HOW TO PREVENT AND MANAGE MEDICAL CLAIM DENIALS TO INCREASE REVENUE

Transcription

1 Billing & Reimbursement Revenue Cycle Management HOW TO PREVENT AND MANAGE MEDICAL CLAIM DENIALS TO INCREASE REVENUE Billing and Reimbursement for Physician Offices, Ambulatory Surgery Centers and Hospitals Billings & Reimbursements Revenue Cycle Management

2 How to Prevent and Manage Medical Claim Denials to Increase Revenue Contents Gathering data about your claim denials can help you identify trends, patterns and opportunities to prevent future denials. 4 Understand the top reasons claims are denied 7 Facilitate communication among staff 8 Train your staff 9 Appeal denials 12 Monitor and analyze claim denials 2

3 Introduction According to Medical Group Management Association (MGMA), even the best-performing medical practices have 4 percent of their claims denied. MGMA estimates that up to 65 percent of denied claims are never re-submitted, and it costs approximately $25 to re-submit a denied claim. Furthermore, if you don t research the denied claim and correct and re-submit the claim within the time frame required by each individual payer (which many times is as short as 90 days) you may not get paid. Taking these five steps to prevent and manage claim denials can significantly increase your practice s revenue. 3

4 UNDERSTAND THE TOP REASONS CLAIMS ARE DENIED To take proactive steps to prevent claim denials, your staff needs to understand the most common reasons claims are denied. Claim denials fall into several categories: Registration-related errors. Failure to collect accurate patient information and verify insurance coverage leads to many claim denials due to: Data entry errors. Even a basic error such as a misspelled name or wrong gender can cause a claim to be denied. For example, a claim for a hysterectomy for a patient mistakenly identified as male will be denied. Use claim scrubbing software to review patient demographic information for the most common data entry errors. Ineligibility. The patient isn t eligible for service because health insurance coverage ended. Use online payer tools to verify eligibility, and be sure the payer s patient account information matches your data. Payer tools also provide information about copays, deductibles and co-insurance. Get a new copy of the patient s insurance card at each visit. Non-covered service. A particular service may not be included under the plan s benefits. Verify benefit information before the services are provided using the payer s online tools. Check the date of the patient s last physical exam, mammogram or other annual service to be sure it s covered at the time of the current visit. Also, make sure the patient hasn t exceeded the maximum number of sessions allowed (e.g., for physical therapy). To prevent registration-related errors, your front desk staff needs to gather accurate patient information before or during patient registration. Collect patient demographic and insurance information during the scheduling phone call, and verify eligibility and benefits a few days before the visit. When the patient checks in, the front office staff should verify that all demographic information is complete, that information reported on forms matches patient identification and insurance cards and that data are accurately entered into the billing system. Instead of asking a returning patient, Has your information in the system changed? have the patient review and initial a printout of address, employment and insurance information to signify that it s correct. Missing authorization. To avoid denials based on failure to provide authorization, obtain authorization for any procedure that requires it. Use a system that automatically asks about the authorization status of any scheduled service. Determine whether the in-office services commonly ordered during the patient s visit require prior authorization. Staff can then obtain authorization for those on-the-spot services before they re provided. Many payers have an online tool for obtaining precertification. Coding errors. Because the Current Procedural Terminology (CPT) and International Classification of Diseases (ICD) coding systems are so complex, with millions of code combinations, it s not surprising that coding errors often lead to claim denials. Physicians Practice and Power Your Practice list these common coding errors: 4

5 Missing or misused modifiers. Modifiers are the two-digit codes added to CPT or HCPCS (the Healthcare Common Procedure Coding System used by Medicare) codes that tell the payer about special circumstances related to a service. Using modifiers correctly is crucial for getting your claim paid. To use modifiers properly, you need to understand the global surgical package and National Correct Coding Initiative (NCCI) edits. Refer to a coding book for guidance. Using the wrong procedure code. This error isn t usually due to confusion about what procedure was performed. This error may be caused by using cheat sheets and electronic charge systems, or by incomplete or inaccurate code descriptions on encounter forms. Failing to link diagnosis codes to CPT codes. The CPT code indicates what service was performed, while the diagnosis code indicates the reason for the service. Some patients may have more than one diagnosis and may need several services. Other patients may need a service that is only covered for a specific diagnosis. For example, a patient who comes to your office for treatment of hypertension has a wart removed at the same visit. The code for the office visit must be linked to hypertension, but the wart removal must be linked to a diagnosis code for warts. Using the code for nurse visit instead of another service code. You may be tempted to use the code for nurse visit when a patient receives an injection or venipuncture blood draw, instead of using the procedure code. After all, the nurse visit is reimbursed at a higher rate than the venipuncture. However, nurse visits are bundled into injection codes, and will not be paid separately by a payer using NCCI edits, or any payer using proprietary edits. Using nurse visit instead of the venipuncture code does not accurately describe the reason for the visit or the service performed. If the reason for the visit and the service performed was venipuncture: bill venipuncture. If the patient presented for an allergy shot, bill for the administration of the allergen. Assessing the patient pre- and post-shot is part of the payment for the shot administration. Using outdated CPT codes. The American Medical Association updates and republishes the CPT codes annually. Your billing staff must keep up with the new coding rules and initiatives to prevent revenue loss and potential compliance risk. 5

