part 5 accounts management - indian health service · 2017-04-24 · part 5 - 1-4 1.2 about account...

Revenue Operations Manual

Part 5

Accounts Management

Version 1.0 July 2006

Department of Health & Human Services Indian Health Service

Business Office

Indian Health Service Revenue Operations Manual

Part 5. Accounts Management Version 1.0 Table of Contents July 2006

Part 5 - ii

Part 5. Accounts Management

Table of Contents

1. Overview of Accounts Management 1.1 About the Revenue Operations Manual 1.2 About Account Reconciliation 1.3 About Explanation of Benefits and Remittance Advice

Adjustments 1.4 Remittance Advice/Notice Rejection Codes 1.5 Explanation of Benefit/Remittance Advice Data Elements 1.6 Automated Posting 1.7 Medicare Health Care Claim Adjustment Reason Codes 1.8 Claim Processing Timeliness 1.9 Check Management Process 1.10 Financial Management Internal Controls 1.11 Monitoring Internal Controls

2. Electronic Deposits and Remittance Advices 2.1 About Electronic Transactions 2.2 Electronic Reimbursement Process

3. Processing Zero Pays 3.1 Preparing Zero Pays 3.2 Sorting Payments and Zero Pays with No Identifying

Information 3.3 Processing Zero Pay Documents 3.4 Creating Batches for Zero Payment

4. Creating Payment Batches 4.1 Procedure for Creating a Payment Batch 4.2 Editing Batches before Finalizing 4.3 Processing the Batches for Posting 4.4 Logging New Batches in the RA Log 4.5 Logging Posted Batches in the RA Log



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5. Processing Payments and Adjustments 5.1 Posting Payments and Adjustments 5.2 Posting Payments to Patient Accounts 5.3 Posting Medicare/Railroad Retirement Released Payments 5.4 Posting an Adjustment 5.5 Posting an Interest Payment/Adjustment 5.6 Posting Payment Recoupments

6. Reconciliation of Credit/Negative Balances 6.1 Procedure for Reconciliation of Credit/Negative Balances 6.2 Processing Payments Received and Batched in Error 6.3 Medicare Provider Credit Balance Reporting 6.4 Adjustment Request Form

7. Collections 7.1 Overview of Collections 7.2 Legal Aspects of Collection 7.3 Financial Responsibility 7.4 Collection Process 7.5 Collecting Insurance Reimbursements 7.6 Transworld Systems Debt Collection

8. Collection Strategies 8.1 Overview of Collection Strategies 8.2 Negotiation Guidelines 8.3 The Art of Listening 8.4 Payment Motivators 8.5 Five Ways to Change a Patient’s Mind 8.6 Collection Calls

9. Rejections and Appeals 9.1 Medicaid Appeal Process 9.2 Private Insurance Appeal Process 9.3 Collection Policies and Procedures for Submitted Claims 9.4 Verifying Eligibility 9.5 Medicare Appeals Process 9.6 The Revised Medicare Appeals Process 9.7 Medicare Part B Appeals Process - Carriers 9.8 Medicare Part B Appeals Process 9.9 General Guidelines for Writing Appeals



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9.10 Quality Control 9.11 Additional Resources

Appendixes

A PNC Lockbox Collections Report

B RA Log Examples

C Medicare Appeals Process Comparison



Part 5 - v

Version Control Version Date Notes

1.0 Beta February 2006 Initial version

1.0 July 2006 Published Version


Part 5. Accounts Management Version 1.0 1. Overview of Accounts Management July 2006

Part 5 - 1-1

1. Overview of Accounts Management

Contents 1.1 About the Revenue Operations Manual ..................................................... 1-2

1.1.1 Revenue Operations Manual Objectives............................................. 1-2 1.1.2 Revenue Operations Manual Contents................................................ 1-2 1.1.3 Accessing the Revenue Operations Manual........................................ 1-3

1.2 About Account Reconciliation ................................................................... 1-3 1.3 About Explanation of Benefits and Remittance Advice Adjustments ....... 1-5

1.3.1 Guidelines for Review Process ........................................................... 1-6 1.4 Remittance Advice/Notice Rejection Codes .............................................. 1-7

1.4.1 PR Group Code ................................................................................... 1-8 1.4.2 CO Group Code .................................................................................. 1-8 1.4.3 OA Group Code .................................................................................. 1-8 1.4.4 CR Group Code................................................................................... 1-9

1.5 Explanation of Benefit/Remittance Advice Data Elements ....................... 1-9 1.6 Automated Posting ................................................................................... 1-11

1.6.1 Processing Electronic Remittance Notices........................................ 1-12 1.7 Medicare Health Care Claim Adjustment Reason Codes ........................ 1-12 1.8 Claim Processing Timeliness ................................................................... 1-12 1.9 Check Management Process..................................................................... 1-13 1.10 Financial Management Internal Controls ................................................. 1-13

1.10.1 About Internal Controls .................................................................... 1-14 1.10.2 Internal Control Standards ................................................................ 1-14 1.10.3 Internal Control Activities ................................................................ 1-15

1.11 Monitoring Internal Controls ................................................................... 1-15 1.11.1 Benchmarking Accounts Receivable ................................................ 1-16 1.11.2 Avoiding Cash Flow Problems ......................................................... 1-17



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1.1 About the Revenue Operations Manual The Indian Health Service Revenue Operations Manual provides a system-wide reference resource for all Indian, Tribal, and Urban (I/T/U) facilities across the United States, to assist any and all staff with any function related to business operation procedures and processes.

1.1.1 Revenue Operations Manual Objectives • Provide standardized policies, procedures, and guidelines for the Business

Office related functions of IHS facilities.

• Capture accurate coding for all procedures and services to maximize reimbursement for each facility.

• Provide on-line, via the IHS Intranet, reference material subdivided by department and function that is accessible to all facilities.

• Share innovative concepts and creative approaches to Business Office functions across all the Area offices and facilities.

• Promote a more collaborative internal working environment throughout all of IHS.

• Foster and promote continuous quality improvement standards, which when implemented and monitored on a day-to-day basis, will ensure the highest quality of service at each level of the Business Office operation.

1.1.2 Revenue Operations Manual Contents

The Revenue Operations Manual is divided into the following five (5) parts:

• Part 1 Administrative Roles and Responsibilities contains – Overview of revenue operations – Laws, acts, and regulations affecting health care – IHS laws, regulations, and policies – Health Insurance Portability and Accountability Act Privacy Rule – Business Office management and staff – Business Office Quality Process Improvement and Compliance

• Part 2 Patient Registration contains: – Overview of patient registration – Patient eligibility, rights, and grievances – Direct care and contract health services – Third-party coverage



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– Registration, discharge, and transfer – Scheduling appointments – Benefit coordinator

• Part 3Coding contains: – Overview of coding – Medical record documentation – Coding guidelines – Data entry

• Part 4 Billing contains: – Overview of billing – Hard copy vs. electronic claims processing – Billing Medicare, Medicaid, and private insurance – Third party liability billing – Billing private dental insurance and Pharmacy – Secondary billing process

• Part 5 Accounts Management contains: – Overview of accounts management – Electronic deposits and Remittance Advices – Processing zero pays, payments, and adjustments – Creating payment batches – Reconciliation of credit/negative balances – Collections and collection strategies – Rejections and appeals

Each part and chapter of the manual is designed to address a specific area, department, or function. A part may also contain one or more appendices of topic-related reference materials.

This manual also includes: • Acronym dictionary • Glossary

1.1.3 Accessing the Revenue Operations Manual

The Revenue Operations Manual is available for downloading, viewing, and printing at this website:

http://www.ihs.gov/NonMedicalPrograms/BusinessOffice/index.cfm?module=rom





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1.2 About Account Reconciliation Account reconciliation is the act of comparing and confirming that the patient’s account for total charges and amount owed matches or balances with the reimbursement received from the insurer or patient or the transactions posted. In other words, it is balancing the account to zero or to a balance that may still be owed by another third party.

Another definition of account reconciliation is a method for reconciling the accounts to the monthly financial reports – the process of comparing a facility’s account records to the reports generated from the RPMS system.

Account reconciliation is an important element in the business process for the following reasons:

• Accounts must be reconciled to a zero balance. To accomplish this task, payments need to be accurately posted, errors need to resolved, explanations on adjustments need to be indicated, and research must be done to resolve discrepancies.

• Reimbursement is the basis for continued viability of the facility. If payment does not occur in a timely manner within the statute of limitations, the facility will not be paid. That is lost revenue. In addition, errors in payments, if not corrected, will in time result in significant financial losses to the facility. Finally, it is just good business practice to manage, accurately, each account.

• Audits from State Medicaid or Medicare could occur at any given time. Errors, discrepancies, or backlogs could have an impact on the outcome of the audit.

• If account reconciliation is not managed in a timely manner, the backlogs of adjustments, changes, appeals, and man-hours will become unwieldy.

With that said, it is important that all Business Office staff

• fully understand the comments and remarks on an Explanation of Benefits or Remittance Advice,

• efficiently and quickly decide on the next course or action,

• document and follow through on the course of action, and

• monitor the progress until rectified.

Account reconciliation is essential to ensure accurate reports and/or to identify errors and inconsistencies requiring correction. Without follow through, error corrections and appeals will be lost.



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1.3 About Explanation of Benefits and Remittance Advice Adjustments Explanation of Benefits (EOB) and Remittance Advices (RA) or notices vary by private insurance company, as well as by each state Medicaid program. The most consistent across the United States is the Medicare Part A and Part B payment notices.

The Accounts Receivable (AR) staff is responsible for reviewing all adjustments to assure they are posted correctly into the patient accounting system. Additionally, the Accounts Receivable or Billing staff is responsible for reviewing, researching, and appealing any rejections referenced on the Remittance Advice/notice. Finally, the task of being aware of any potential repetitive system problem, adjustment, credit, or other type of error is the responsibility of the AR person, as part of their review process.

The Explanation of Benefits and Remittance Advices/notices are important to finalizing the patient accounting process on any bill. The objective is to obtain a zero balance on the patient’s account between the charge, payments, and adjustments. There are different types of adjustments, such as deductibles, coinsurance, rejections, or amounts above the reasonable charge, as well as others.

This process represents the true accounting process of the Business Office. Therefore, it is very important for the AR staff to have a thorough understanding of each Explanation of Benefit and Remittance Advice/notice, to perform the proper accounting procedures in the RPMS system.

Each AR person needs to fully understand the meaning of each Remark code to determine the next pathway:

(1) Should the Remittance Advice be filed or passed on to another person to research?

Or

(2) Is the rejection valid and should the amount be adjusted in full on the patient account?



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1.3.1 Guidelines for Review Process

For those patient accounts listed on the Remittance Advice/notice that need further review, a definitive process and procedures should be established that will:

• Determine who will be researching the error or rejection.

For example, at your facility, is the person researching the errors and rejections the same AR person who posts, a separate person who is responsible for researching and appealing all accounts for all insurers, or does the remittance go back to the original biller to research and appeal?

The optimum person for researching and appealing claims is a separate person; however, this depends on the volume of claims handled at your facility.

If the volume is low, then the biller or AR person could perform this function, but if the volume is high, the biller would take away valuable billing time in order to research and appeal claims, potentially creating a backlog. The advantage of the biller reviewing rejections or errors is that they learn from their own mistakes, but you do not want to jeopardize the billing process.

The advantage of the AR person reviewing the errors and rejections is that it enables a second, independent review. Billing errors can always be shared back to the biller either as examples or part of a discussion.

• Define a policy and procedures for when each of these reviews needs to be done.

Remember that many insurers have stipulated timeframes of when a response to an appeal must be done. If the response is not sent within that timeframe, the claim will be denied and there will be no recourse for the facility.

• Prioritize the reviews based on the either the large dollar claims (inpatient) or by the shorter timeframes to respond in the appeal process.

• Develop a review and audit process, randomly or at set times per month, to review the number of claims that need to be researched. This will assure that these reviews are being done in a timely manner.

• Develop a backup process in case the volume of denials or errors increases. Train other staff to help with the review and appeal process, or consider outsourcing



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• Know what is paid and not paid by the insurer.

Once a rejection is noted and the facility determines that it is not a covered service by the insurer, make sure the coder, provider, and billing staff know that this should not be billed in the future.

However, if there is a primary and secondary coverage and the secondary coverage provides benefits for this service or procedure, it definitely needs to be billed to obtain the rejection.

Insurers have certain internal rules and regulations on how certain services should be billed and/or what they want documented in the Provider Note. Each biller should be familiar with these processes to assure that the bills submitted are submitted correctly.

• Educate staff on noted changes to insurer rules, regulations, procedures, and processes.

The following RPMS Accounts Receivable application options allow you to query for definitions of adjustment reason and remittance advice remark codes:

• Standard Adjustment Reason Inquire (IADJ)

• Remittance Advice Remark Code Inquire (IRMK)

For information on accessing these options, see the RPMS Accounts Receivable (BAR) User Manual, which is available at this website:

http://www.ihs.gov/cio/rpms/index.cfm?module=home&option=documents

1.4 Remittance Advice/Notice Rejection Codes Remittance Advices/notices are also known as Medicare Summary Vouchers. Reason and Remark codes are used to explain why a claim may not have been paid in full. Reasons include

• The service is not covered, • The benefit maximum has been reached, or • The charges exceed the amount allowed.




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Group codes are codes that will always be shown with a Reason code to indicate when you may or may not bill a beneficiary for the non-paid balance of the service you rendered. There are four types of Group Codes:

Code Reason/Remark PR Patient Responsibility CO Contractual Obligation OA Other adjustment CR Correction or Reversal to a prior decision

For a complete list of Remittance Advice Remark codes, see the RPMS Accounts Receivable (BAR) User Manual, Appendix C: “Remittance Advice Remark Codes,” which is available at this website:


1.4.1 PR Group Code

The PR group code indicates the patient’s liability. Due to the frequency of use, separate columns are used to report the deductible and coinsurance amounts, which are also the patient’s responsibility. Totals for all PR amounts are listed at the end of each claim.

1.4.2 CO Group Code

The CO group code identifies excess amounts for which the law prohibits Medicare payment and absolves the beneficiary of any financial responsibility. These includes such areas as

• Participation agreement violation amounts • Limiting charge violations • Late filing penalties • Amounts for services not considered to be reasonable and necessary

1.4.3 OA Group Code

The OA group code is used when neither PR nor CO is used, such as with the Reason code message that indicates the bill is being paid in full.




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1.4.4 CR Group Code

The CR group code indicates a change to the decision on a previously adjudicated claim as the result of a subsequent reopening. CR will explain the reason for change.

1.5 Explanation of Benefit/Remittance Advice Data Elements The following list is a summary of the typical data elements listed on the private insurer or state Medicaid Explanation of Benefits or Remittance Advice. Some insurers include more information and some less.

• Name, address and telephone number of the insurer

• Date of the Remittance Advice or Explanation of Benefits or date of invoice

• Tax Identification Number (TIN)

• Group name and group number (primarily private insurers)

• Check number and check amount

• Name and address of IHS facility

• Bank code (for electronic submission and posting)

• Identification or member number for the patient

• Patient name

• Social Security Number (not all insurers reference this data on the EOB)

• Patient relationship

• Patient account number (the account number assigned by the facility)

• Member name (if different than patient)

• Control number or claim number (number assigned by the insurer for their internal control)

• Date claim received at the insurer

• Provider of service (facility name, provider name, billing provider, service provider, etc.)

• Provider number

• Date or dates of service (for inpatient admissions the admitting and discharge date will be referenced)



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• Place of service, form type, or services rendered at (specific location)

• Description or type of service (clinic visit, lab, surgery, or the insurer may list the CPT or HCPCS code. For inpatient claims the DRG code and days will be referenced. In addition, some insurers will also list the term “negotiated rate.”)

• Modifier or Units – This refers to the number of same services being billed for a given day or the modifier that was billed with the procedure code. This could also be used for inpatient revenue codes that utilize units.

• Amount Charged (usually divided by service or date)

• Not covered portion (for those services or procedures not covered under that patient’s contract or for patients not covered under that contract, e.g., contract was terminated)

• Adjustment or discount amount

• Amount allowed

• Amount applied to the deductible or coinsurance

• Percent or payment factor covered by the insurer

• Amount paid to the provider, facility (usually the amounts are divided by service or date)

• Remark code – a description of the remark code will either appear at the bottom of the Explanation of Benefits or Remittance Advice, or at the end of the notice.

• Patient responsibility or patient share – this is the amount owed by the patient to the facility, such as deductible, coinsurance, or rejected claim.

• Subtotals and Totals – Subtotals are listed for multiple services done on one day and the total is listed at the end for all patients, all services.

• Adjustments – For claims paid previously and denied or underpaid, there will be reference to this statement:

“This is an adjustment to a previously considered claim”.



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For Medicare, offsets to payments are shown as an adjustment against an individual claim in that remittance notice. The Financial Control Numbers (FCNs) that will enable the provider to associate the offset with those claims and payments that led to the withholding is shown under the FCN column.

A single HIC number is printed if the offset is for a Medicare overpayment and a HIC number is associated with the offset. The HIC number will not be supplied if none is associated with the offset. Multiple HIC numbers are not printed in this field; the notice must be consistent with the electronic remittance advice standard, which only permits a single HIC in this field

• Claim status – This is used by insurers to inform the facility of a deferred claim, a paid claim, a claim routed to another insurer such as a secondary insurer, or other. Crossover claims may also be listed immediately following the claim payment history under comments. Other insurers will have a column on the Remittance Advice for other insurers billed, such as “Medicaid billed amount.”

