Claims analysis shows doctors the way to fight insurer denials
■ Dealing with fewer appeals gives physicians more time to concentrate on their patients and other areas of practice.
By Karen Caffarini — covered practice management issues during 2008-09 and writes for us occasionally on the topic. Posted July 15, 2013.
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Physician practices that are losing a significant amount of administrative time and revenue due to denied insurance claims may be able to reduce those losses by regularly conducting a claims denial analysis.
The analysis, which should be done on a monthly or quarterly basis, will reveal the main causes for denials, point out any patterns for denials per insurer and determine whether the errors or oversights were made by the insurance company or the physician’s staff. With this information in hand, practices can solve internal deficiencies through education and control, and decide which cases are worth appealing.
The result will be fewer denials and appeals. And that will mean more revenue for practices and more time for physicians and staff to concentrate on other things.
“You’re looking at 5% of claims denied every year for an average family practice, that’s about $30,000 walking out the door every year,” said Ryann Philpot, manager of revenue cycle management at e-MDs, a certified practice management software and solutions provider in Austin, Texas.
In its sixth annual National Health Insurer Report Card, released in June, the American Medical Association found that administrative tasks associated with errors, inefficiencies and waste in the medical claims process had an Administrative Burden Index cost per claim of $2.36 for physicians. The report card said denials dropped 47% in 2013 to an overall rate of 1.82%, and errors are down from about 20% in 2010 to 7.1%. However, the AMA estimates that more than $43 billion could have been saved since 2010 if commercial insurers had consistently paid claims correctly.
Kristin D. Drynan, MD, a family physician in a Geneva, Ill., practice with eight other doctors, said that although she hasn’t done a formal claims denial analysis, she recently began doing her own billing, checking for errors and denials in the claims process.
“I’ve seen a 7% to 10% increase in my receipts, which the other doctors haven’t seen,” she said.
Where to start
When conducting an analysis, the key is to organize denials by payer explanation of benefit reason and remark codes, said A.J. Johnson, director of reimbursement products for TriZetto Provider Solutions in Sacramento, Calif. He said the required codes from the payer should identify the reason for the denial, such as a patient eligibility issue or missing claim information. The next step is to organize the groups of codes into work flows such as claims data issues, patient responsibility and claims that may require an appeal or reconsideration from the insurer.
This will determine where the error was made, if it can be successfully appealed and how it can be corrected.
“Last year a series of claims was denied by one insurance company that didn’t make sense,” said Bill Gilbert, vice president of marketing for AdvantEdge Healthcare Solutions in Warren, N.J., which provides financial management, billing and coding services. “Through a series of phone calls we discovered that the company had an edit wrong in their system.”
The analysis, if done on a timely basis, could quickly uncover a pattern of denials, alerting a practice to a new rule established by an insurer without warning, said Taylor Moorehead, Western regional partner with Zotec Partners in Carmel, Ind., which specializes in medical billing and practice management services. He said it was discovered through an appeal that an insurance company denied claims if it wasn’t stated on the claim that the visit wasn’t due to a workers’ compensation case or auto accident. Practices weren’t notified about the insurer’s new policy.
Experts say the top three reasons for denial are patient ineligibility, medical necessity and coding errors.
With patient ineligibility, the insurance card may no longer be active, there could be a lapse in coverage or there could be an error in data entry, Philpot said. Patients also may not have been precertified and may have given their spouse’s insurance card by mistake. He recommends having each insurer’s guidelines on hand so office staff can easily access them.
Gilbert said front desk employees should look at the insurance card to make sure it matches the patient and is valid on that date, then make a copy of the card.
“I suggest to my clients that they ask the patient, particularly around the beginning or end of the year, if their insurance changed recently. During the recession, we saw a lot of changes in insurance companies as people lost jobs,” he said.
Johnson recommends practices send insurers an electronic eligibility request, which can provide a quick response on whether a patient is eligible before receiving services. Additional benefit information may let the practice know ahead of time, for example, that a patient is allowed only up to 10 physical therapy treatments, and the practice should bill the patient for any subsequent treatments.
Philpot said insurers might deny a claim on the basis of medical necessity if they don’t believe the diagnosis justifies the procedure. Richard Quadrino, a New York attorney who represents medical facilities fighting claim denials, said some insurance companies will see a doctor do a lot of the same procedure, believe the procedure was being abused and put an automatic edit into the computer not to pay for it.
Problems with coding
Dr. Drynan said she found in her own informal analysis that not being coded correctly goes hand in hand with not being considered medically necessary by insurance companies. Being in family practice, she said many of her patients come in for more than one symptom at a time, making the coding process difficult.
“There’s not an easy way to code on a multitask visit. It’s hard to code correctly unless you do it yourself,” Dr. Drynan said.
But Quadrino said insurers who deny claims based on their view of what is medically necessary may be violating the federal Employee Retirement Income Security Act of 1974. He said the law states that for any claim denied for medical necessity, investigational or experimental reasons, insurers must provide a scientific or clinical basis for their decision. Under ERISA, which Quadrino said was expanded under the Affordable Care Act to include large group health plans and their insurers, companies must make a decision on a claim within 30 days. A 15-day extension could be granted only for a good cause. If the insurer requests more information, it can get an additional 30 days.
Doing the claims denial analysis regularly will help a practice make any appeals in a timely fashion and determine whether it wants to appeal or ultimately drop the carrier.
“If a company doesn’t bend on its policy it would be a waste of time and money to appeal,” Moorehead said.
Quadrino said that although insurers frequently violate ERISA rules, a lot of doctors let it go rather than proceed to the appeals process. “Even in smaller practices this could mean the loss of a very large amount of money,” he said.
Brian Reese, director of new business relationships for medicalbillersandcoders.com based in Cleveland, said while claims denial analyses help practices improve their denial rates, they shouldn’t expect immediate results.
“It doesn’t happen right away,” he said. “You need to chisel away at it.”
Karen Caffarini covered practice management issues during 2008-09 and writes for us occasionally on the topic.