduction:

• In the preauthorization record, review the benefit amount that was verified. Be sure to document the customer service representative's full name when verifying benefits.
• Was the claim submitted within the required timeframe? Some organizations have unbilled claims over 60 days from delinquent dictation of operative reports.
• Evaluate any MCO fee schedule. Many contracts refer to a "lesser of Exhibit A (reimbursement schedule), billed charges or an MCO fee schedule." This means that the MCO uses its own fee schedule to price the claim. If you hold a contract that has this language in place, request a copy of the fee schedule and determine if this contract is financially risky.
• Is the denial a result of a non-covered diagnosis code? That might include such factors as screenings or a lesion's size. Also find out if the payor requires implant invoices for reimbursement.

What can you appeal?

• Slow payment. In writing, notify insurers that you'll no longer accept staff reductions, computer downtime and bureaucratic inefficiency as excuses for long processing periods. Cite state laws on prompt payment.
• Refer to the patient's benefits. If the benefit plan says it will pay 80% of charges but pays only 50%, you can submit an appeal on the basis that the carrier isn't honoring the patient's benefits. You may want to copy the patient on all your appeal letters. In most cases, patients view you as their advocate in this process.
• On second appeal, substantiate your own usual and customary charges. Collect EOBs demonstrating that your organization has been paid based on your charges. Make copies (removing patient data) and send these EOBs along with your appeal letter in defense of usual and customary payments in your area. Most states put the burden of proof on payors to provide their methodology of payment. Request in writing their methodology and the usual and customary charges on which they're basing their payment.
• Alert employers to multiple underpaid claims. If the provider is a workers' compensation carrier, consider writing letters to the employers they cover, informing them that their provider is paying a fraction of the bill compared to other carriers. You also do this for other payors, such as MCOs, alerting the employer that the MCO isn't paying correctly.
• Verify benefits and preauthorization. This is one of your best defenses. If your facility doesn't already verify benefits and receive preauthorization, begin immediately. This information gives you an edge if benefits are denied later. When following up on your appeal, inform the carrier of the customer service representative that provided you with preauthorization and verification of benefits. Your facility in good faith relied on this information before performing services and expected payment under the benefits quoted. When reviewing MCO contracts, ensure that the contract doesn't negate the importance of preauthorization with language that states that "the carrier still has the right not to pay the claim." This gives the MCO total control to insist on verification, yet later change what it will do.

Never settle
Perseverance is the key to overturning denied claims. Some 25% of appeals are overturned on first appeal; another 25% on second appeal, says appealsolutions.com. Research the law in your state for appealing denials with insurance companies and worker's compensation carriers. Fight back and put the burden of proof on the insurance companies.