For detailed descriptions of Remittance Advices or Explanation of Benefits for your area, contact your local insurer.

1.6 Automated Posting For Medicare Part A and Part B, Medicaid, and for some private insurance, an Electronic Fund Transfer (EFT) and Electronic Remittance Notice (ERN) are available. Advantages include:

• Facilities receive reimbursement electronically on a daily basis for the claims that have been approved and have met the payment floor.

• Saves time from manually handling checks.

• Eliminates the need for manual posting of payments, line by line.

• Remittances include all claims and adjustments.

• HIPAA compliant - uses the same electronic format, ANSI X12 files (Using the same format enables facilities to electronically transmit to multiple insurers.)



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1.6.1 Processing Electronic Remittance Notices

For information on processing electronic Remittance Advices/Notices, see the RPMS Accounts Receivable User Manual (BAR), Chapter 9.14, “ERA Posting (ERA),” which is available at this website:


1.7 Medicare Health Care Claim Adjustment Reason Codes Medicare adjustment reason codes are used to explain any adjustment in payment. For the most recent updated code list, go to this website:

http://www.wpc-edi.com/codes/claimadjustment

1.8 Claim Processing Timeliness Facilities across the United States confirm that payment delays from insurance companies have become a significant problem. Because of this, many states have enacted prompt payment laws, also known as fair claims practice regulations.

Prompt payment laws dictate how quickly an insurer must pay a clean claim once it is submitted. Not all states have a prompt payment law, and certain restrictions apply in each state.

The process is as follows:

1. Generate an aged trail balance (accounts receivable report) and identify payers with outstanding claims.

2. Examine payers that have a number of outstanding balances that are past your state’s time limit.

3. Review the EOBs and follow up.

If the insurer claims it has no record of receiving your claim,

• Resend the claim.

• Keep track of the response in the Message section of the RPMS Accounts Receivable application.


http://www.wpc-edi.com/codes/claimadjustment



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If there is no valid reason for non-payment,

• Send a letter to the payer stating that payment is overdue and expected.

• Keep a copy for your file.

• If your state has an interest penalty for late payments be sure to ask for those additional monies in your letter.

• Document (in writing) any payers who are chronically late with payments, so that reference can be made to the person and date if the reimbursement is not received.

In addition, the Omnibus budget Reconciliation Act of 1986 established claims processing timeliness requirements for all Medicare claims.

• Electronic clean claims, defined as any claim that does not require outside development, must be processed within 30 days by Medicare;

• Manual paper claim submission is slightly longer.

On October 1, 1993, a provider interest payment was implemented. Interest payments will be applied on clean claims not process timely on the 31st day, after the date of receipt of a clean electronic claim, or, on the 31st day after the date of receipt of a clean paper form.

1.9 Check Management Process For information regarding check management, see the Indian Health Manual, Part 5, Chapter 1, “Third Party Accounts Management and Internal Controls,” which is available at this website:

http://www.ihs.gov/PublicInfo/Publications/IHSManual/Part5/pt5chpt1/pageone.htm

1.10 Financial Management Internal Controls The purpose of this section is to provide guidelines and suggestions to IHS facilities to strengthen their internal reviews related to account reconciliation.





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1.10.1 About Internal Controls

Internal controls are those checks and balances that ensure that operational objectives are carried out as planned, in the most effective and efficient manner possible. As such, internal controls should be viewed as integral parts of each system management uses to accomplish the objectives of the department.

Internal controls are not just financial tools that safeguard assets, but also are vitally important to the day-to-day programmatic and administrative operations. Thus, each facility needs to ask itself the following question:

“Can we be sure that there are adequate internal controls in place and operating effectively for the business processes that we are performing?”

Internal controls provide reasonable assurance that the following objectives are being achieved:

• Effectiveness and efficiency of operations

• Reliability of financial reporting, and

• Compliance with applicable laws

Internal controls also serve as the first line of defense in safeguarding assets, and preventing and detecting errors and fraud. In short, internal control, which is synonymous with management control, helps supervisors and managers achieve desired results through effective stewardship of resources.

1.10.2 Internal Control Standards

There are three fundamental concepts underlying the framework of internal control standards:

(1) Internal controls involve a facility-wide commitment that defines and implements a continuous process of assessing, monitoring, and tracking activities through an integrated and effective communication mechanism.

(2) A facility’s management directs internal control, which is carried out by the staff.

(3) Reasonable assurance indicates that an internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance.



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Discipline and structure, integral parts of internal control, should be supported by management.

1.10.3 Internal Control Activities

Internal control activities, policies, and procedures help to ensure that management’s directives are carried out. Activities include • approvals • authorizations • verifications • reconciliation • performance reviews • security • proper execution of transactions • accurate and timely recording of transactions • access restrictions • appropriate documentation • segregation of duties

Pertinent information must be identified, captured, and communicated in a form and timeframe that enables people to carry out their responsibilities.

1.11 Monitoring Internal Controls Internal control monitoring, which assesses the quality of the operational system and process over time, needs to be part of the process. Internal control should generally be designed to assure that ongoing monitoring occurs in the course of normal operations. Part of the process includes separate evaluations to assure a check and balance of the entire process.

Other key points to note are:

• Access to computer systems and programs should be appropriately authorized, documented, and monitored.

• Adequate segregation to duties exists between various functions and is supported by appropriately authorized and documented policies.

• Staff are supervised and reviewed.

• Audit and tracking trails are developed and monitored



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• Aged claims are routinely reviewed and processes are in place to limit claims being placed in the over 120 day category

• Business office staff are trained on all aspects of their job

• Copies of written and telephone inquiries and appeals are retained and handled accurately, appropriately and timely

• Appropriate safeguards and administrative actions are taken when fraud is suspected.

• All employees comply with applicable laws and regulations

• All financial transactions are valid and have a secondary approval process by an authorized person

• Segregation of duties exists within the areas of disbursement and collection, as well as between billing and account reconciliation

• Accounts receivable should be correctly recorded

• Bank deposits should be accurately stated and have a secondary review process by an authorized person

The Indian Health Service has recently adopted the Third Party Revenue Accounts Management and Internal Controls policy, which defines internal controls and guidance for financial management control. To review the policy, see the Indian Health Manual, Part 5, Chapter 1, “Third Party Accounts Management and Internal Controls,” which is available at this website:


1.11.1 Benchmarking Accounts Receivable

A suggestion for monitoring accounts receivable performance is to create an excel spreadsheet of the total cash/checks received on a daily, weekly, or monthly basis, or the total cash/checks received by payer. This data can be compared to previous months or years to demonstrate increased reimbursement and/or to monitor compliance process improvement changes.

Additional monitoring reports, such as amount of dollars placed in bad debt by month, amount billed and/or received by each insurer on a monthly basis, and days in AR by major payer, are value tools to monitor adverse fluctuations in your cash flow. These reports provide a true assessment of a facility’s accounts receivable and pinpoint where improvements are necessary.





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Each of these reports can also yield charts and graphs so that information can be shared with the Finance Office and senior management. Problems and adverse trends can be easily identified, and mitigation strategies can be put into place quickly.

1.11.2 Avoiding Cash Flow Problems

To avoid cash flow problems, the following areas need to be monitored:

• An increase of dollars in Accounts Receivable outstanding of more than 10 percent over one year ago

• An increase in the number of open accounts compared to a year ago

• An increase in bad debt compared to a year ago

• An increase in medical record delays

• An increase in percent of receivables over 90 days means cash is turning slowly

• Cash collections not keeping up with or exceeding net amount billed each month


Part 5. Accounts Management Version 1.0 2. Electronic Deposits & Remittance Advices July 2006

Part 5 - 2-1

2. Electronic Deposits and Remittance Advices

Contents 2.1 About Electronic Transactions ................................................................... 2-2 2.2 Electronic Reimbursement Process ............................................................ 2-2

2.2.1 Download PNC Bank Deposits........................................................... 2-2 2.2.2 Download the PNC Bank Previous Day Summary

and Detail Report ............................................................................... 2-2 2.2.3 Download and Print the PNC Bank Lockbox Report ......................... 2-3



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2.1 About Electronic Transactions Electronic transactions can be used to make a payment and/or send an Explanation of Benefits (EOB) or Remittance Advice (RA) to a health care provider either directly or via a financial institution.

Medicare currently supports the ANSI ASC X12N 835 Health Care Claim Payment/Advice Transaction electronic format. This is a variable-length format that allows remittance advice information to be sent to both institutional and non-institutional providers.

2.2 Electronic Reimbursement Process IHS has an agreement and arrangement with PNC Bank to enable electronic reimbursement between major insurers and the different IHS facilities and Area offices. The reimbursement is based on claim batches by insurer.

The following sections describe the process of tracking these electronic fund transfers (EFTs).

2.2.1 Download PNC Bank Deposits

EDI 835 files are downloaded thru PNC Sterling Software.

Website: www.treasury.pncbank.com

After logging on, see the instructions for downloading EFT payment files.

2.2.2 Download the PNC Bank Previous Day Summary and Detail Report

Note: Previous Day Summary and Detail Reports are only for ACH/EFT credits for payers with ACH/EFT capabilities, such as Medicare Part A and B.

It is the responsibility of the Business Office Accounts Receivable section to identify facility payments from the PNC Bank deposits and the pay date. A hard copy of the Previous Day Summary and Detail Report should be printed and submitted to the Business Office manager, which can be used for

http://www.treasury.pncbank.com/



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management review. For an example of the PNC Lockbox Collection Report, see Part 5, Appendix A.

To download and print the Previous Day Summary and Detail report:

1. Go to the PNC Bank website:

www.treasury.pncbank.com

2. Select a Module: Account Login

3. Select a Service: Pinnacle Web

4. On the log in page, enter the following information: – Company User ID – Operator ID – Password

5. Pinnacle Web page: Modules

6. Select a Module: Previous Day Rptg

7. Previous Day Report Page: Under Daily Reports, select: Previous Day Summary and Detail.

8. Click on Download/Print.

9. In the small box that appears, select ALL and APPLY.

10. When the File Download screen appears, select Open this File from this Location and click OK.

11. Print two (2) copies, and Exit.

One complete copy will be filed with A/R and another copy will be given to Finance or Accounting.

The A/R technician will now access the special report service using the same website.

2.2.3 Download and Print the PNC Bank Lockbox Report

The PNC Bank Lockbox Special Report contain all paper check deposits, including amounts with check number, check amount, and payer (e.g., Private Insurance, Non-Beneficiary, NM Medicaid and Saluds).




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For the correct PNC Bank Lockbox procedure, go to this website:

http://www.treasury.pncbank.com

To download and print the Lockbox report:

1. Select a Module: Special Report Svc

2. Under Special Report Dashboard: (Report Group), select Lockbox.

3. Under Lockbox (History Report), select Lockbox.

4. Click on Download/Print.

5. In the small box that appears, select ALL and APPLY.

6. When the File Download screen appears, select Open this File from this Location and click OK.

7. Print two (2) copies, and Exit.

8. Log off

One complete copy will be filed with A/R and another copy will be given to Finance or Accounting.



Part 5. Accounts Management Version 1.0 3. Processing Zero Pays July 2006

Part 5 - 3-1

3. Processing Zero Pays

Contents 3.1 Preparing Zero Pays ................................................................................... 3-2 3.2 Sorting Payments and Zero Pays with No Identifying Information........... 3-2 3.3 Processing Zero Pay Documents................................................................ 3-3 3.4 Creating Batches for Zero Payment ........................................................... 3-3

3.4.1 Step 1: Create a batch.......................................................................... 3-3 3.4.2 Step 2: Print a Report .......................................................................... 3-4



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3.1 Preparing Zero Pays 1. Research each payment and/or EOB for patient’s account number,

patient’s name, date of service, and payment.

2. Sort each payment and/or zero pay by identified allowance category and by facility.

After researching and sorting for batching, each EOB for private insurance, Medicare, Medicaid, and non-beneficiary is maintained according to local Area office finance procedures.

3.2 Sorting Payments and Zero Pays with No Identifying Information Use the following procedure when there is no identifying information on the EOB to tell which facility it belongs to or to identify the allowance category for batching.

1. Log on to RPMS system.

2. Access the Accounts Receivable application, the Posting (PST) menu.

3. Go to the Adjustment (ADJ) menu option.

4. Search each EOB for patient’s account number, patient’s name, date of service and billed amount/charges.

5. Note on EOB the account number and the facility.

6. Sort each EOB by identifying allowance category, by facility.

After researching and sorting for batching, each EOB for private insurance, Medicare, Medicaid, and non-beneficiary is maintained according to local Area office finance procedures.



Part 5 - 3-3

3.3 Processing Zero Pay Documents To process zero pay documents:

• 1. Create a batch for zero pays.

• 2. Enter by document the payer name, check number, and amount.

Documents include any correspondence, Explanation of Benefits, or Remittance Advice from an insurer where there is no payment. Each document may reference a single claim or multiple claims.

3.4 Creating Batches for Zero Payment The procedure for posting a zero payment is the same as posting a payment; however, only adjustments are posted for zero payments.

3.4.1 Step 1: Create a batch

1. Log on to RPMS to generate a batch.

2. Select the Collection Menu (COL) and press Enter.

3. At the prompt, type EN (Collections Entry) and press Enter.

4. At the prompt, enter your electronic signature code and press Enter.

5. Enter the following information: Collections Name Create a zero pay collection point Payment Type 51 (EOB Checks) Payer’s Name (e.g., Blue Cross and Blue Shield) – if more than one find

the correct address Check Number Type ZP (Zero Pay) and issue date of document

Example: ZP05232005 Check Amount type the number 0 (zero) Location If applicable, enter the facility location

Press Enter.



Part 5 - 3-4

6. If . . . Type . . . your entry is correct C for Continue There is an error on the check number or check name

E for Edit

you duplicated an entry, or want to start over for that item

D for Delete.

7. Continue to enter all checks for each batch (change the check name, if necessary).

8. When finished, type Q (Quit).

3.4.2 Step 2: Print a Report

1. Go to CR (Collections Report).

2. At the prompt, type DT (Collections Report Detail). – Type in batch name. – Review and type Yes.

Press Enter two (2) times (print to screen or print hard copy).

3. Review the batch and press Enter

4. Go back to DT (Collections Report Detail). – Type the batch name again and press Enter.

5. Type the device number to print.

6. Go to FL (Collections Report Final). – Type batch name again and press Enter.

7. Type Yes to finalize this batch and print.

Continue generating all batches for remaining deposit.


Part 5. Accounts Management Version 1.0 4. Creating Payment Batches July 2006

Part 5 - 4-1

4. Creating Payment Batches

Contents 4.1 Procedure for Creating a Payment Batch ................................................... 4-2

4.1.1 Step 1: Create a Batch......................................................................... 4-2 4.1.2 Step 2: Print a Report .......................................................................... 4-3

4.2 Editing Batches before Finalizing .............................................................. 4-3 4.2.1 Step 1: Edit the Batch.......................................................................... 4-3 4.2.2 Step 2: Print the Collections Report Detail ......................................... 4-4

4.3 Processing the Batches for Posting ............................................................ 4-5 4.4 Logging New Batches in the RA Log ........................................................ 4-5 4.5 Logging Posted Batches in the RA Log ..................................................... 4-7



Part 5 - 4-2

4.1 Procedure for Creating a Payment Batch

4.1.1 Step 1: Create a Batch

1. Log on to RPMS Accounts Receivable application.

2. Select the Collection Menu (COL) and press Enter.


4. At the prompt, enter your electronic signature code and press Enter.

5. Enter the following information: Collections Name Create a zero pay collection point Payment Type 51 (EOB Checks) Payer’s Name (e.g., Blue Cross and Blue Shield) – if more than one find

the correct address Check Number Type ZP (Zero Pay) and issue date of document

Example: ZP05232005 Check Amount type the number 0 (zero) Location If applicable, enter the facility location

Press Enter.

6. If . . . Type . . . your entry is correct C for Continue There is an error on the check number or check name

E for Edit

you duplicated an entry, or want to start over for that item

D for Delete.

7. Continue to enter all checks for each batch (change the check name, if necessary).

8. When finished, type Q (Quit).



Part 5 - 4-3

4.1.2 Step 2: Print a Report

1. Go to CR (Collections Report).

2. At the prompt, type DT (Collections Report Detail). – Enter the batch name. – Review and type Yes.

Press Enter two (2) times (print to screen or print hard copy).

3. Validate the lister tape, deposit ticket, and batch totals to reconcile. If the totals do not reconcile, see section 4.2, "Editing Batches before Finalizing," on page 4-3.

4. Go back to DT, Collections Report Detail. – Type the batch name again and press Enter.


6. Go to FL (Collections Report Final). – Type batch name again and press Enter.

7. Type Yes to finalize this batch and print.

8 Go to FL (Collections Report Final). – Type batch name and the date. – Print final copy.

Continue generating all batches for remaining deposit.

4.2 Editing Batches before Finalizing

4.2.1 Step 1: Edit the Batch

If you need to edit a batch item,

2. Go to the Collection Menu (COL) and press Enter.


4. At the prompt, type your electronic signature code and press Enter.

5. At the prompt, enter the collection point name and press Enter.



Part 5 - 4-4

6. At the next prompt (Payer or Payment Type), press Shift/6 (^).

7. At the next prompt, type E (Edit) and press Enter.

7. At the Edit/Cancel an Item with Auditing prompt, type ?? to display the list of items.

8. Select the item you want to edit and press Enter.

9. At the Edit with Audit, Cancel, or Quit prompt, type E (Edit). – Under Comments, enter Yes. – Enter message for error comments. – If comment is correct, enter Yes.

