June 2008 The ABCs of Claim Rejects: Causes, President and Chief Executive Officer
The ABCs of Claim The ABCs of Claim Healthcare rivals only the U.S. military in the use of acronyms to denote various programs and actions within the industry. The ABCs of healthcare have provided us with both clinical and financial acronyms that create an entire language barrier to most other businesses. For example, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Physician Quality Reporting Initiative (PQRI) and the National Provider Identifier (NPI) are all relatively recent additions to our lexicon of healthcare terms. Interestingly, most of the acronyms have been developed with the goal of improving efficiency ever elusive within our healthcare system. For certain, HIPAA has the highest expectation of providing only one legal claim format. Unfortunately, the various industry players involved cannot manage to attain any normal level of efficiency since there are currently over 1,500 HIPAA compliant claim formats available. Quality Measures? NPI and PQRI provide the hope of quality in medicine as long as they are transformed to address the challenges they pose in claims processing. Unfortunately, NPI and PQRI are two independent initiatives that are forever wedded due to the coincidental start dates for most payers. The combined adverse impact of last summer s initiation of these two programs has recently been realized as clearinghouses are struggling with managing the tension between provider numbers, payer status and management of internal databases. Certainly not an easy job. Needless to say, the majority of healthcare initiatives that have held high promise to address the high cost of collections have not only fallen short, but have added even more cost to the revenue cycle for providers. Clean Claims Legislation? Claim rejects, or pre-adjudication claim errors, have come about since HIPAA and have increased dramatically since the inception of NPI and PQRI. Claim rejects are the result of these programs as well as the adverse impact of many states Clean Claims Legislation passed a few years ago. Provider groups around the country celebrated the passage of the Clean Claims Legislation because they thought it would facilitate the payment of their claims. However, claim rejects were born as a new category of unpaid claim files to be identified, measured and fixed without the tools necessary to repair the errors. In other words, a certain amount of traditional claim denials have moved forward in the revenue cycle process exacerbating timely filing as practice management systems and many clearinghouse products cannot readily identify these issues. Additionally, this increase in claim rejects and the technical issues related to these claim files have given rise to a new specialty within the billing office: claims production. Today, medical providers must segment the various portions of their revenue cycle in order to manage through the increasingly complex and technical segments. A few years ago, many healthcare providers could manage the revenue cycle process by employing generalists. Today, these billing organizations are being transformed from generalist organizations into specialist organizations. So what can healthcare providers do in the face of this increasing complexity which is causing high volumes of rejects? A B C 1
CBO Segmentation Today, a billing organization must have clearly segmented and measurable functions within the revenue cycle. These functional segments are broken down as follows: Technical Services Claims Production Payment Services Insurance A/R Analysts Patient Services Application hosting, connectivity, security and disaster recovery. Primary, secondary and patient statements via electronic and paper production cycles. Payment posting, imaging, indexing and reconciliation to the bank deposit file on a daily basis. Reconciliation of all paper and electronic payments with indexing to multiple provider and account fields through the payment posting function. Please note we use the term Analysts versus billers or appeals. Today, the analysis of why A/R exists is the key fundamental function in the A/R process. Additionally, insurance analysis is a distinct skill set separate from self-pay analysis. The function of processing self-pay accounts for payment including call center functions and tracking the self-pay balance through the payment function. The ABCs of Claim All of these functions require additional analysis and metrics to manage the process from staffing to measuring performance. Each one of these segments is growing in terms of the amount of work as well as the amount of time spent diagnosing and resolving problems. Claim Reject 101 As stated earlier, a claim reject is a pre-adjudication error on a CPT code level. In other words each CPT within a claim is a unique economic event requiring measurement at the CPT code level versus the claim level. A claim reject is not evidenced by an Explanation of Benefits (EOB). Denials are CPT codes that have been received by the payer and denied payment via an EOB. Claim rejects are hopefully captured by a clearinghouse or payer reject report on a daily basis. Generally, there are two types of claim rejects: Format Content Format rejects are technical rejects generally at the batch level for a specific payer. In other words, the failure of HIPAA to standardize the claims process has given rise to format denials. What goes in Box 19 for the electronic format for XYZ Insurance Company? These Format rejects are technical claim filing issues requiring key knowledge of the electronic claims production process as well as various eligible formats and the practice management system setup. 2