6 Non-specific codes. Your coders must code a diagnosis to the highest level (i.e., greatest number of digits) for that chosen code. If you submit a four-digit code instead of the required five digits, your claim will be denied. Coding to the highest level of specificity is one of the best ways to prevent claim denials. To address the problem of non-specific codes, facilitate communication between your coders and billers. Learn to recognize truncated codes so you can remedy the problem. To prevent coding errors, identify your practice s most common services and then seek expert advice on how to code them correctly. Ask colleagues in your specialty to share their coding tips. Use claim scrubbing software that reviews your codes and modifiers to be sure they comply with payer guidelines. Because each insurer has claims filing deadlines, establish protocols to alert you of delays in the code selection and review process Medical necessity. According to Novitas Solutions (a Medicare contractor), medical necessity is defined as the need for an item or service to be reasonable and necessary for the diagnosis or treatment of disease, injury or defect. The need for the item or service must be clearly documented in the patient s medical record. Medically necessary services or items are: Appropriate for the symptoms and diagnosis or treatment of the patient s condition, illness, disease or injury; and Provided for the diagnosis or the direct care of the patient s condition, illness, disease or injury; and In accordance with current standards of good medical practice; and not primarily for the convenience of the patient or provider; and The most appropriate supply or level of service that can be safely provided to the patient Most medical necessity denials are due to improper documentation. To prevent medical necessity denials, ComplyMD recommends you: Capture and document all the required information at the point-of-care instead of trying to reconstruct it after the fact. While the patient is still in the exam room, the provider should document the patient s history, physical findings, all diagnoses, services performed, supplies used, prescriptions or tests ordered and patient instructions. The patient s medical record should contain all the detailed and specific information that indicates why the physician prescribed the procedure. CMS will only reimburse you for a service if all the elements that make the procedure medically necessary are included in the patient s medical record. If this information is missing, your claim will likely be denied. Medical necessity software can help you select the appropriate procedure codes for a particular diagnosis. Charges should be entered into the billing system immediately after the visit. Doing so not only assures timely claims submission, but the provider will be readily available to answer any questions about procedures and coding. Educate physicians about medical necessity denials and the critical role they play in preventing them. Analyze physician documentation habits to identify physicians and procedures that are likely to cause medical necessity claim denials. Then train those physicians how to document and choose appropriate codes. Billing/filing errors. Here are several other common reasons for claim denials: Missing information. If your staff doesn t include certain encounter data in a claim, it may be denied. According to the Ohio State Medical Association, specific dates date of accident, date of medical 6

7 emergency and date of onset are the most common pieces of missing information. To correct this problem, your staff needs to complete all required information on your claim forms. They should doublecheck commonly missed fields, such as the dates listed above and patient subscriber number, and fill in any missing information before submitting the claim. Claims not filed on time. If you don t submit a claim to the payer within the designated time frame, which varies by payer, the claim will likely be rejected. The limit to file may be as short as 90 days from the date of service. To correct this mistake, keep a list of the filing windows for each of your payers. You should track and document your claim submissions and the payer s receipt of each submitted claim. You ll need this information in case a payer tells you a claim you submitted on time was late. Duplicate claim. If you submit a duplicate claim when you didn t receive payment the first time, the duplicate claim will be denied and slow the reimbursement process. To prevent this, check with the payer to see what steps you should take before re-submitting a claim. When you understand these common reasons that claims are denied, you can help your staff work together to gather and submit the required information. Here s what you can do to improve the claim submission process: FACILITATE COMMUNICATION BETWEEN YOUR STAFF Your front office staff, billers and clinicians need to talk about issues related to denials. Consider holding monthly meetings to discuss billing and coding issues. Trace errors back to their source. According to Ben Colton, a revenue cycle management consultant, frequent communication between the front and back office goes a long way toward preventing repeated errors. The best practice is to route any front-end issues that are causing denials back to the person responsible so he can modify his procedures. Coding and billing staff should give regular, specific feedback to clinicians about the reasons for denials. Clinicians need to learn how to document and capture all necessary charges to support optimal billing. 7