Note: When you select Edit with Audit, the original item number is replaced with the next available item number. The Exceptions report (Collections Report menu) allows you to view canceled or edited items.

The Edit menu allows you to change the following: – Payer’s Name – Check Number – Check Amount – Location

10. At the prompt, type C (Continue).

11. A detail screen appears. Verify the information displayed. – If it is correct, type Yes. – If still incorrect, type No to re-edit the item.

12. The system prompts for another item. If you have completed editing this batch, press Enter.

13. Type Q (Quit).

4.2.2 Step 2: Print the Collections Report Detail

1. Go back to the Collection Menu (COL) and at the prompt, type DT (Collections Report Detail).

2. Enter the batch name again and press Enter.



Part 5 - 4-5


4. Review the batch and press Enter.

5. Review the detailed report to verify that the information entered is correct.

6. If the data on the detailed report is accurate, go to FL (Collections Report Final).

7. At the prompt, type batch name again and press Enter.

8. At the prompt, type Yes to finalize this batch and print the report.

9 Go to FL (Collections Report Final). – Type batch name and date. – Print final copy.

4.3 Processing the Batches for Posting To prepare the batches for posting:

1. Sort the reports.

2. Attach the Collections Report Final to Remittance Advice and zero pay documents for posting.

3. Submit to the Business Office for posting.

4.4 Logging New Batches in the RA Log The RA log is an Excel spreadsheet that consists of all payers, check numbers, check amounts, date deposits were made, date batch was completed, and number of days it took to complete a batch.

Each tab represents deposits made by allowance category. In some cases facilities with satellites may have separate tabs by allowance category and location.

These spreadsheets will allow the A/R technician to provide accurate information about each payer and track every cent received from PNC for your facility. To view sample RA logs, see Part 5, Appendix B.



Part 5 - 4-6

To log new batches in the RA log:

1. Open the Excel RA Log file.

2. Click on the worksheet tab for the type of deposits you want to log: Medicare Part B, Medicare Railroad, Private Insurance.

To enter deposits for . . . You need . . . Medicare Part B, • date received

• initials • amount received • provider number

Medicare/Railroad • date received • initials • amount paid

Private Insurance • date received • initials • date paid • amount received

3. Date-stamp with the date of receipt on all cover sheets of final batches.

4. Select the worksheet tab for the correct Third Party payer.

5. Assign the batches with numbers including date received, batch date, batch amount, R/A date, and R/A number.

6. Assign numbers to the batches located on the lower right of the Collections Report Detailed.

7. Once the batch has been identified, go to the R/A Log and click on the worksheet tab.

8. Match each check number, payer, and amount on the Previous Day Summary and Detail Report with what has been batched.

9. Enter the information accurately to include check number, check amount, date paid and date received in the appropriate payers, which is listed on the worksheet tab.

10. When finished, place batches in the file room for posting.



Part 5 - 4-7

4.5 Logging Posted Batches in the RA Log After batches have been posted in the RPMS Accounts Receivable application, log these batches in the Excel RA Log file.

To log posted batches in the RA log:

1. Open the Excel RA Log file. Click on the tab containing the appropriate allowance category.

2. Identify the completed batch by matching the batch name, batch date, and batch amounts.

3. Complete all columns with required information.

4. When finished, put the posted and logged batches in the area designated for completed batches at your facility.


Part 5. Accounts Management Version 1.0 5. Processing Payments & Adjustments July 2006

Part 5 - 5-1

5. Processing Payments and Adjustments

Contents 5.1 Posting Payments and Adjustments ........................................................... 5-2 5.2 Posting Payments to Patient Accounts ....................................................... 5-2

5.2.1 Posting Payments on Daily Batches.................................................... 5-2 5.2.2 Unidentified Cash ............................................................................... 5-5

5.3 Posting Medicare/Railroad Retirement Released Payments ...................... 5-6 5.3.1 Released - No Penalty ......................................................................... 5-6 5.3.2 Released - with Penalty....................................................................... 5-6

5.4 Posting an Adjustment ............................................................................... 5-6 5.5 Posting an Interest Payment/Adjustment ................................................... 5-9

5.5.1 Step 1: Post the Payment..................................................................... 5-9 5.5.2 Step 2: Reverse the Credit Balance................................................... 5-10

5.6 Posting Payment Recoupments ................................................................ 5-10



Part 5 - 5-2

5.1 Posting Payments and Adjustments The Accounts Receivable (RA) staff will use the Explanation of Benefits or Remittance Advice as their reference document when posting payments or adjustments.

For more information, see the Indian Health Manual, Part 5, Chapter 1, “Third Party Accounts Management and Internal Controls,” which is available at this website:


5.2 Posting Payments to Patient Accounts

5.2.1 Posting Payments on Daily Batches

To post payments on daily batches:

1. Log on to RPMS and go to the Accounts Receivable (BAR) application.

a. Select BAR or A/R Master Menu.

b. At the menu option prompt, type PST (Posting) and press Enter. T

c. At the menu option prompt, type PAY (Post Payments and Adjustments) and press Enter.

d. Enter your electronic signature code and press Enter.

e. If the Roll-over as you post? prompt appears, type Y (Yes) and press Enter.

2. Select the batch and batch item you want to post.

a. At the prompt, enter the batch or type ?? to display a list of batches and select the batch. Then press Enter to display the total amount posted and any remaining balance of the batch selected.





Part 5 - 5-3

b. Enter the Batch Item you want to post.

Normal selection is in item number order. Item numbers may be selected out of order by entering the specific item number.

The following data is displayed for the selected batch item: • Total posted amount • Remaining balance amount

c. Select Visit Location (your facility) and press Enter.

3. At the prompt enter the A/R Bill/IHS Bill Number and enter the patient’s account number.

a. If no claim number is listed on the EOB, press Enter.

b. Enter the patient’s last name, then first name or social security number, and press Enter.

c. Enter date of service and press Enter.

d. Confirm that the patient name, date of service, and dollar amount match the EOB.

e. At the select Action prompt, type P (Post), M (More), or C (Cancel), and press Enter.

f. At the Select Command prompt, type B (Bill Inquire) and press Enter. The patient chart number, visit type, clinic type, provider, a brief description of the visit and other related information are displayed.

g. At the Select Command prompt, type H (History) and press Enter. All transactions for a particular bill, including current and posted transactions, are displayed.

h. At the Select Command prompt, type D (Patient Demographic) and press Enter. The patient’s residence, third party eligibility, date of birth, social security number, and verification of eligibility are displayed.



Part 5 - 5-4

6. At the prompt, type P or 1 for posting payments and press Enter.

a. Confirm the correct dollar amount to post from the EOB. Enter the payment amount and press Enter.

b. If the Current Balance column for the line item for which the payment was posted equals zero (0), type Q or 3 at the prompt and press Enter.

7. Identify the reason for the remaining balance based on the EOB. The most common reasons are the deductible and coinsurance.

8. At the Select Command prompt, type A or 2 (Adjustment) and press Enter.

a. Enter the amount of the adjustment based on the EOB or your calculations and press Enter.

b. Type ?? to display the list of Adjustment Categories and press Enter.

Adjustments 3 Non Payments 4Deductible 13Co-Pay 14Penalty 15Grouper Allowance 16Refund 19Payment Credit 20

c. Select the appropriate Adjustment Category and press Enter.

d. Type ?? to display the list of Adjustment Types and press Enter.

e. Select the appropriate Adjustment Type and press Enter.

9. If there is still a balance after all the payments are posted, at the prompt type B (Bill Detail) and press Enter.

The bill detail will provide information on whether all the charges were considered.

10. At the Select Command prompt, type M (Message), and press Enter.



Part 5 - 5-5

11. At the prompt, type 1 to create a message, and press Enter.

If there is a previous message, the system displays it and asks if you want to view the existing message. If there were no previous messages, “No Message on File” appears.

• To view the previous message, type Y (Yes). After viewing the message, type Q (Quit) and press Enter.

• If you do not want to view the previous message, type N (No) and press Enter.

12. At the Create a Message? prompt, type Y (Yes) to create an editable message.

a. Enter the message. The message should be very detailed and include the insurance company name, amount in question and the name of the person to which you referred the EOB.

b. when finished, press Enter or type 4 (Exit).

13. At the prompt, select one of the following options based on whether there are more checks to post to this item number:

P Post to A/R (post what has been entered) M More (post more to the claim) C Cancel (cancel current entry)

14. If there are

• more claims to post off that item number, select another claim.

• no other claim(s) to post, press Enter three (3) times.

Continue posting payments until your Batch Total is zero (0).

5.2.2 Unidentified Cash

Note: For unidentified cash or a check received where you are unable to identify the patient, post the money to “Unallocated Cash.” The system will ask “Do you want to POST any of the unposted balance to Unallocated Cash?” Press Enter (Yes).



Part 5 - 5-6

5.3 Posting Medicare/Railroad Retirement Released Payments

5.3.1 Released - No Penalty

Post these payments, using the instructions in Part 5, Chapter 5, Section 5.1, “Posting Payments and Adjustments.”

When finished, attach the Remittance Advice (RA) from the holding file.

5.3.2 Released - with Penalty

1. Post the penalty charge under Penalty, using the most appropriate description listed under the Penalty Adjustment types.

2. Post the payments, using the instructions in Part 5, Chapter 5, Section 5.1, “Posting Payments and Adjustments.”

5.4 Posting an Adjustment The Explanation of Benefits or Remittance Advice is the reference document for adjusting over-payments or handling a billed-in-error account. Examples include adjusting copays, deductibles, over usual and customary charges, eligibility not received, and over-payment.

The RA staff must post each account sequentially, and notify Finance.

To post an adjustment:

1. Log on to RPMS and go to the Accounts Receivable (BAR) application.

a. Select BAR or A/R Master Menu.

b. At the menu option prompt, type PST (Posting) and press Enter. T

c. At the menu option prompt, type PAY (Post Payments and Adjustments) and press Enter.

d. Enter your electronic signature code and press Enter.

e. If the Roll-over as you post? prompt appears, type Y (Yes) and press Enter.



Part 5 - 5-7

2. At the prompt, enter the batch or type ?? to display a list of batches and select the batch. Then press Enter to display the total amount posted and any remaining balance of the batch selected.

3. Enter the Batch Item number for which you want to post an offset payment.

Normal Selection is in Item Number order. Item Numbers may be selected out of order by inputting the Specific Item number

The following data is displayed for the selected batch item: • Total posted amount • Remaining balance amount

4. Select Visit Location (your facility) and press Enter.

5. At the prompt enter the A/R Bill/IHS Bill Number and enter the patient’s account number.

a. If no claim number is listed on the EOB, press Enter.

b. Enter the patient’s last name, then first name or social security number, and press Enter.

c. Enter date of service and press Enter.

d. Confirm that the patient name, date of service, and dollar amount match the EOB.

e. At the select Action prompt, type P (Post), M (More), or C (Cancel), and press Enter.

f. At the Select Command prompt, type B (Bill Inquire) and press Enter. The patient chart number, visit type, clinic type, provider, a brief description of the visit and other related information are displayed.

g. At the Select Command prompt, type H (History) and press Enter. All transactions for a particular bill, including current and posted transactions, are displayed.

h. At the Select Command prompt, type D (Patient Demographic) and press Enter. The patient’s residence, third party eligibility, date of birth, social security number, and verification of eligibility are displayed.



Part 5 - 5-8

6. At the prompt, type A or 2 (Adjustment/Close Out) and press Enter.

a. Post the balance of the positive sum to the Adjustment Category, Billed in Error.

b. Select appropriate adjustment type and press Enter.

c. Enter the New Patient Claim Number/Non Batch EOB. Remain in the same batch

d. Enter the payment sum to the new claim.

7. At the Select Command prompt, type P or 1 for posting payments and press Enter.

8. If the claim has a secondary payer, the system asks if you want to roll to secondary. Type Yes and press Enter.

9. At the Select Command prompt, type M (Message), and press Enter.

The following options appear: 1. Bill Message for bill number and location listed 2. Patient Message for patient name listed 3. Account Message for account insurance company name listed 4. Exit

10. At the prompt, type 1 to create a message, and press Enter.

If there is a previous message, the system displays it and asks if you want to view the existing message. If there were no previous messages, “No Message on File” appears.

• To view the previous message, type Y (Yes). After viewing the message, type Q (Quit) and press Enter.

• If you do not want to view the previous message, type N (No) and press Enter.

11. At the “Create a Message?” prompt, type Y (Yes).

a. Enter the message in the system. The message should be very detailed to include the insurance company name, amount in question and the name of the person to which you referred the EOB.

b. To exit the Message Menu, press Enter or type 4 (Exit).



Part 5 - 5-9

12. At the prompt, select one of the following options based on whether there are more offset payments to post to this item number:

P M C

Post to A/R (post what has been entered) More (post more to the claim) Cancel (cancel current entry)

13. If there are

• more claims to post off that item number, select another claim.

• no other claim(s) to post, press Enter three (3) times.

Continue posting adjustments until your Batch Total is zero (0).

5.5 Posting an Interest Payment/Adjustment The following procedure is completed in two steps:

• The first step posts the payment to a pre-identified account, resulting in a credit balance.

• The second step reverses the credit balance transaction.

5.5.1 Step 1: Post the Payment

1. Follow the steps in section 5.2.1, “Posting Payments on Daily Batches,” beginning on page 5-2, through and including, step 3-h,

“At the Select Command prompt, type D (Patient Demographic) and press Enter.”

to validate patient information, such as name, policy holder ID, date of service, amount billed.

Then continue with the following steps:

2. At the prompt, type 1 to Post Payment.

3. Confirm the correct dollar amount to post from the EOB. Enter the amount and press Enter.



Part 5 - 5-10

5.5.2 Step 2: Reverse the Credit Balance

1. At the Select Command prompt, type A or 2 for Adjustment and press Enter.

2. Enter the negative amount of the adjustment based on your calculation or EOB or RA, and press Enter.

3. Type 4 or NONPAY (Non-Payments) for Adjustment Category and press Enter.

4. Type 685 or Interest Amount for Adjustment Type and press Enter.

The claim is zeroed out.

5. Ensure that all items have been posted from the EOB. Review, and then type Q or 3 at the Select Command prompt to quit and press Enter.

5.6 Posting Payment Recoupments Insurers often will not wait for a refund to be issued and will recoup an overpayment or payment error through a payment credit process to correct the overpayment. This can occur when the payer has identified that a duplicate payment was made, as a result of a payer audit, when the payer has identified an overpayment, or payment was made in error.

The insurer will send an EOB or RA with the recoupment for the overpayment or payment error (The recoupment can be taken in lieu of a payment for an unrelated patient account.).

Recoupments are taken at the end of the EOB or RA and can be identified by the adjustment reason noted on the EOB or RA. When recoupments are taken there will not be enough money in the collection batch item to cover the all postable items listed on the EOB or RA.

If the recoupment amount is larger than $1,000, the Business Office should notify the local Finance Office of this recoupment for reconciliation purposes.

The following steps describe how to post the recoupment from the original EOB or RA and the account(s) affected.



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Note: It is the responsibility of the facility to have all documentation on file to support the recoupment of payments to the payer, for future reference.

Step 1 – Original account with credit balance

Identify the bill with the credit balance. Contact the insurer if unable to identify the bill they have taken the recoupment against. It is recommended that a log be created to track overpayments or payment error by insurer.

A negative adjustment must be posted to the patient account (bill with the credit balance) using the Payment Credit adjustment type and Credit to Another Bill adjustment category. (Note: The negative transaction should zero-out the account.)

Message Entry in RPMS A/R—a new message entry on the patient account must be made in RPMS A/R to document all transactions (adjustment entries.) The message should indicate when contact was made with the payer, who they talked to, phone number, and their initials.

Include this message, "Transferred (dollar amount) to (bill number) as a result of the recoupment."

Step 2 – Affected account(s)

A positive adjustment must be made to the patient account from which the recoupment was taken using the PAYMENT CREDIT adjustment type and CREDIT FROM ANOTHER BILL adjustment category. (Note: The positive transaction should zero-out the account.)

Message Entry in RPMS A/R—a new message entry on the patient account must be made in RPMS A/R to document all transactions (adjustment entries.) The message should indicate when contact was made with the payer, who they talked to, phone number, and their initials. Include this message:

"Transferred (dollar amount) from (bill number) as a result of the recoupment."

Refunds are covered in detail in the Indian Health Manual, Part 5, Chapter 1, “Third Party Accounts Management and Internal Controls,” which is available at this website:





Part 5. Accounts Management Version 1.0 6. Reconciliation of Credit/Negative Balances July 2006

Part 5 - 6-1

6. Reconciliation of Credit/Negative Balances

Contents 6.1 Procedure for Reconciliation of Credit/Negative Balances ....................... 6-2

6.1.1 Exceptions to Restitution .................................................................... 6-3 6.2 Processing Payments Received and Batched in Error................................ 6-5 6.3 Medicare Provider Credit Balance Reporting ............................................ 6-6

6.3.1 Medicare Credit Balance Report (CMS-838) ..................................... 6-6 6.3.2 Procedure for Handling Medicare Credit Balances ............................ 6-7 6.3.3 Notification of Payments Withheld..................................................... 6-7

6.4 Adjustment Request Form.......................................................................... 6-8



Part 5 - 6-2

6.1 Procedure for Reconciliation of Credit/Negative Balances In the case where an insurer requests a refund of a claim they paid because, in their view, either they should not have paid the claim or they paid too much, the first step is to evaluate the following:

• If the insurer verbally requested a refund, the insurer must be informed that the refund request must be submitted in writing.