Content rejects are data elements that need to be completed and can be identified at the clearinghouse level or at the payer level. Unfortunately, it is difficult to determine at which level they occur within the practice management system. For example, a report showing all CPT codes with a claim date will have both CPT codes that have been accepted by the payer and those with content format that have passed the clearinghouse but have not been received and/or accepted by the payer. A claim date analysis is a critical report but unfortunately many of the rejects that must be identified do not have a claim date and are therefore difficult to find in the practice management system. Claim Reporting Tools To identify and capture the information necessary to address all claim reject issues, providers should develop a few essential reports: Past Due Claims Report includes all CPT codes with no claim date greater than five days from the date of service. Each provider may alter the date difference to reflect coding delays etc. However, you must realize the longer the delay the more time is wasted if repairs are needed to get acceptance. No Response Report identifies all CPT codes that have not been denied or paid (greater than $20.00 for co-payments) within 45 days of the date of service. The number of these CPT codes will provide you with a key indicator of the claims production process. The ABCs of Claim Payer Reject Reports capture CPT rejects by the payer for a specific reason. Many clearing houses pass these reports to the provider. However, they might be in code that requires some investigation on the meaning. These reports are usually worked on a daily basis. It is recommended that these reports are posted into the practice management system by reason in order to resolve these rejects in bulk. Working these reports independently does not allow for tracking or compliance until the No Response Report (above) is produced thus creating more of a time constraint to correct issues. Past Filing Deadline Report includes a subset of a basic Denial Report identifying the number and payers who have CPT codes that are not accepted for payment due to timely filing guidelines. More than 0.25% of all CPT codes charged for a period with this denial code indicate a claims production or verification of benefits issue. Additionally, reviewing payer concentrations will determine the nature of the claim issue or payer issue within the process. Summary The new ABCs for the healthcare industry have promised better transparency and improved efficiency. Unfortunately, many, if not all of these acronyms (HIPAA, PQRI, NPI, etc.) have failed to meet those promises. The cost of implementing these programs has increased the cost of collection in a significant manner by generating a new and faster form of CPT denial called the Reject. CPT rejects are pre-adjudicated errors that require a provider to fix the transaction in order to seek payment or adjudication. The time pressure of identifying, measuring and repairing the CPT code is evidenced by increasing percentages of Past Filing Deadline denials and continued specialization of the claims production process. Healthcare providers are adjusting their billing organizations to meet these new time sensitive demands and are investing in new reporting tools to manage the business of Claims Production. 3
President and Chief Executive Officer John Thomas has been with MedSynergies since its inception in 1996, when he began as senior vice president and managing director of development. While at MedSynergies, Mr. Thomas has held positions such as senior vice president and chief financial officer, and has been a member of the board of directors since 1999. Prior to joining MedSynergies, Mr. Thomas was the vice president of the newly formed HealthCare Finance Group for Bank One. He was also the assistant vice president for Texas Commerce Bank, where he focused on hospitals and emerging healthcare markets. About Now serving 3,000 healthcare providers in 37 states, MedSynergies provides revenue cycle services and integrates leading software programs into the daily operations of healthcare organizations. Founded in 1996, MedSynergies serves physicians in hospitals, specialty medical groups, ambulatory surgical centers, rehabilitation centers, and independent practice associations (IPAs). Based in Irving, Texas, the company has regional offices across the United States. For more information on MedSynergies, please visit www.medsynergies.com. Mr. Thomas is a national speaker on topics such as revenue cycle management, billing and collections processes, capitalization, and turnarounds. Mr. Thomas received his Master of Business Administration, with honors, from the University of Texas Graduate School of Business. While at the University of Texas, he focused on finance and management and was selected as the Sword Scholar and received the Dean s Academic Award. Mr. Thomas received his Bachelor of Arts from the University of Arkansas. 1255 Corporate Drive Third Floor Irving, Texas 75038 972.791.1224 www.medsynergies.com Copyright 2008 No reproduction, in whole or part, without written permission.