8 TRAIN STAFF Teach your staff to submit clean claims. Be sure your front desk and billing staff understand why claims are denied. Train them to gather all pertinent patient information and complete claim forms accurately. Train physicians to document properly and select correct procedure and diagnostic codes. Colton recommends that newly hired providers attend an educational seminar on the basic fundamentals of the revenue cycle. All clinicians should attend training sessions once or twice a year to keep up with changes in documentation requirements. Proper documentation will reduce coding errors and medical necessity denials. Appointment schedulers should ask the patient about the reason for the visit to help them schedule the appropriate type and length of visit. Some insurers don t allow you to group preventative services, such as a routine physical, and procedures, such as a mole removal, into the same visit for billing purposes. In that case the patient would need two separate appointments. 8

9 APPEAL DENIALS Despite your best efforts, some of your claims will still be denied. When that happens, take steps to resolve the denied claim. Elizabeth Woodcock, MBA, FACMPE, CPC, recommends using these strategies to manage denials: Identify the reason for the denial. When insurers return a claim without paying it, they ll include claims adjustment reason codes (CARC) that explain why the claim was denied. Although it sounds straightforward just read the code and correct the problem it can be challenging to interpret the CARCs because they re in alpha-numeric form and vary by insurer. Therefore, your billing staff needs to keep track of what the codes mean for each insurer. Furthermore, the codes may not give you enough information to determine why the claim was denied. For example, CARC 16 is claim/service lacks information that is needed for adjudication. Unfortunately, the insurer doesn t tell you what information is missing, so you ll need to spend time researching what additional critical information is required. Follow an action plan to resolve the denials. These action steps can help your staff resolve denials efficiently: Directly route denials to the appropriate person. Use automation to route denials to your staff members work lists. Send coding-related denials directly to your coders, who will then take action on each item in their denials-management work list. Use software to sort the denials by reason, dollar amount or other factors so your staff can work more efficiently. 9

10 Create standard workflow. Develop a denial management protocol for your staff to follow. Identify your practice s most common reasons for denials. Then record the most common reason codes associated with those denials. For example, for medical necessity denials, one relevant reason code is the diagnosis is inconsistent with the procedure. Develop a step-by-step, written action plan for your employees to follow when working that denial, including even the basic steps like check online claim status. By using standard protocols, you can achieve better denial management performance by holding your staff accountable for their tasks and achievements. Use a checklist of actions to take and avoid. Here are some denial management Dos and Don ts : Don t delay. Begin working the denial immediately so that you re-submit the claim within the insurer s time limit. Avoid automatic re-billing. Re-transmitting unpaid claims to insurers produces duplicate claims and duplicate denials. With duplicate denials, your billers have to spend a lot of time figuring out whether the denial was legitimate and whether the claim has already been paid. 10

11 Build your case. Prepare a professional letter that describes your case for appeal. To support your request for payment, include documents such as documentation of the service, relevant medical literature, copy of the original filing of the claim and copies of sections from the CPT book or CPT Assistant that explain the appropriate use of the code. Request an expert. In your appeal letter, ask that a specialist in your area of expertise review your appeal. If the denial is upheld, this request (rarely granted by the insurer) will improve your chances of receiving a second review. Engage the patient. Send a copy of your appeal letter to the patient. Patients who are worried that they ll have to pay for the service themselves will be more likely to call their insurance company. An appeal is more likely to be considered when both the provider and the patient are involved in the process. Create online tools. Build a library of tools to help your staff build a strong case for appeals. These tools may include: Payer rules and guidelines National coverage and local coverage determinations Specialty organization briefs about certain procedures Template letters for specific appeal types 11

12 MONITOR AND ANALYZE CLAIM DENIALS Gathering data about your claim denials can help you identify trends, patterns and opportunities to prevent future denials. Examine this data: Type (reason for denial): Categorize and track your denials by reason (using reason and remark codes), sorting them by provider, dollar amount, insurer and other factors. Number: Calculate the percentage of denials to learn about your practice s revenue cycle performance. Source: Study the sources physician or other provider, site, type of service (CPT codes) and insurer of denials to help find solutions that prevent future denials. You need this information at the line-item level, not just by claim or account, to fully explore opportunities to improve your operations to prevent denials. If your practice management system can t give you this data, you may need separate denial-reporting software. By understanding why insurers deny medical claims and by communicating with your front office staff and clinicians, your billing staff can prevent claim denials. When claims are denied, standard processes and protocols for submitting appeals improve your chances of being reimbursed. Analyzing your denied claims helps you identify patterns and opportunities to improve your operations to prevent future claim denials. By taking these steps to prevent and manage denials, you ll improve your revenue cycle management and increase your revenue. 12

13 About MediGain MediGain is a global full- service revenue cycle management and healthcare analytics company devoted to improving billing, collections and outcomes for healthcare providers and the patients they serve. With more than 800 employees, MediGain provides solutions for physician groups, provider networks, ambulatory surgery centers and hospitals, enabling them to reach their maximum potential through improved operational, financial and clinical outcomes. For more information on how MediGain can maximize revenue, reduce expenses and allow you to spend more time on providing your patients with quality healthcare, visit our website, call us at or marketing@medigain.com Dallas Parkway, #200 Plano, Texas