• Validate the requesting party by calling the payer. – Note in the Messaging option of the RPMS Accounts Receivable

application.

Examples of refund requests: – The patient was not insured at the time the services were rendered. – The payment was for services or supplies not covered under the

patient’s benefit plan. – The payment was greater than the amount owed for the services

provided. – The insurer was not the party obligated to make payment. For example,

the secondary insurer paid for the services yet the primary insurer was truly obliged to make payment.

Each case is unique and the answer is always a combination of legal and business factors.

Two factors need to be considered when submitting claims and/or evaluation overpayments or incorrect payments.

1) Always protect your insurance payments at the outset by sending clean claims and keeping a record of all interaction with the insurer.

2) Never refund money without researching. If you return the money that was not truly an overpayment, it will be very difficult to get back.



Part 5 - 6-3

6.1.1 Exceptions to Restitution

A party that paid money by mistake is entitled to have that money back, even if due to the payer’s negligence. This rule, known as the “General Rule of Restitution,” includes the following exceptions:

• The innocent third-party creditor exception

This situation is where the health care provider is owed money from someone and if it unknowingly accepts money from the wrong party, the provider will be harmed by having to refund the money. To qualify for this exception, the party seeking to avoid restitution cannot

1) Be unjustly enriched because of the mistake (received more than full payment for services rendered – a true overpayment);

2) Have induced the mistake (billing errors); or

3) Have notice of the mistake (knew payment was made in error, but took the money anyway).

• Material change in positions

This means a provider will not have to refund the payment if payment is unlikely to come from another source. Material change in positions can be demonstrated by

1) Never starting collection efforts from the patient, or discontinuing those efforts, or

2) Not seeking other sources of payment that may be available.

If the provider knew the insurer was not required to pay, yet failed to seek payment elsewhere, a refund must be given.

• Assumption of risk

This exception puts the burden on the insurer. It is the insurer’s responsibility to investigate all doubtful facts in a claim before making payment. If the insurer fails to adequately investigate, then a refund is not required. In short, the insurer was negligent, and in balancing the equities, it would be unfair to allow the insurer to recover the payment it made.



Part 5 - 6-4

Remember:

• Establish policies and procedures, as well as responsibility for timely and appropriate identification and resolution of overpayments.

• Maintain a complete audit trail of all credit balances.

• Designate at least one person as having the responsibility for the tracking, recording, and reporting of credit balances.

• Payers may choose to adjust a future remittance rather than request a refund. As an alternative to issuing a refund check, encourage your payer to adjust from a future remittance.

Under Medicare if a physician or facility submits a Medicare claim, receives the Medicare payment, and finds that the claim has been overpaid by the Medicare program, the physician or facility is responsible for immediately refunding the overpayment amount to the Medicare carrier.

Overpayments should be refunded to Medicare in one of two ways:

1) Return the original Medicare check (only when the entire check amount is overpaid), or

2) Make the refund via a business check.

Overpayments assessed by Medicare that are not repaid within 30 days of the initial demand letter will result in the offset of monies. Interest begins accruing and any payments due on submitted claims are used to offset the overpayment obligation.

Multiple overpayments initiated on the same date but in different files will be combined to show one total amount due, even though multiple demand letters were sent. Overpayments are always recovered in date order. Accrued interest is withheld before withholding for the principal balance.

To reconcile these Medicare Remittance Notices, a specific overpayment file should be kept in date order. The file should contain the initial demand letter and the listing of the claims involved.

Follow up with the insurer is necessary for negative balances or for being paid less than the facility expected. The follow-up process may vary depending on the process set up by the insurer and their preference, such as:

• online requests for review

• completion of forms stating the reduced payment



Part 5 - 6-5

• Fax process, or other

Regardless, if your facility has been paid previously at a higher rate for this specific service or procedure or inpatient stay, you need to challenge the insurance company. If you have a previous example of what was paid, then you need to reference it with the insurance company. As with all follow-up, it is important to query the insurance company in a timely manner, document all the conversations in the patient account, and continue to follow up until the claim(s) are adjusted.

6.2 Processing Payments Received and Batched in Error The Explanation of Benefits (EOBs) and Remittance Advices (RAs) received from PNC Bank are sorted by facility and entered into a collection batch. After the collection batches are created for the facilities by the Area or Service Unit Finance office, the EOBs or RAs are sent to each facility for posting and/or follow up.

However, in this process, insurers may record payment to an “incorrect” facility, or the Area or Service Unit office may batch the funds to the wrong facility.

In the case of an insurer recording payment to an "incorrect" facility, the best accounting approach is to return the check and the Explanation of Benefits to the insurance company.

In the case of an Area or Service Unit Finance office batching the funds to the wrong facility,

• Notify the Area or Service Unit Finance office of the need to transfer the third party revenue between the respective locations,

• Notify the correct facility of the transfer.

• Send the EOB documentation to the correct facility.

For the complete process, see the Indian Health Manual, Part 5, Chapter 1, “Third Party Revenue Accounts Management and Internal Controls,” Exhibit 5-1-A, “Accounts Receivable Posting and Reconciliation Instructions,” which is available at this website:

http://www.ihs.gov/PublicInfo/Publications/IHSManual/Part5/pt5chpt1/mea.htm





Part 5 - 6-6

6.3 Medicare Provider Credit Balance Reporting The Paperwork Burden Reduction Act of 1995 was enacted to inform you

• Why the Government collects information.

• How it uses this information.

In accordance with 1815(a) and 1833(e) of the Social Security Act (the Act), the Secretary is authorized to request information from participating providers that is necessary to properly administer the Medicare program. In addition, section 1866(a) (1) (C) of the Act requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.

In accordance with these provisions, all providers participating in the Medicare program must complete a Medicare Credit Balance Report (CMS-838) to help ensure that monies owed to Medicare are repaid in a timely manner.

6.3.1 Medicare Credit Balance Report (CMS-838)

The CMS-838 report is used specifically to monitor identification and recovery of credit balances owed to Medicare. A credit balance is an improper or excess payment made to a provider as a result of patient billing or claims processing errors.

Examples of Medicare credit balances include instances where a provider is:

• Paid twice for the same service either by Medicare or by Medicare and another insurer;

• Paid for services planned but not performed or for non-covered services;

• Overpaid because of errors made in calculating beneficiary deductible and/or coinsurance amounts; or

• A hospital that bills and is paid for outpatient services included in a beneficiary's inpatient claim.

Credit balances would not include proper payments made by Medicare in excess of a provider's charges such as DRG payments made to hospitals under the Medicare prospective payment system.



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For purposes of completing the CMS-838, a Medicare credit balance is an amount determined to be refundable to Medicare. Generally, when a provider receives an improper or excess payment for a claim, it is reflected in their accounting records (patient accounts receivable) as a credit.

However, Medicare credit balances include monies due the program, regardless of its classification in a provider's accounting records. For example, if a provider maintains credit balance accounts for a stipulated period, for example, 90 days, and then transfers the accounts or writes them off to a holding account, this does not relieve the provider of its liability to the program. In these instances, the provider must identify and repay all monies due the Medicare program.

Only Medicare credit balances are reported on the CMS-838 report. To help determine whether a refund is due to Medicare, another insurer, the patient, or beneficiary, refer to the sections of the manual (each provider manual will have the appropriate citation) that pertain to eligibility and Medicare Secondary Payer (MSP) admissions procedures.

6.3.2 Procedure for Handling Medicare Credit Balances

This is the procedure for handling Medicare credit balances:

1. Remittance Advice (RA) is received without payment.

2. Remittance advice is batched, and a copy of the RA is held in a holding file.

3. The Medicare credit balance is posted as an ADJ, adjustment, non-payment, Pending Documentation.

4. Post as a zero pay with a note explaining the reason.

6.3.3 Notification of Payments Withheld

Notification of Payments Withheld is a penalty that is applied when facilities do not submit monthly credit balance reports to Medicare on a timely basis. Medicare has set guidelines notifying all Medicare providers that when credit balance reports are not submitted, payments will be withheld and a penalty will be charged.

Not all insurers will charge a penalty but just may hold payment until the credit balance reports is filed.



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6.4 Adjustment Request Form This form is used to notify Finance of any adjustments required, which will affect the reconciliation process.

For a sample of the Adjustment Request form, see the Indian Health Manual, Part 5, Chapter 1, Exhibit 5-1-A, “Accounts Receivable Posting and Reconciliation Instructions,” Attachment 2, which is available at this website:

http://www.ihs.gov/PublicInfo/Publications/IHSManual/Part5/pt5chpt1/mea.htm#attach2




Part 5. Accounts Management Version 1.0 7. Collections July 2006

Part 5 - 7-1

7. Collections

Contents 7.1 Overview of Collections............................................................................. 7-2 7.2 Legal Aspects of Collection ....................................................................... 7-3

7.2.1 Fair Debt Collection Practices Act of 1996 ........................................ 7-3 7.2.2 Debt Collection Improvement Act of 1996......................................... 7-4 7.2.3 Fair Credit Reporting Act.................................................................... 7-5 7.2.4 Fair Credit Billing Act ........................................................................ 7-6 7.2.5 Third Party Collection Program.......................................................... 7-6

7.3 Financial Responsibility ............................................................................. 7-6 7.4 Collection Process ...................................................................................... 7-8

7.4.1 Collecting Co-Pays, Deductibles ........................................................ 7-9 7.4.2 Credit Card Helpful Hints ................................................................. 7-10 7.4.3 Collection Guidelines for Non-Beneficiary Payments...................... 7-11 7.4.4 Guidelines for Deceased Patient Collections .................................... 7-13

7.5 Collecting Insurance Reimbursements..................................................... 7-13 7.5.1 Guidelines for Claim Resubmissions ................................................ 7-15

7.6 Transworld Systems Debt Collection....................................................... 7-15



Part 5 - 7-2

7.1 Overview of Collections IHS collection includes:

• Collection of monies for either the total amount of the procedure or service, or the remaining deductible and coinsurance amount for treating non-beneficiary patients

• Follow up with all insurance companies on any outstanding billed but not paid account

• Follow up with insurers on incorrectly paid claims (less than the contractually agreed upon amount)

All collection is important to the survivability of each facility. Regardless of the situation, IHS needs dedicated, trained staff either in

• Registration to collect and record monies received from non-beneficiaries, or

• Account Reconciliation to follow up with insurance companies in a timely manner.

If all processes are completed at the facility except for collections, the facility will not receive all of its intended reimbursement.

For more information on procedures for the collection and handling of monies received, see the Indian Health Manual, Part 5, Chapter 1, “Third Part Revenue Accounts Management and Internal Controls” (5-1.4), which is available at this website:

http://www.ihs.gov/PublicInfo/Publications/IHSManual/Part5/pt5chpt1/part5chapt1.htm#4

The following sections provide information on processes, procedures, and techniques for collecting from either the insurance company or from the patient directly.





Part 5 - 7-3

7.2 Legal Aspects of Collection

7.2.1 Fair Debt Collection Practices Act of 1996

The Fair Debt Collection Practices Act is a Federal law which regulates the activities of those who regularly collect debts from others. The reason for the law is that there was abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors that contributed to personal bankruptcies, marital instability, loss of jobs, and invasions of individual privacy. Many states have adopted similar laws regulating the practices of debt collectors.

While collectors employed by a facility are not covered by the Fair Debt Collection Practices Act, the following provisions of the Act will help avoid negative patient relations.

A debt collector –

• May contact you by mail, in person, by telephone, or by telegram during “convenient hours” (commonly between 8AM and 9PM) and only once a day.

• May not call a debtor repeatedly or let the phone ring with the intent to annoy.

• May not contact you at work, if the collector knows or has reason to know that the employer forbids employees from being contacted by debt collectors at the workplace.

• May not contact a debtor, if the debtor is represented by a lawyer (the debt collector must then contact the debtor’s attorney).

• May not continue to contact a debtor after the debtor has sent the debt collector a letter by mail within thirty days of the first contact, stating that he/she disputes all or part of the debt (however, the debt collector may begin collection activities again if she/he sends the debtor proof of the debt).

• Must, within five days of the first contact, send the debtor a written notice stating the name of the creditor the debtor owes money to, the amount of money owed, what to do if the debtor believes he/she does not owe the money, and the name of the original creditor if different from the current creditor.



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• May not threaten violence against the debtor or his/her property, use obscene or profane language, repeatedly telephone the debtor to annoy or harass him/her, make the debtor accept collect telephone calls or pay for telegrams, or use false or misleading information in an effort to collect the “debt.”

Additionally:

• Contacting a debtor on a Sunday or any other day that the debtor recognizes as a Sabbath, could be considered harassment.

• Repeated calls in one day could be considered harassment, even if a debtor has asked the collector to call back.

If a debt collector violates the law, it is the debtor’s right to write a letter concerning the activity to the nearest Federal Trade Commission, and to file a federal or state lawsuit against the debt collector for violation of the law, although there is usually a one-year “statute of limitation.”

7.2.2 Debt Collection Improvement Act of 1996

The Debt Collection Improvement Act of 1996 (DCIA) fundamentally changed the manner in which the Federal government is required to manage the collection of its delinquent debts. The Act creates standards for administrative collection, compromise, suspension, and termination of Federal agency collections acts and is referred to as the proper agency for litigation.

Congress has directed that the management of delinquent obligations is to be centralized at the Treasury Department in order to increase the efficiency of our collection efforts. The Administration strongly supported this legislation and is fully committed to its successful implementation.

This act was designed for the following purposes:

• To maximize collections of delinquent debts owed to the Government by ensuring quick action to enforce recovery of debts and the use of all appropriate collection tools.

• To minimize the costs of debt collection by consolidating related functions and activities and utilizing interagency teams.

• To reduce losses arising from debt management activities by requiring proper screening of potential borrowers, aggressive monitoring of all accounts, and sharing of information within and among Federal agencies.



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• To ensure that the public is fully informed of the Federal Government’s debt collection policies and that debtors are cognizant of their financial obligations to repay amounts owed to the Federal Government.

• To ensure that debtors have all appropriate due process rights, including the ability to verify, challenge, and compromise claims; and access to administrative appeals procedures which are both reasonable and protect the interests of the United States.

• To rely on the experience and expertise of private sector professionals to provide debt collection services to Federal agencies.

It is required of all Federal agencies to aggressively service and collect delinquent debts, and to

• Report all delinquent debts to credit bureaus.

• Refer all eligible non-tax debts more than 180 days delinquent to the Department’s Treasury Financial Management Services (FMS) for collection of FMS cross-servicing program.

• Adopt rules and procedures authorizing the use of all available debt collection tools, including offset and administrative wage garnishment.

• Ensure debtors are afforded due process as required by law, including the ability to seek verification and to dispute validity of the debt.

7.2.3 Fair Credit Reporting Act

The Fair Credit Reporting Act is another law passed for consumer protection. This act affects those who “issue or use reports on consumers in connection with the approval of credit.” It provides protection of consumers’ rights to privacy and limits the use of credit reports.

Although health care patients are not usually refused credit based on a credit report, your office may be affected by the Fair Credit Reporting Act. If you refuse to grant credit based on a credit report, you must:

• Tell the patient why credit has been refused.

• Supply the name and address of the credit agency from which you got the credit report.

This gives the patient the opportunity to correct any errors or disputes on the credit report.



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7.2.4 Fair Credit Billing Act

The Fair Credit Billing Act is another step in consumer protection and should be followed by health care providers. This Act states:

• Patients have 60 days from the date a statement is mailed to complain of an error.

• The creditor (facility) must acknowledge this complaint within 30 days of receiving it.

• The error must be corrected or the accuracy of the statement explained to the customer within two complete billing cycles or a maximum of 90 days.

• Creditors can be fined up to $50 for each disputed transaction, if they do not follow these guidelines.

7.2.5 Third Party Collection Program

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) established the Third Party Collection Program. Under this program Military Treatment facilities and Indian Health Service facilities are authorized and obligated to bill health insurance carriers for the cost of medical care furnished to all family members who are covered by health insurance policies, such as group insurance, individual insurance, and Medicare supplemental policies.

7.3 Financial Responsibility To protect the facility and to prevent future problems, the best thing to do is to get a signature on a financial guaranty statement at the time of service. Before making someone financially responsible, consider the following:

• Anyone signing the guaranty must be aware of the fact they are accepting financial responsibility.

• Anyone signing the guaranty must be considered “competent” at the time they sign. Minors, mentally ill, or anyone under the influence of drugs or alcohol would not be considered competent.

With a guaranty statement properly signed and dated, the question of who is responsible is eliminated.



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Who should sign the financial guaranty?

An individual who accepts financial responsibility on behalf of the patient.

Examples are:

• Mentally competent adult – Patients who are of legal age (18 years old) or emancipated and are mentally competent.

• Mentally incompetent adult – If patients are over the legal age, but considered mentally incompetent, the financial guaranty should be signed by the patients’ parents or legal guardian.

• Married patients – If services are for the wife, both husband and wife are responsible, so either one can sign or you can collect from either of them. If the services are for the husband, in some states you cannot hold the wife responsible for payment without her signature, so she should not be listed as guarantor if she did not sign the financial guaranty.

• Divorced or separated patient – The wife should always be listed as her own guarantor and the husband as his own.

• Minor children – Both parents are financially responsible for payment of their minor children’s bills, so either parent can be listed as guarantor, and you may collect from either parent.

For non-beneficiaries, the financial guaranty signature shows who is accepting financial responsibility for the patient’s bill. Since non-beneficiary patients accepting medical services at your facility are financially responsible, balances may be collected without signature. However, this does not mean a guarantor’s signature is not important.

Often circumstances occur, preventing providers from getting the necessary financial guaranty signature. Even if you do not have a signature, non-beneficiary patients are still liable for payment under the theory of implied-in-law contract or quasi-contract. If non-beneficiaries receive services and do not pay for them, they would benefit unjustly at the provider’s expense. This is why, if non-beneficiary patients accept medical services at your facility, it is implied that they accept responsibility.



Part 5 - 7-8

7.4 Collection Process There are five financial control points in the collection process:

1. Before services are rendered

Includes obtaining or verifying patient demographic and eligibility information through telephone calls or online processes prior to the scheduled appointment. Review payment requirements with non-beneficiaries,

2. During the registration process

Includes obtaining and updating patient information and signatures on required documents (AOB, MSP, etc.) by the Registration staff or Benefit Coordinator.

3. During the visit

Includes completing the required charge tickets and documentation by the nurse assistant, nurse practitioner, nurse. or provider during the course of their conversations.

4. At discharge

Includes information obtained by and through the discharge process or by the Appointment clerk.

5. Collection follow-up

This would include information obtained by Billing, Pharmacy, and/or Collection staff.

The Registration staff plays a significant role in the first three control points. By emphasizing the first three, the facility can easily improve information gathering and full collection of accounts.

Information obtained from patients is the best way to get the required data. While they are talking with the Registration staff or Benefit Coordinator, patients are more willing to communicate because they are in need of services and are more inclined to provide information and/or to pay (non-beneficiaries) to be certain the services are received. Once patients receive treatment, the urgency is gone, and the bill does not seem that important anymore.



Part 5 - 7-9

7.4.1 Collecting Co-Pays, Deductibles

If the non-beneficiary patient has insurance and the facility plans on filing the insurance, you need to collect the co-pay before the patient leaves the office.

To make collections easier:

• Put up a sign stating that all co-pays are expected at time-of-service unless other arrangements have been made. Visibility is important, as is keeping patients informed.

• Don’t underestimate patients. Most expect to pay their co-pay at the time of their visit, but if you don’t ask for it, they won’t pay.

• The co-payment amount usually can be found on the insurance card or by calling the insurance company. It is better to take a minute to make the call than to simply assume no co-payment is required.

Even though there is no contractual obligation to collect coinsurance at the time of service, doing so is a huge improvement in the overall financial health of the facility. If the Registration or designated Collection staff can be convinced to collect consistently, account receivables will improve.

Reimbursement for the service or for co-payments should be in the form of cash, check, credit card, cashier’s check, money order, or traveler’s checks. Stamp all checks with the health care facility’s endorsement and the time of receipt.

Do not accept: • Two-party checks • Postdated checks • Multiple-party checks • Checks written in excess of the amount owed



Part 5 - 7-10

7.4.2 Credit Card Helpful Hints

Having patients use their credit cards to make payments is a proven way to increase collections. Many patients may not have cash to pay their bill in full, but usually, they do have credit cards available.

However, convincing patients to charge their bills can be a difficult task. Registration staff may not know what to say; designated collectors are afraid to offend patients; and others are overcome by patient excuses and objections. To encourage paying for medical services with a credit card,

• Put signs up – You need to have signs showing credit cards are accepted for payment of patients’ bills. Post them where they are visible to patients.

• Put it on your statements for Non-Beneficiaries – Statements should make it clear that credit cards are accepted.

• “Sell” credit cards – Patients don’t always pay attention to signs, statements, or policies, but Registration staff, Benefit coordinators, collectors, or others can remind the patients that credit cards are accepted.

• Convince them it’s the right thing to do – Many patients don’t want to put their medical bill on their credit card. You need to convince them that paying now is the right thing to do.

• Overcoming their excuses – Patients will offer many excuses for not paying by credit card. Be prepared to overcome these excuses.

• Get authorization at registration – Some patients are reluctant to pay at the time of service because they want to wait until their insurance pays. You can have these patients sign a credit card preauthorization form. This form gives you permission to charge the patient’s balances to their credit card.



Part 5 - 7-11

7.4.3 Collection Guidelines for Non-Beneficiary Payments

Collecting at time-of-service is a crucial practice many facilities use inconsistently, if at all.

Before the visit

When setting up an appointment for a non-beneficiary, it is always a good idea to discuss the procedures that will be done immediately during the visit, followed by the charges associated with the visit. Non-beneficiary patients need to know about these charges and that payment is expected at the time of service.

Prior to seeing the provider

An effective tool to determine whether a non-beneficiary has come in prepared to pay is the check-in process itself. Non-beneficiaries are required to check-in prior to seeing a provider. This is expected and most patients do so without any prompting.

Always review the patient’s insurance card for co-pay information and collect any appropriate co-pays and deductibles at check-in. Add verbiage on a Non-beneficiary payment policy form, and include the customary standard return check fee.

At this point you will have an understanding of whether this patient intends on paying.

After the visit

Even though the patient indicated at the time of check-in that he/she would be able to pay for the visit, some patients, after seeing the provider, will try to tell you that they cannot pay in full today. You should ask them for other means of payment.

The following table shows some of the most frequent excuses and appropriate responses.



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The Excuse: The Response:

“I never had to pay at the time of service before with my regular doctors.”

“I understand your concern. Paying at the time of service helps us to avoid additional administrative cost, which saves you money. Plus, it lets you take care of your payment now rather than worry about a bill later. Would you like to pay by cash, check, or credit Card?”

“My insurance will pay.” “We verified your insurance coverage and the representative noted a deductible/copayment obligation that is your responsibility. Would you like to pay by cash, check, or credit card?”

“I didn’t bring my checkbook.”

“That’s OK; we also accept cash and credit cards.”

“Can I pay over time?” “You can pay half now and the remaining half in 30 days. How would you like to handle your payment?”

“I saw the doctor for only five minutes. Why is the bill so high?”

“The visit is based on the care and counsel, not the time with the provider.”

“You seem more worried about the bill than my care?”

“I assure you we are concerned about your care first. Payment for that care ensures that we can continue to provide the quality treatment you and other patients expect.”

“Just send me the bill.” “I’m sorry; we can no longer delay collecting payments.”

Of course, if the patient really did not bring any money, then you would have to let him/her leave without paying. You cannot make a patient pay, but you can make it difficult for them not to pay.



Part 5 - 7-13

7.4.4 Guidelines for Deceased Patient Collections

There are some legal implications to consider when collecting after a patient has died. Here are some guidelines:

• Check for all outstanding accounts for the patient. Note that the patient is deceased on all files. Change bill to read “Estate of John Do.”

• Find out the date the patient died. If it was recently, you may want to stop all normal collection steps. You should allow at least four weeks before resuming collection activity.

• You can verify the death by checking the obituaries or contacting the registrar of deeds office. Be sure to obtain the next of kin, if you do not have this information already.

• Contact the nearest relative or the county probate office to find out if there is an estate left and the name of the executor or attorney handling it. It is usually best to call the probate office instead of a relative because the relative may not honestly disclose estate information.

• If the balance warrants and there are sufficient assets, file a claim on the pending estate. You do not need an attorney to do this. The executor or your county probate office can give you necessary forms and instructions. Many states have time limits for filing on estates.

• If there is a surviving spouse, contact the spouse for payment. Husbands are responsible for payment of a deceased wife’s bill. In a few states, a wife may not be legally responsible for payment, but many will pay out of honesty and loyalty.

7.5 Collecting Insurance Reimbursements Insurance companies are in the business of making and keeping money, and if they can get you to give up your claim to their money out of frustration, they're happy. Some insurance policies seem to lose half of their initial claims and deny the other half, so don't be surprised that you need to hassle them to pay you. But don't be discouraged, either.

The process of following up with insurance companies is straightforward:

• Contact them regarding the outstanding claim between 45-90 days,

• Determine what is missing or why the claim has not been paid,



Part 5 - 7-14

• Send any additional information requested to include, if asked by the insurer, a duplicate copy of the claim, and

• Document the entire conversation in the patient record.

In the event the insurance company does not respond in a timely manner or is non-responsive, a detailed process needs to be followed.

• The billing staff needs to call the insurance company to verify that the claims have been received. Ask specific, detailed questions. If the individual is not responding to the questions, request to speak with the supervisor. Document all telephone calls and include the date, time of the conversation, the name of the individual at the insurance office, and the resolution or outcome. This information will be supported in case the insurance company questions timely filing limitations.

• If the claim is lost and the insurer has no record, resubmit a duplicate claim.

• If the claim(s) has been received and is pending receipt of additional information, note exactly what is needed for the claim to be processed.

• Additional information requested should be sent to the insurer in a timely manner.

• If payment has not been made on the agreed upon date, follow-up with the insurer.

• Follow-up when a message has been left and the insurance representatives has not returned a call.

• Unpaid claims over 120 days should be forwarded to a collection service, such as Transworld Systems, for further collections.

• Follow-up on inpatient accounts first – these are usually the accounts with more services and cost.

• Build a file on insurance companies. The file should include company name, address, phone number, names of individuals, and titles.

• Involve the patient if you are unsuccessful with the insurers. This should be done as a last resort.

Continue to follow up with the insurance company until the claim has been adjudicated.



Part 5 - 7-15

7.5.1 Guidelines for Claim Resubmissions

It is not a good idea to routinely send a duplicate claim form without conducting a manual review of the claim. The insurance system will reflect that they have two claims for the same date, which may appear to be a duplicate.

To avoid confusion at the insurance company, all follow-up claims should be identified as resubmissions or tracers.

7.6 Transworld Systems Debt Collection Transworld Systems is in the business of profit recovery and has an arrangement with IHS nationally to provide follow-up inquiries to insurance companies for any facility in need of their service. With the state laws in effect, insurance companies should pay claims within 30-45 days; however, their stipulation is when they receive all the information needed from the provider or facility. This delay tactic results in around 20% of the claims not being processed in a timely manner.

Transworld is contracted to generate from one to a maximum of five demands to the insurance carrier at a fixed flat fee per claim, for those claims over 90 days old. In each communication the insurance company is instructed to pay and communicate directly to the medical facility. All monies, calls, and correspondence still pass through the medical facility where the information regarding the claim is kept. In addition, the Transworld process is integrated with the IHS RPMS system, enabling them to obtain bills from the facility electronically.

Transworld’s intent is to resolve from 60-to-95 percent of the claims in the over 90-day category, enabling the medical facility to complete the revenue cycle and concentrate their collection efforts with insurance companies on claims less than 90 days old.

Since many insurers state in their policies and by-laws that they must respond to third-party collection agencies or attorneys within a set number of days, Transworld effectively utilizes these regulations to their advantage. Many of their claims are reviewed more timely, at a higher level, and if the insurer needs some specific information, they will call or write stating exactly what is needed. The end result is that the Collection department is working more productively, researching and providing the information needed versus making follow-up collection calls.



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In summary, as a debt collection firm, Transworld rides on the regulations stated in the Federal Fair Debt collection Practices Act that “all portions of the claim shall be assumed valid unless disputed within 30 days”. The insurance companies do not want to be held responsible for 100% of the claim, and secondly, the insurance company must comply with the Federal law. Therefore, these outstanding claims are handled and resolved within the 30-day timeframe.


Part 5. Accounts Management Version 1.0 8. Collection Strategies July 2006

Part 5 - 8-1

8. Collection Strategies

Contents 8.1 Overview of Collection Strategies ............................................................. 8-2 8.2 Negotiation Guidelines............................................................................... 8-3 8.3 The Art of Listening................................................................................... 8-4 8.4 Payment Motivators ................................................................................... 8-5

8.4.1 Pride Motivators.................................................................................. 8-5 8.4.2 Honesty Motivators............................................................................. 8-5 8.4.3 Fear Motivators ................................................................................... 8-6 8.4.4 Words and Phrases to Avoid ............................................................... 8-6

8.5 Five Ways to Change a Patient’s Mind...................................................... 8-8 8.6 Collection Calls .......................................................................................... 8-9

8.6.1 Handling Objections to Payment from Patients ................................ 8-10 8.6.2 Handling Objections to Payment from Insurers................................ 8-11



Part 5 - 8-2

8.1 Overview of Collection Strategies It is difficult for the Indian population to understand that there is an obligation to pay the balances on bills. Many have been under the impression that health care services are free and are owed by the Government to a member of the Indian or Tribal community.

However, the government only reimburses or allocates a certain sum of money to support the facilities. The remainder must come either from the third party insurers or the legal balances owed by the patient.

As important as it is to know how to handle opposition when it is encountered, it is equally important to know how to avoid it.

Pay attention to what you say – Don’t use terms that sound like orders. Instead, ask for the patient’s cooperation and agreement. Focus on the word you and on the benefits of paying the debt. Use phrases that promote agreement and cooperation, such as:

• Don’t you agree?

• Let’s look at it this way

• You’d benefit more from….

• Think of how good you will feel when…..

Be pleasant – It is hard to resist someone you like. Make your voice sound pleasant and project a feeling of concern for the patient’s situation. Positive persuasion always works best, and it makes any encounter you have with the patient more pleasant for both of you.

Acknowledge resistance – Some people like being difficult. The best way to handle this situation is to say, “I respect what you are saying”, while not patronizing the patient. This tactic will halt the progression of the patient’s argument without ending the discussion.

Move the conversation along – Resistance is often a defensive measure, and as long as the patient is in a defensive mode, the resistance will remain. Keep in mind opposition is rooted in a method of thinking. You need to make the patient stop thinking defensively and start thinking cooperatively. If you acknowledge the patient’s position and move the conversation along, you can bypass the resistance and work toward payment.



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Don’t be hostile – Becoming hostile and aggressive may help you win an argument with a patient, but you may still lose the greater battle. Even if you make a patient agree to send you payment, the patient may not mail the check simply to spite you.

Don’t make it an issue of right versus wrong – No one likes to be told he is wrong. This will incite opposition in any normal situation and can send a touchy situation into a tailspin. Avoid telling a patient, “You are mistaken” or “That’s wrong”. Instead, refer to the problem as a separate entity you and the patient should work on together.

Don’t stifle the patient – A great deal of conflict is rooted in emotion. By letting the patient express that emotion you can move onto more logical, cooperative conversation. Resistance isn’t a case of saying “no” instead of “yes”. It is a mix of anger, hesitation, embarrassment, and fear lying between the patient and payment.

8.2 Negotiation Guidelines Depending on the circumstances, there are three stages in every negotiation in the collection process:

Stage I – Clarify the objections

Find out what the debtor wants and know what you want to attain. Negotiate with a strong sense of purpose. Look at it as a way to get what you want, not as an activity to see what you can get. If you want payment in full, negotiate for it. Do not enter the discussion with a “wishy-washy” attitude that says you will take whatever you can get.

Stage II – Gather Information about the Debtor

The information you need includes sources of income and other assets. Some of the information may not have anything to do with the demands or needs of that person, but it will help you decide what strategy or method you will use. You cannot negotiate with incomplete information.



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Stage III – Reach an Agreement or Compromise

This is the stage toward which many people rush without setting the groundwork by going through stages I and II. Completing the objectives of Stages I and II allows you to plan your strategy, thus giving you an advantage over the person who is poorly prepared or not prepared at all. Obtain a written agreement between the patient and the facility.

8.3 The Art of Listening There are three levels of listening:

1) Listening to remember, 2) Listening to evaluate, and 3) Listening to understand and recognize the needs of the patient or the interest of the insurer.

We are capable of hearing almost four times faster than we can speak.

Listening Guidelines • Show a genuine interest in what is being said.

• Pay close attention to the statements being made. As they speak, you should construct a mental word map and counter-strategy of how you are going to respond.

• Learn to recognize and correctly analyze hidden meanings in the conversation.

• Acknowledge your understanding with a series of encouraging comments such as, “Oh, I see.”

• Do not evaluate what is being said to you. Keep an open mind during the conversation.

• Do not become emotionally involved.

• Do not give advice, even if prompted.

• Display professional courtesy.

• Build bridges during the conversation.



Part 5 - 8-5

8.4 Payment Motivators There are three categories of motivators for encouraging people to pay their bills: • Pride • Honesty • Fear

8.4.1 Pride Motivators

Pride Motivators deal with the self-respect or reputation of the other person. People are usually proud that they can earn a living for themselves and their family and pay bills on time. A good credit rating and payment reputation are things they are proud of.

Examples of patient pride motivators include:

• “It took many years to build such a good credit rating. You don’t want to jeopardize it on this bill, do you?”

• “You’ve always had an excellent payment reputation. Don’t you want to clear this up today?”

Examples of insurance pride motivators include:

• “Your company has a great payment record with us. I’m surprised to have this bill outstanding.”

• “Isn’t your reputation as a good payer important to you?”

8.4.2 Honesty Motivators

Honesty motivators consider people’s natural reaction to do what’s right. Most people want to be known as someone who pays bills on time and is fair with others. Patients who received good care from you facility generally know its only right to pay you in full. Honesty motivators are built around this sense of fair play.

Examples of patient honesty motivators include:

• “Do you think it’s fair to shortchange the clinic after we gave you our best care?”

• “Won’t you feel a whole lot better when this bill is off your conscience?”



Part 5 - 8-6

Examples of insurance honesty motivators include:

• “The patient pays your premiums on time. Isn’t it fair to pay this bill on time, too?”

• “We’ve provided you with all necessary information in a timely fashion. Don’t you think it’s only right to pay us now?”

8.4.3 Fear Motivators

Fear motivators can be designed around anything that threatens the other person’s well being. This could be the fear of loss of reputation, loss of future services, loss of future credit, or loss of respect. Many patients fear further collection action or loss of their good credit rating.

Examples of patient fear motivators include:

• “Legal action is expensive, but may be necessary if your promise is not kept. You don’t want that, do you?”

• “Credit is a valuable asset. You don’t want to risk it on an unpaid bill, do you?”

Examples of insurance fear motivators include:

• “If we don’t get payment from you soon, I have no choice but to contact your subscriber for payment.”

• “The insurance commissioner requires payment of a clean claim in 30 days. If you can clear payment today, we won’t notify them of your delinquency.”

8.4.4 Words and Phrases to Avoid

Another part of learning how to motivate others to pay is looking at specific words or phrases that will actually de-motivate others. There are certain words or phrases used in collection with either a patient or an insurer that immediately will trigger a bad response. You will recognize some of these as very common words used in your daily collection conversations. Set goals to eliminate them from your collection vocabulary.



Part 5 - 8-7

Phrases to Avoid When Collecting

These phrases are all demand phrases. • You need to…. • I need….. • You must….. • We require….. • I want you to…. • You have to….. • I expect…… • Our policy states……

No one likes to be told what to do, so the remainder of the sentence will not be received well by the patient or insurer.

For a better response, try one of the following: • Here are some options for you….. • What can you do? • May I suggest….. • You might want to try….. • Did you know you can …..? • Will it help if…..

Avoid saying . . . Because . . .

“But,” “However,” “Yet” Research has found that using these words cause people to get defensive. You will get a better response using the word “and” instead of “but. For example: “I understand how you feel, and I hope you can see my point of view”.

“May I ask . . . ?” Some people may think that prefacing questions with “may I ask” is a courtesy and will get a good response from the patient or insurer; however, it has the opposite effect. It almost conveys to the patient or insurer that you are “nervous” about asking an inappropriate question. Also, this is a yes/no question, so you run the risk of the patient saying “no”. For a better response say “Why can’t you pay this bill?”



Part 5 - 8-8

Avoid saying . . . Because . . .

“Only” If you ever catch yourself saying, “This is the only thing I can do for you,” remind yourself that this will “only” make your patients and/or the insurer angry. People naturally become defensive or resistant to compromise when you limit their options or force decisions on them. For a better response try, “I think the best option for you is…” or “You could try….”

“You are past due.” When collecting, it is best not to use statements that put patients down or point out that they are “bad” in any way or point a finger at them. Use instead the wording “Your account is past due”

8.5 Five Ways to Change a Patient’s Mind “No matter how hard you try, you can not force people to do what you want.”

1. Give Choices. Most people like to make up their own minds without being told what to do. Rather than having patients simply say yes or no, offer them alternatives.

2. Offer Reasons. Give patients reasons to change their minds – reasons that are important to them. Show patients how paying their bills will benefit them.

3. Devise a Plan B. If you can’t get the patient to pay in full, be sure to have a back up plan, such as having the patient pay in two payments.

4. Don’t Argue. If patients have their minds made up about something, arguing won’t help. In fact, it will make the situation worse. Try to find something you can agree on and go from there.

5. Ask Questions. Sometimes it’s helpful to ask what patients would like you to do for them. Most people will be reasonable with their requests; otherwise you can negotiate a common solution.



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8.6 Collection Calls This is an important but sometimes difficult process, as it involves confronting a person about payment. When making any collection call, always remember that time is of the essence, and timeliness is what you want to base a payment structure on.

Many facilities and even many collection agencies go about collection calls the wrong way by asking the patient what he or she can afford to pay each month, or asking for a specific dollar amount payment every month. This is a mistake. By asking for a set dollar amount, you restrict yourself to the amount you can collect. Instead, you should ask for the full payment.

If the patient says. . . Then say,

“I can’t pay today.” “Would you be able to drop a check in the mail for the balance in full today?”

“I don’t have enough money to pay the bill in full today.”

“The balance is due today. However, we would be willing to extend some time to you to pay this bill. Since today is Friday, how long will you need to pay of this bill?”

By your saying a particular day of the week and asking for a length of time to pay, the patient is now in the context of days rather than months or years. The patient might respond with, “I will need at least two days or I will need at least two or three months.” Even if it is two or three months, your account will be settled in full.

If you deal with the patient on the terms of what they can afford to pay you, it is more likely that the patient may only pay a portion of the bill or drag the payment cycle out over many months. However, when asking a patient how long it will take to pay off a bill, it is very unlikely that he or she will respond with “I think it will take me about a year and a half to pay you”. The main idea here is to get the debtor thinking on your terms and not on theirs.



Part 5 - 8-10

8.6.1 Handling Objections to Payment from Patients

When collecting, you hear many of the same excuses for not paying from patients and insurance companies. Becoming an expert at handling these payment objections will lead to improved collection totals. Follow these principles when collecting payment:

• Don’t Argue – You could easily win an argument with a patient but would you get paid in full? The goal is not to win an argument and make a patient feel bad. The goal is to get paid in full while protecting patient relations.

• Use Intelligence, not Emotion – Patients may become emotional when they are talking with you. You need to express sympathy, but remain calm and logical.

• Use a Professional and Businesslike Manner – Treat matters seriously. State facts with authority and assurance. Be friendly, but not too familiar. Stick to business-related matters without alienating patients.

• Be Courteous – Always consider the other person’s feelings. Be polite and practice good telephone manners.

• Be Flexible – Your collection approach should change if the situation warrants it. Remember, every patient will respond differently to your requests for payment. You need to use a variety of motivators.

• Be Natural – Use simple, uncomplicated words and phrases. Avoid technical jargon that will confuse others. Your delivery should be unhurried and deliberate.



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8.6.2 Handling Objections to Payment from Insurers

Billing accounts manually does not assure that an insurer will pay in a timely manner. Many insurers purposely delay payments on manually submitted claims to encourage clinics, hospitals, and facilities to convert to electronic billing. Many pharmaceutical insurers will ignore paying manually submitted claims or continually return these claims, asking for other justification or documentation.

If … Do this:

No record of claim: • Verify billing address • Verify eligibility on date of service • Ask if any additional information such as itemized

charges or medical records are needed to process the claim

• Attach all requested information and resubmit claim

Claim is pending: • Verify the billing date and determine when claim was sent to insurer

• Ask what information is needed from the provider in order to process the claim

• Once information is provided ask the insurer when payment can be expected

• Stress that the account is past due. • If the insurer representative does not cooperative,

request a supervisor

Coordination of benefits or Medical Record documentation is needed:

• Ask what specific information is needed to process the claim

• Determine the time to process the claim once the information has been provided

• Obtain medical records, copy relevant information, and send to insurer

• Contact patient to determine if patient or spouse has other insurance

Behind in processing claims:

• Verify the date your claim(s) was received • Find out how far behind the insurer is in processing

claims • Stress that payment is overdue • Document


Part 5. Accounts Management Version 1.0 9. Rejections and Appeals July 2006

Part 5 - 9-1

9. Rejections and Appeals

Contents 9.1 Medicaid Appeal Process ........................................................................... 9-2

9.1.1 Requesting a Hearing .......................................................................... 9-3 9.2 Private Insurance Appeal Process .............................................................. 9-4 9.3 Collection Policies and Procedures for Submitted Claims......................... 9-6 9.4 Verifying Eligibility ................................................................................... 9-7

9.4.1 Steps to Verify Eligibility via Telephone ........................................... 9-7 9.4.2 Steps to Verify Eligibility Online ....................................................... 9-7 9.4.3 Entering Updated Eligibility Information in RPMS ........................... 9-8

9.5 Medicare Appeals Process ......................................................................... 9-8 9.5.1 Background ......................................................................................... 9-8 9.5.2 General Appeals Process in Initial Determinations

(CMS CR 4019) ................................................................................ 9-10 9.6 The Revised Medicare Appeals Process .................................................. 9-10

9.6.1 First Level of Appeal – Redetermination.......................................... 9-11 9.6.2 New Language for Redetermination Letters ..................................... 9-13 9.6.3 Second Level of Appeal - Reconsideration....................................... 9-14 9.6.4 Third Level of Appeal – Administrative Law Judge (ALJ)

Hearing.............................................................................................. 9-14 9.6.5 Fourth Level of Appeal – Departmental Appeals Board (DAB) ...... 9-15 9.6.6 Fifth Level of Appeal – Federal District Court................................. 9-15

9.7 Medicare Part B Appeals Process - Carriers ............................................ 9-16 9.7.1 Who Can Appeal ............................................................................... 9-16 9.7.2 Aggregation of Claims ...................................................................... 9-18 9.7.3 Good Cause ....................................................................................... 9-19

9.8 Medicare Part B Appeals Process ............................................................ 9-20 9.8.1 First Level of Appeal – Redetermination.......................................... 9-20 9.8.2 Telephone Review Procedures.......................................................... 9-22 9.8.3 Second Level of Appeal – Hearing Office Hearing .......................... 9-22 9.8.4 Hearing Office Hearing Types .......................................................... 9-24 9.8.5 Third Level of Appeal – Administrative Law Judge (ALJ)

Hearing.............................................................................................. 9-25 9.8.6 Fourth Level of Appeal – Departmental Appeals Board Review ..... 9-26 9.8.7 Fifth Level of Appeal – U.S. District Court (Court) Review............ 9-27

9.9 General Guidelines for Writing Appeals.................................................. 9-27 9.10 Quality Control......................................................................................... 9-27 9.11 Additional Resources ............................................................................... 9-28



Part 5 - 9-2

9.1 Medicaid Appeal Process Reasons for resubmitting or appealing Medicaid claims include

• Date of Service spans over the calendar year (payment and billed amount changes).

• The patient was admitted on September 13 and discharged on September 30, but Medicaid’s eligibility was not effective until September 15.

• Eligibility information states the patient was not eligible for coverage; however, other information provided states the patient was covered.

• The initial claim was not received by Medicaid; however, the facility has proof of submission within the timely filing guidelines.

• The Authorization number was not on file.

• Medicaid has a record that the patient is covered by other insurance; however, research finds that the patient is not covered by other insurance.

• The Consent form was not present with initial bill.

• There was a coding discrepancy on the initial claim submission.

• There was a name discrepancy on the original claim.

• There were system errors.

Each state has its own appeal process. For guidance on the rejection and appeal process, contact your state Medicaid program.

Sample of the appeal and rejection process: • Determine the validity of the denial or partial pay by reviewing the

following items. – Date of Service – Type of Service – Medicaid Identification Number – Effective Date of Coverage – Review of Medical Record and PCC, PCC+, or Electronic Health

Record – Diagnosis



Part 5 - 9-3

• If denial of partial payment is invalid, – Resubmit a claim on the appropriate form. – Type a letter requesting reconsideration, stating a reason for the

request. – Copy and attach one of the following documents:

• Remittance Advice • Authorization Number • Consent Form • Proof of Medicaid Eligibility • Private Insurance denial EOB

9.1.1 Requesting a Hearing

A hearing process is available for any provider or facility who disagrees with decisions from Medicaid that relate to participation or termination from the plan, overpayment, or imposed sanctions. Most Medicaid state plans have 30 calendar days from the date of an action to request a hearing.

To be timely, the request must be received by Medicaid no later than the close of business of the specified day. Hearings are conducted and a written decision is issued to the provider within 120 calendar days from the date Medicaid receives the request, unless the parties agree to an extension.

For individual hearings, a pre-conference is usually scheduled to clarify the issues, resolve some or all of the issues, exchange documents and information, review audit findings, and discuss other matters.

Besides the traditional hearing, most state Medicaid programs offer either

• An expedited hearing for cases related to health, safety, or service availability; or

• A group hearing for cases where individual issues of fact are not disputed and where related issues of state and/or Federal law, regulation, or policy are the sole issues being raised.

Medicaid may deny or dismiss a request for a hearing when:

• The request is not received in a timely manner or within the time period stated in the notice

• The request is withdrawn, or canceled in writing by the provider



Part 5 - 9-4

• The sole issue presented concerns a Federal or state law which requires an adjustment of compensation for all or certain classes of providers of services

• The provider fails to appear at a scheduled hearing without good cause

• The same issue has already been appealed or decided upon as to this provider and fact situation

Beyond the hearing process, if the final decision is upheld, providers still have the right to pursue judicial review of the decision. This must be accomplished within 30 calendar days from the date of the hearing decision

9.2 Private Insurance Appeal Process To substantiate any denied claims through an appeal process, it is essential that you keep written records of all verbal and written correspondence at all levels of the patient encounter. This is especially critical in the issuing of prior approvals/authorizations by third-party payers.

Oftentimes claims are denied months or even years after the original submission. Because of this wide disparity in claims adjudication, document your correspondence in the RPMS Accounts Receivable messaging fields.

Documentation of conversations with payers should include at a minimum:

• Date the conversation took place • Telephone number and extension of representative you called • Person you spoke to • Prior authorization or treatment numbers • The name of the IHS facility staff person

In addition, be sure to note any additional information from the preauthorization telephone call or conversation. This can be found on page 5 of the RPMS registration editor. This can include comments such as “this individual was just added to the contract”. Written documentation of comments such as these can often be the deciding factor between a successful appeal and a denial.

Immediately after you receive the claim denial, begin the appeal process. If you believe you have a compelling rational for an appeal resulting in the denial being reversed, proceed with that appeal.



Part 5 - 9-5

Each appeal letter does not have to be customized. Craft a letter that has worked in the past. Keep copies of prior letters in your computer system and modify them for the current situation.

Appeal letters should include the following:

• Date of your letter

• Name of the particular individual to whom you are addressing your appeal. If you don’t have a name, call the payer and obtain one.

• Title of the individual to whom you are addressing the appeal

• Complete address, including department to which you are sending the appeal

• Reason for the letter

• Subscriber name, patient name, date(s) of service, certificate number, precertification number, internal patient account number, and amount of claim being appealed

• Include language from the contract or the billing manual, if relevant

• If you have resubmitted the claim numerous times prior to the denial, be sure to tell the payer

• Send the appeal letter certified mail

Familiarize yourself with the response time for an appeal as contained in the payer’s billing manual or contract. Always follow up on your appeal at set timeframes

When appealing a denied claim,

• Be respectful of the individual receiving your letter.

• Involve your patient in the appeal process. The patient is paying the premiums and a satisfied patient will want the provider paid.



Part 5 - 9-6

9.3 Collection Policies and Procedures for Submitted Claims The collection of outstanding insurance claims requires a high level of research and review:

• All outstanding claims are examined for accuracy and adequacy of documentation in preparation for re-submission.

• All claims require the same basic information, which is either collected or verified as correct from various components of the RPMS.

• All private insurance (inpatient and outpatient) claims are filed in the respective patient financial folders, which are readily available for retrieval.

Outstanding claims are identified utilizing the

• Explanation of Benefits for private insurance claims.

• Remittance Advice for Medicare and Medicaid claims.

Other sources in obtaining outstanding claims are the various reports available from the RPMS Accounts Receivable menu, such as 30/60/90/120 Day Age report.

The Accounts Receivable (A/R) staff should be responsible for keeping the batches in order by the remittance date. Uncompleted batch reports should be prepared on a weekly basis for Medicaid and Medicare. These reports allow the supervisor to monitor outstanding batches and/or Remittance Advices.

The first step in the process is to review the Explanation of Benefits or Remittance Advice to determine the status of the outstanding account. Accounts Receivable staff need to

• Log completed batches in the Tracking Log

• File remittances by payer according to remit date.

All Remittance Advices should be batched, logged, and filed. Explanation of benefits are logged and filed by received date. Follow-up of denied and outstanding claims are done by the latest remittance date.



Part 5 - 9-7

The second step is to confirm that the insurance eligibility information listed in the RPMS Patient Registration application on Page 4 and Page 8 is accurate and current. If the eligibility has not been updated, the respective insurance company or carrier needs to be contacted either by a telephone call or on-line. Once verification is completed, updates will be made in RPMS.

9.4 Verifying Eligibility

9.4.1 Steps to Verify Eligibility via Telephone

1. Make contact with the appropriate insurance company or carrier and follow prompts or ask for the eligibility department.

2. Provide the patient’s information for verification of coverage, such as social security number, date of birth, and gender of patient.

3. Ask for the effective date, any lapses in coverage, the termination date, and type of coverage.

4. Enter updated information in the RPMS Patient Registration application, on Page 4 and Page 8.

9.4.2 Steps to Verify Eligibility Online

Note: Various payers have on-line capabilities to verify eligibility which require setting up a user name and password.

1. Log onto website, enter password, and enter with information that is requested, such as Health Insurance Claim Number, social security number, name, and date of birth, gender, and the identification number for the recipients.

2. Enter date range for payers that require that information

3. Enter updated information in the RPMS Patient Registration application, on Page 4 and Page 8.



Part 5 - 9-8

9.4.3 Entering Updated Eligibility Information in RPMS

1. Select the RPMS Patient Registration menu.

2. Select PAG or edit one of the patient pages.

3. Select P4.

4. Select PATIENT NAME and enter the patient’s name, social security number, date of birth, and/or health record number.

5. Select upper case E to edit eligibility.

6. Enter the insurer number you want to edit.

7. Type “E” to edit or “A: to add an insurer.

8. Make necessary corrections or updates

9.5 Medicare Appeals Process

9.5.1 Background

The Medicare claim appeals process was amended by the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), and again by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The Medicare appeals process is undergoing revision as a result of these amendments, and currently, new appeals process requirements are being phased-in.

By the completion of the phase-in process, and in addition to other changes, there will be a uniform claim appeals procedure for Part A and Part B claims. A table comparing the Medicare Appeals process is available in Part 5, Appendix C.

There will be a new stage (second level) in the appeals process, named reconsideration, which is different from the previous first level of appeal for Part A claims performed by Medicare Fiscal Intermediaries (FIs).

These new reconsiderations will be processed by Qualified Independent Contractors (QICs). For clarification, see Table 1: Appeal Rights for Redetermination Requests.



Part 5 - 9-9

Note: As of October 1, 2004, reconsiderations are called redeterminations.

Table 1: Appeal Rights for Redetermination Requests

Medicare Claims

Medicare Contractor Issuing Redetermination

Date Redetermination Issued and Mailed

Appeal Rights for

Redetermination*Part A/Part B FI On or after May 1, 2005 QIC Part B Carrier On or after January 1, 2006 QIC Part A FI Before May 1, 2005 ALJ Part B FI Before May 1, 2005 HO Part A Carrier Before January 1, 2006 ALJ Part B Carrier Before January 1, 2006 HO

*Qualified Independent Contractor (QIC); Administrative Law Judge (ALJ); Hearing Officer (HO)

For requests filed The date received is defined as

in writing the date received by the Medicare contractor in the corporate mailroom

in person the date of the office’s date stamp on the request

Note: For Part A and Part B redeterminations issued before May 1, 2005, contractors will be responsible for accepting ALJ hearing requests and for preparing case files for the hearing. Contractors will continue to follow instructions in the Medicare Claims Processing Manual, Chapter 29, sections 50 and 60, in preparing case files.

CMS has developed and published Understanding the Remittance Advice: A Guide for Medicare Providers, Physician, Suppliers, and Billers. This Medlearn guide is designed to be used as a self-help tool, and is available at this website:

http://www.cms.hhs.gov/MedlearnProducts/

Additional information about this guide can be found in the 2005 Medlearn Matters article SE0540, CMS Releases New Educational Guide on Remittance Advice (RA) Notices, which is available at this website:

http://www.cms.hhs.gov/MedlearnMattersArticles/





Part 5 - 9-10

9.5.2 General Appeals Process in Initial Determinations (CMS CR 4019)

Note: The Centers for Medicare & Medicaid Services (CMS) revised the Medlearn Matters article on Nov. 18, 2005.

CMS has released an article that discusses the general appeals process in initial determinations and references pertinent information in Sections 200 to 260 in Chapter 29 of the Medicare Claims Processing Manual.

The article, titled “MMA - Changes to Chapter 29 – General Appeals Process in Initial Determinations,” (MM4019, October 7, 2005) is available at this website:


Providers may reference CR 4019, Pub. 100-04, Transmittal 695, dated Oct. 7, 2005, for this information. The CMS transmittal is available in its entirety at this website:

http://www.cms.hhs.gov/Transmittals/downloads/R695CP.pdf

9.6 The Revised Medicare Appeals Process (For Medicare Part A Fee-for-Service Appeals for Redeterminations issued by FIs on or after May 1, 2005, and Medicare Part B Fee-for-Service Appeals for Redeterminations issued by Carriers on or after January 1, 2006)

Effective for all initial determinations made on or after May 1, 2005, are new appeal rights for Medicare providers. Providers who submit claims to FIs will have the same right to appeal claims as beneficiaries. Accordingly, FIs will no longer use RA remark code MA44 for initial determinations made on or after May 1, 2005.

This means that FIs will not have to determine whether a provider submitting as appeal has the right to appeal, nor will they have to evaluate appointment of representative forms submitted by providers representing beneficiaries. In the past, non-participating suppliers accessed the appeals process by acting as the beneficiary’s appointed representative in situations where they might not otherwise have had appeal rights.


http://www.cms.hhs.gov/Transmittals/downloads/R695CP.pdf



Part 5 - 9-11

Section 1869(b)(1)(C) permits a beneficiary to assign his or her appeal rights with respect to an item or service to a provider or supplier. This assignment of appeal must be made using the CMS standard form, CMS 20031, Transfer (Assignment) of Appeal Rights, which is available at this website:

http://www.cms.hhs.gov/CMSForms/

9.6.1 First Level of Appeal – Redetermination

Parties who are not satisfied with the initial determination of their claim have the right to appeal that decision. For requirements for written redetermination requests made on or after May 1, 2005, s the Medicare Claims Processing Manual (pub# 100-4), Chapter 29, Section: • 40.2.1(B) and 50.3.1(A) for beneficiary requests • 40.2.1(C) and 50.2.1(B) for provider and State appeal requests.

The manual is available at this website:

http://www.cms.hhs.gov/manuals/

Unlike appeal requests filed before this date, provider and State appellants do not need to specify the date of initial determination in their requests.

Most Part A appeal requests will be made using the prescribed form, CMS 20027, Medicare Redetermination Request Form, available at this website:


If a fully completed Form CMS-20027 is not used to express disagreement with the initial determination, the appeal request must contain the following information:

• Date of initial determination;

• Beneficiary name;

• Medicare Health insurance Claim Number;

• Name and address of provider of service;

• Date(s) of service for which the initial determination was issued (dates must be reported in a manner that complies with the Medicare claims filing instructions. Ranges of dates are acceptable only if a range of dates is properly reportable on the Medicare claim form);






Part 5 - 9-12

• Which item(s), if any and/or service(s) are at issue in the appeal; and

• The signature of the appellant.

During the transition period, requests for redeterminations of appeal decisions (determinations) effective for all initial determinations made on or after May 1, 2005 should go either to the QIC, the Administrative Law Judge (ALJ), or the Hearing Officer (HO), depending on whether the claim is a Part A or Part B claim; whether the Medicare contractor who issued the initial claim decision is an FI or a carrier; and the date of the claim. (see Table 2.)

A request for redetermination must be filed in writing within 120 days of the date of receipt of the notice of initial determination (either the Medicare Summary Notice (MSN) supplied to the beneficiary, or the Remittance Advice (RA) supplied to the provider. Provider and State appellants no longer have to specify the date of the initial determination in their requests. Medicare contractors may consider as good cause for late filing written redetermination requests that are mailed or personally delivered to CMS, SSA, Railroad Review Board (RRB) office or another Government agency, mailed in good faith and within the time limit, but do not reach the appropriate Medicare contractor until after the time period to file a request expired.

FIs are not required to send the appellant a letter acknowledging the receipt of a redetermination request, however, an Automated Correspondence System (ACS) will be created to house redetermination request information. This information will be accessible to providers within the Direct Data Entry (DDE) system for 90 days after receipt of the redetermination request and will allow providers to view which appeals were received by the FI and which appeals need to be resubmitted.

The redetermination is an independent examination of the claim file made by FI personnel who were not involved in the original determination decision. This person examines each aspect of each service in the claim. If there is doubt that the request is specific or general, a general redetermination is performed. For appeals initiated by the State, the FI will request that the State, or the parties who are authorized to act on behalf of the Medicaid State Agency will obtain and submit the necessary documentation.

Once the written redetermination appeal has been filed, Medicare providers and beneficiaries will receive a Medicare Redetermination Notice (MRN) from the FI for any partially favorable or unfavorable decision made on a redetermination request that was made on or after October 1, 2004. This written notification of the redetermination decision will provide complete, accurate and understandable information about the redetermination decision.



Part 5 - 9-13

All redeterminations will be completed and mailed within 60 days of the receipt of the request for redetermination.

CR3530, Appeals Transition – BIPA 521 Appeals (MM3530), discuses the revisions to the Medicare appeals process for FIs. A copy of the new Medicare Appeal Decision letter is attached to CR3530 (exhibit 2), and is available at this website:

http://new.cms.hhs.gov/MedlearnMattersArticles/

Note: The revisions discussed in CR3530 do not apply to claims submitted to Medicare carriers and/or redeterminations processed by carriers.

9.6.2 New Language for Redetermination Letters

Note: This does not apply to carriers and/or redeterminations processed by carriers.

FIs will change the Medicare Redetermination Notice (MRN) for redetermination decisions issued on or after May 1, 2005. There is no longer a minimum amount in controversy (AIC) requirement to move to the next level of appeal (QIC).

The MRN will show that providers who disagree with the redetermination decision will have 180 days to appeal to a QIC. The MRN will include a form to use for requesting a reconsideration from the QIC. If this form is not used to request an appeal, providers must include the required information in the letter requesting the appeal, and must include the name of the contractor that made the redetermination.

Providers should, in particular, note the instructions on the MRN related to the submission of evidence to support their appeal. All evidence must be presented before the reconsideration is issued. Providers will not be able to submit any new evidence in subsequent appeal levels, unless they show good cause for not presenting evidence to the QIC.

The request for a reconsideration form will be included with the MRN and it will include the address of the QIC. If you send your request to the wrong QIC or to the FI in error, the error will be corrected and the request for appeal will be honored.




Part 5 - 9-14

9.6.3 Second Level of Appeal - Reconsideration

Only the QIC has the authority to dismiss a request for reconsideration. This applies even when it appears that the request does not meet the requirements for requesting a reconsideration.

A provider or State request for a reconsideration must be made either on the CMS 20033 Medicare Reconsideration Request Form, available at this website:


or as shown in the attachments to CR3530; or the request must contain the following information:

• Beneficiary’s name

• Medicare health insurance number

• Specific service(s) and item(s) for which the reconsideration is requested and the specific date(s) of service

• Name and signature of the party or representative of the party making the request; and

• Name of the FI that made the redetermination

In many cases, the QIC’s decision will be effectuated (payments issued) by the FI; however, the FI will not effectuate a decision based on correspondence from any party of the reconsideration. The FI will take action only in response to a formal decision from the QIC.

If the decision is favorable and the amount to be paid is specified, the FI will effectuate the decision within 30 calendar days of the date of the QIC’s decision or from the date written assurance from the provider is received. If the amount to be paid must be computed, the decision must be effectuated within 30 days of the time the amount was computed.

9.6.4 Third Level of Appeal – Administrative Law Judge (ALJ) Hearing

For Part A and Part B redeterminations issued before May 1, 2005, FIs will continue to be responsible for accepting ALJ hearing requests and for preparing case files for the hearing. For redeterminations issued on or after May 1, 2005, the QIC will be responsible for accepting ALJ hearing requests and for preparing case files for the hearing.




Part 5 - 9-15

Often the FI will be responsible for effectuating the ALJ’s decisions. The FI will take effectuation action only in response to a formal decision by the ALJ.

If the decision is favorable and the amount to be paid is specified, the FI will effectuate the decision with 30 calendar days of the date of the ALJ’s decision or from the date the written assurance from the provider is received. If the amount to be paid must be computed, the decision must be effectuated within 30 days of the time the amount was computed.

9.6.5 Fourth Level of Appeal – Departmental Appeals Board (DAB)

Appeals should be made to the DAB or the ALJ Hearing Office. Appeals must be filed within 60 days of the date of receipt of the ALJ hearing or dismissal notice. The DAB may review an ALJ decision on its own, or may decline review of an appeal.

9.6.6 Fifth Level of Appeal – Federal District Court

Appeals must be filed within 60 days of the date of receipt of DAB decision or declination of review, and the amount in contention (AIC) must be at least $1000 and for requests made or after January 1, 2005, the AIC must be at least $1050. A request filed with the contractor is considered to have been filed as of the date the contractor received it.

Agency referrals

The AdQIC will be responsible for reviewing ALJ decisions and deciding whether an agency referral is appropriate for decisions issued after May 1, 2005. For all ALJ decisions issued by SSA ALJs, the FI remains responsible for this activity. The FI will no longer be responsible for reviewing ALJ decisions issued by HHS ALJs.

Additional Information

Among other topics, Medlearn Matters article MM3530, and the related CR3530 Appeals Transition – BIPA Section 521 Appeals contain appeals related information about

• Redetermination letters for fully favorable decisions, decision making time frames and extensions to the 60 day decision-making time frame;

• Requirements for written redetermination requests effective with initial determinations made on or after May 1, 2005;



Part 5 - 9-16

• Consolidating requests for multiple parties on redetermination requests received on or after May 1, 2005;

• Filing reconsideration requests on redeterminations issued on or after May 1, 2005 (QIC jurisdictions);

• Requirements for reconsideration requests

• Overpayments and reopenings

• QIC decisions

• Appealing and vacating dismissals, and dismissal letters

• Incomplete requests

• Dismissal appeals and dismissal letters

• ALJ hearings

• Incomplete requests

• Preparing case files for ALJ hearings

The article is available at this website:


9.7 Medicare Part B Appeals Process - Carriers For Part B appeals, the Medicare regulation 42 CFR 405.807 states that a party who is dissatisfied with an initial determination may request that the contractor make a redetermination.

9.7.1 Who Can Appeal • Providers (including physicians), as defined in 42 CFR 400.202, who

have appeal rights (42 CFR 405.710(b)).

• Physicians and Suppliers with appeal rights as specified in regulations at 42 CFR 405.801(b), accepting assignment on the claim at issue, and suppliers with refund requirements under section 1842(1)(1), 1834(a)(18), or 1834(j)(4) of the Act.

• Beneficiaries and their authorized representatives

• After December 7, 2000, the Medicaid State agency or the party authorized to act on behalf of the Medicaid State agency.




Part 5 - 9-17

Reviews are based on the following criteria:

• If the services and charges you provided were reasonable and necessary. Medicare will conduct a new, independent, and critical reexamination of the facts regarding denial or reduction in payment.

• If the services were covered and arbitrarily denied.

• You did not know and could not reasonably have been expected to know that Medicare would not pay for the service.

• You notified the beneficiary that Medicare would likely deny payment before you furnished the service.

There are two specific instances that are not initial determinations regarding claims for benefits under Medicare Part B:

• Any determination that CMS or SSA has sole responsibility for making, such as whether an independent laboratory meets the conditions for coverage of services or whether a Medicare overpayment claim should be compromised or a collection action terminated or suspended; and

• Any issue or factor that relates to hospital insurance benefits under Medicare Part A.

Further, a party may not appeal your use of the Physician Fee Schedule.

The initial determination is binding unless a party to the initial determination, such as the beneficiary, physician, supplier, or facility requests an appeal. The Medicare Part B administrative appeals process is available to resolve each party’s questions or concerns about payment and coverage decisions. In instances where appeal rights have been exhausted or lapsed, you may have the authority to reopen your determination.

The Part B appeals process consists of five levels. Each level must be completed for each claim at issue prior to proceeding to the next level of appeal, except for two specific situations:

1) Claims for payment not acted upon with reasonable promptness

2) Reopened determinations



Part 5 - 9-18

Table 3 Medicare Part B Fee-for-Service Appeals Process - Carriers

Appeal Level Time to File (TTF) Limit Notes 1 - Redetermination (Beginning October 1, 2004, reviews will be called “redeterminations.”)

TTF = 120 days from date of the notice of initial determination (the carrier allows 5 days beyond the date of notice for mail delivery)

Minimum amount in controversy (AIC) = None TLP = Complete 95% within 45 days of receipt of request, and all within 60 days of receipt of request.

2 - Hearing Officer (HO) hearing

TTF = 6 months from date of redetermination (allow an additional 5 days for mail delivery)

AIC = At least $100 remains in controversy

3 - Administrative Law Judge Hearing (ALJ)

TTF = Filed with 60 days of receipt of HO hearing decision

AIC = At least $100 remains in controversy

4 - Departmental Appeals Board (DAB) Review

TTF = Filed within 60 days of receipt of ALJ hearing decision/dismissal

AIC = None

5 - Federal Court Review TTF = Filed within 60 days of receipt of DAB decision or declination of review by DAB

1At least $1,050 remains in controversy Must be filed with the district court and not the contractor.

1. In 2005, the Amount in Contention (AIC) requirement for an Administrative Law Judge (ALJ) hearing and Federal District Court will be adjusted in accordance with the medical care component of the consumer price index for all urban consumers (U.S. city average) for July 2003 to the July preceding the year involved, rounded to the nearest $10.

9.7.2 Aggregation of Claims

Under 42 CFR 405.815, claims with an amount in controversy (AIC) greater than $0 may be combined to meet the amount in controversy (or contention) requirements. The decision about whether the AIC requirement has been met is made by the Hearing Officer (HO) at the HO level, and by the Administrative Law Judge (ALJ) at the ALJ level.

For further information, see the Medicare Claims Processing Manual (100-4), Chapter 29, Section 60.6.5, which is available at this website:





Part 5 - 9-19

9.7.3 Good Cause

When a request for redetermination or Hearing Office hearing is not filed within the time-to-file limit and where there is sufficient evidence or other documentation supporting a finding of good cause, the time limit (120 days for redetermination or within 6 months for Hearing Office dismissal) can be extended.

Good cause may be found when the record clearly shows, or the beneficiary alleges and the record does not negate, that the delay in filing was due to one of the following:

• Circumstances beyond the beneficiary’s control, including mental or physical impairment (such as disability or extended illness), or significant communication difficulties

• Incorrect or incomplete information about the subject claim furnished by official sources (Social Security Administration (SSA), CMS or the contractor) to the individual, such as whenever a beneficiary is not notified of his appeal rights or the time limit for filing

• Delay resulting from efforts by the beneficiary to secure supporting evidence, where the individual did not realize that such evidence could be submitted after filing an appeal

• Unusual or unavoidable circumstances, the nature of which demonstrates that the beneficiary could not reasonably be expected to have been aware of the need for timely filing

• Destruction by fire or other damage of the individual’s records, when the destruction was responsible for the delay in filing

Good cause for providers, physicians, or other suppliers can be found when the delay in filing was due to:

• Incorrect or incomplete information about the subject claim and/or appeal was furnished by official sources (CMS, the contractor, or the Social Security Administration (SSA)) to the provider, physician, or supplier; or

• Unavoidable circumstances that prevented the provider, physician, or other supplier from timely filing a request for review or Hearing Office hearing. These may include floods, fire, tornados or other natural disasters.



Part 5 - 9-20

If good cause for late filing is not found by the Hearing Office, the Hearing Office may refer the appeal to the contractor to consider reopening. If the contractor does not find good cause for the late filing of a request for redetermination, it may determine whether the case has any basis for reopening and revising its determination.

9.8 Medicare Part B Appeals Process

9.8.1 First Level of Appeal – Redetermination

A facility or provider dissatisfied with the initial determination on a Part B claim may request by telephone or in writing a redetermination of their initial determination.

The redetermination appeal can be filed with the contractor by telephone or in writing, and must be filed within 120 days of the date of the notice of initial determination (MSN or RA) received in the corporate mailroom by the contractor (minus 5 days to allow for normal mail delivery).

A fully completed CMS 20027 Medicare Redetermination Request Form constitutes a request for redetermination. The form is available at this website:


If the form is not used, a written redetermination request must include the following information:

• Beneficiary name;

• Medicare health insurance claim (HIC) number;

• Name and address of provider/physician/supplier or item/service;

• Date of initial determination;

• Date(s) of service for which the initial determination was issued (dates must be reported in a manner that complies with the Medicare claims filing instructions. Ranges of dates are acceptable only if a range of dates is properly reportable on the Medicare claim form);

• Which item(s), if any and/or service(s) are at issue in the appeal; and

• The signature of the appellant




Part 5 - 9-21

If the Remittance Advice (RA) is attached to the redetermination request and the dates of service are highlighted or emphasized on the attached RA, but the redetermination request does not itself contain the dates of service, it is still an acceptable redetermination request. If an initial determination on a claim has not been made, there are no appeal rights on that claim.

Some letters and calls are considered inquires and not requests for redeterminations. These communications may include the following characteristics:

• It is clearly limited to a request for an explanation of how Medicare calculated payment.

• It is a status request. • It is a request for information. • It is a request for a second copy of a notice. • There is not an initial determination.

The carrier must complete 95% of requests within 45 days of receipt of request, and all requests within 60 days of receipt of request. The date of receipt is defined as the date the request for redetermination is received in the corporate mailroom (written requests) or on the telephone (telephone requests).

If the determination is a full reversal (fully favorable), the contractor will send an adjusted MSN or RA to all parties of the appeal. This will provide the beneficiary information about his or her financial liability with regard to the claim(s) that are now payable. An example of a redetermination letter can be found in the Medicare Claims Processing Manual, Chapter 29, Section 60.11.6.

A party to an appeal may appoint a representative to handle the appeal by completing Form CMS-1696, Appointment of Representative or may submit the required information in writing. The form is available at this website:


To be valid,

• The representative must be an individual, not an organization, and

• Form CMS-1696 (or written request) must be signed by the representative within 30 calendar days of the date that the beneficiary or other party signs, and is valid for no more than one year from the date it was signed by the party making the appointment or the date of acceptance by the representative.




Part 5 - 9-22

The reviewer making the redetermination must comply with, and must be bound by, all applicable statutory and regulatory provisions. The reviewer may not overrule the provisions of law or interpret them in a way different than CMS does; nor may the reviewer comment upon legality, constitutional or otherwise, of any provision of the Act, regulations or CMS policy review determination.

The reviewer is also bound by all CMS-issued policies and procedures, including CMS rulings, Medicare manual instructions, program memoranda, national coverage determinations, and carrier-issued local medical review policies.

9.8.2 Telephone Review Procedures

A telephone review can be requested and performed on the phone. Both are completed through a review determination letter or other notice.

Whether a request for review is made by telephone or is conducted and completed as a telephone review depends on the issues at hand and the complexity of the matters involved. Telephone reviews should be limited to resolving minor issues and correcting errors, and should not involve anyone other than the redetermination analyst.

The appellant has 120 days after the date of the notice of initial determination to request a redetermination by telephone. If a more in-depth review is not necessary, and information and documentation was faxed during or prior to the telephone review, the reviewer may be able to inform the appellant of his or her decision at the conclusion of the call, or via a follow-up phone call.

9.8.3 Second Level of Appeal – Hearing Office Hearing

A party, who is dissatisfied with a review determination where at least $100 remains in controversy, may request a Hearing Office hearing.

The Hearing Office hearing is an independent review of the claim by a hearing officer. The hearing process gives a dissatisfied provider or facility the opportunity to present the reasons for his/her dissatisfaction and to receive a new decision based on the evidence developed at the hearing.

If a redetermination has not been issued, there is no right to a Hearing Office hearing (except for claims not acted upon in a reasonable time by the contractor, and for appeals of revised initial determinations where $100 or more remains in controversy).



Part 5 - 9-23

The request for a Hearing Office hearing can be filed with any of the following:

• the contractor • CMS • an SSA office • the RRB for RRB beneficiaries

The request must be filed within 6 months of the date of the notice of the redetermination or revised initial redetermination (plus 5 days for mail delivery).

The request may be any clear expression, in writing, by a party (or representative) that contains the necessary information to complete the appeal and states that the appellant is not satisfied with the review determination. Form CMS 1965, Request for Hearing – Part B Medicare Claim, can be used for this purpose, and is available at this website:


The written inquiry must be stamped with the date of receipt in the corporate mailroom and tracked until a final answer is provided. Telephone and other inquiries (such as in-person or electronic) should be logged and tracked until the final answer is provided.

Requests that are filed incorrectly to a contractor that did not make the initial review decision/determination will be forwarded to the correct contractor as soon as possible. A request for a Hearing Office hearing that was filed prior to a redetermination should be handled as a request for redetermination.

The contractor or Hearing Officer who is assigned the request must send a letter to the appellant acknowledging receipt of the hearing request within 21 calendar days of the receipt of the request. Carriers must issue 90% of final determinations within 120 days of the date of receipt of request of the Hearing Office hearing (FIs function as carriers when processing Part B Hearing Office hearings.)

For telephone or in-person hearings, the Hearing Office must issue a decision no later than 30 days after the date that the hearing was held (unless the appellant has additional documentation to be considered after the telephone or in-person hearing).




Part 5 - 9-24

9.8.4 Hearing Office Hearing Types

There are three kinds of Hearing Office hearings that can be requested by the appellant:

• In-person • Telephone • On-the record (OTR)

For the in-person hearing, the facility/provider/beneficiary can present both oral testimony and written evidence and has the right to refute or challenge the information.

A telephone hearing offers a convenient and less costly alternative to an in-person hearing, but it is not suited to every person or every case.

The major advantage of an OTR hearing is the speed with which the hearing is held and the decision is rendered. The same format as the in-person hearing is followed, except the decision is based on the facts that are in the file and/or additional information.

Note: Where an appellant specifically requests an OTR hearing, the resulting OTR hearing decision is not a POTR decision, and the appellant does not have a further option of then requesting an in-person or telephone hearing.

Hearing Office Hearing Review Process

An appellant who requests either an in-person or telephone hearing must be given adequate notice of the date, time, and place of the hearing and the specific issues to be determined. The Hearing Office must provide a written notice to the appellant and his/her representative before conducting the in-person or telephone hearing.

The appellant must receive the notice before the hearing takes place, allowing sufficient time to review it and to prepare for the meeting. Meetings can be rescheduled or adjourned on the motion of the Hearing Office for good and sufficient reasons (illness, certain scheduling difficulties, abusive or violent actions during the hearing).

Effectuation (payment) of Hearing Office hearing decisions must be initiated within 30 calendar days of the date of the decision, and 100% of decisions must be effectuated within 60 calendar days of the date of the decision.



Part 5 - 9-25

Durable Medical Equipment (DME) Hearings

Durable Medical Equipment Regional Carriers (DMERCs) should accept transfer of in-person hearing requests from other DMERCs, because the determination of claims processing jurisdiction is based on the location of the beneficiary. Thus, suppliers must request hearings from the DMERC that processed the claim at issue.

9.8.5 Third Level of Appeal – Administrative Law Judge (ALJ) Hearing

If the appellant is dissatisfied with the determination made by the Hearing Office, and the amount in controversy is at least $100, the appellant may request an in-person hearing before an Administrative Law Judge.

Requests for Part B ALJ hearings must be filed in writing with the contractor, at an RRB office (for qualified RRB beneficiaries), or with CMS, or at an SSA office within 60 days of the date of the receipt of the Hearing Office decision. The request must be in writing and filed within 60 days of the date of the carrier’s fair hearing decision of record.

Aggregation

You may combine this claim with other claims to meet the $100 amount in controversy requirement, as long as the appeal is timely filed for all claims at issue, and all claims at issue are at the proper level of appeal.

The contractor will acknowledge the request for a Part B ALJ hearing by sending the ALJ letter to the appellant within 30 calendar days of its receipt of the request in the corporate mailroom.

Supporting Documentation

For claims being submitted for an appeal, the responsibility for gathering and submitting documentation that supports claims and appeals rests with the provider and/or the facility. Documentation sources that have been proven useful to providers/facilities include.

• X-ray reports • Test results • Medical History • Documentation of severity or acute onset • Consultation Reports • Billing Forms



Part 5 - 9-26

• Referrals • Plan of Treatment • Nurse’s Notes • Copies of communications between physician and/or beneficiary, hospital,

laboratory or others.

ALJ Hearing Review Process

The ALJ will either issue a decision based on the request for a Part B ALJ hearing or will issue an order of dismissal. If the decision of the ALJ requires effectuation on the part of the contractor, the contractor will wait to hear the ALJ’s formal decision.

When effectuating the decision, the contractor will use the payment policies that were in effect on the date the claim was first submitted for processing, unless specifically directed otherwise.

The decision will be effectuated within 30 days of the receipt of the ALJ decision, if

• the decision is partially or wholly favorable, • gives a specific amount to be paid, and • is not referred to the DAB.

If the amount must be computed, then effectuation will occur no later than 30 calendar days of the date of receipt of the official ALJ decision. Duplicate ALJ decisions should be brought to the attention of the RO and OHA immediately for resolution.

9.8.6 Fourth Level of Appeal – Departmental Appeals Board Review

The Department Appeals Board (DAB) may choose to review an ALJ’s decision or dismissal for any of the following reasons:

• There was an error or law.

• The ALJ decision/dismissal was not supported by substantial evidence.

• The ALJ abused their discretion.

• There is a broad policy or procedural issue that may affect the general public.

The DAB reviews requests for review and makes final decisions whether to review or decline to review ALJ decisions, as well as ALJ orders of dismissal.



Part 5 - 9-27

The DAB will request all case files from the specialty contractor, who has responsibility to receive and store the files sent by ALJs after they make their decisions.

Effectuation of DAB decisions must be initiated within 30 days of the contractor’s receipt of the DAB decision, and completed within 60 days.

9.8.7 Fifth Level of Appeal – U.S. District Court (Court) Review

An appellant, who is not satisfied with the DAB decision, may request a court review of the DAB decision. This appeal must be filed with the District Court and not with the contractor. The Court may remand the case back to the DAB or the ALJ.

In rare cases, the Court may require effectuation on the part of the contractor. In this case, the contractor will contact its CMS regional office (RO) appeals contact for instructions before taking any action.

9.9 General Guidelines for Writing Appeals The appeals correspondence should be written so that anyone can easily understand the reason why any of the services were not covered or could not be full reimbursed, as well as actions that can be taken if the provider or facility disagrees with that decision. In addition, the following guidelines should be followed to the extent possible:

• Keep the language as simple as possible.

• Do not use abbreviations or jargon.

• Choose a positive rather than a negative tone, whenever possible. Avoid words or phrases which emphasize what you cannot do.

• If possible, avoid one-sentence paragraphs, uneven spacing between paragraphs, or other formatting that makes the document difficult to read.

9.10 Quality Control Records must be kept of all inquiries. Appropriate management reports and reports requested by CMS will be produced from these records to aid in assuring that control standards for the inquiries and the quality of responses to the inquiries are maintained.



Part 5 - 9-28

The appraisal requirements need to include the following:

• Accuracy and Correctness

The information in letters should be correct with regard to Medicare policy and your data. Taken as a whole, the information will increase the inquirer’s overall understanding of the issues that prompted the inquiry. Letters should have good grammatical construction, sentences of varying length, and paragraphs generally containing no more than five sentences.

• Responsiveness

The response should address the inquirer’s major concerns and state an appropriate action to be taken.

• Tone/Clarity

A clear statement of issues should be presented in the warmth and genuineness of a letter. The tone of the communication should be professional and customer friendly.

9.11 Additional Resources If you have additional questions about the Medicare claims appeals process, please refer to your local FI... To find the toll free phone number for your local FI or carrier, go to this website:

http://www.cms.hhs.gov/medlearn/tollnums.asp

For your convenience, the following list summarizes the references to documents in this chapter.

• Medicare Claims Processing Manual (100-4), Chapter 29: “Appeals of Claims Decisions,” which is available at this website:


• Understanding the Remittance Advice: A Guide for Medicare Providers, Physician, Suppliers, and Billers, which is available at this website:


• CR3530: Appeals Transition – BIPA 521 Appeals (MM3530)

• CR3942 Changes to Chapter 29 – Appeals of Claims Decisions: Redeterminations and Reconsiderations (Implementation date May 1, 2005) (MM3942)

http://www.cms.hhs.gov/medlearn/tollnums.asp





Part 5 - 9-29

• CR4019 Changes to Chapter 29 – General Appeals Process in Initial Determinations (MM4019)

• SE0540 CMS Releases New Educational Guide on Remittance Advice (RA) Notices

To download copies of these documents (CR3530, 3942, 4019; SE0540), go to the 2005 Medlearn Matters Articles at this website:


• Form CMS 20031, Transfer (Assignment) of Appeal Rights,

• Form CMS-1696, Appointment of Representative

• Form CMS-1965, Request for Hearing – Part B Medicare Claim

To download copies of these CMS forms (CMS 20031, 1696, 1965), go to this website:





Part 5. Accounts Management Version 1.0 A. PNC Lockbox Collections Report July 2006

Part 5 - A-1

A. PNC Lockbox Collections Report This appendix contains the PNC Lockbox Collections Report in Microsoft Excel format. You can download and save a copy of this report on your local computer and use it to list your facility payments and pay date from the PNC Bank Previous Day Summary and Detail Report of deposits.

To download Appendix A:

1. Go to the IHS Revenue Operations Manual website:


2. In the right panel, click Part 5 - Accounts Management.

3. In the right panel of the next webpage, click Chapter 1. Overview of Accounts Management.

4. In the table locate A. PNC Lockbox Collections Report and click xls in the “Other” column.

5. In the File Download dialog box, click Save to save a copy of the Excel spreadsheet on your local computer.




B. RA Log Examples

Note: The data in the following examples are for demonstration purposes only.

DATE PAID CHECK CHECK ACCOUNTED DATE DATE # OF DAYSRECEIVED INITIAL DATE NUMBER AMOUNT FOR W/ SPE RPT BATCHED POSTED POSTED

4/4/2005 4/1/2005 62,021.01$ 1 1,811.52$

4/7/2005 KKL 4/1/2005 123456 45.76$ ACCOUNTED 01/07/2005-1

PRIVATE INSURANCE

MEDICAIDDATE PAID CHECK CHECK TOTAL CCOUNTED DATE DATE # OF DAYS

RECEIVED INITIAL DATE NUMBER AMOUNT PAYMENTS PAYMENTS PAYMENTS PAYMENTS PAYMENTS W/ SP RT RA # BATCHED POSTED POSTED4/8/2005 KKL 4/4/2005 123456 $ 377,305.10 $ 359,314.76 $ 17,990.34 NO FTW NO WSU $ 377,305.10 ACCOUNT 2025427 04/08/2005 4/13/2005 5

5. Accounts Management Version 1.0 B. RA Log Examples July 2006 Part 5 - B-1


Part 5. Accounts Management Version 1.0 C. Medicare Appeals Process Comparison Part 5 - C-1 July 2006

C. Medicare Appeals Process Comparison

Original – SSA BIPA Current – SSA modified by

BIPA Projected – BIPA modified by MMAAppeal Level

Part A Part B Part A, B Part A Part B Part A, B Reconsideration Review Redetermination

Reconsideration (FI) TTF = 60 d AIC = $0 TLP = 75% - 60d; 90% - 90 d

Carrier Review (Carrier) TTF = 6 mo AIC = $0 TLP = 95% in 45d

Redetermination (FI or Carrier) TTF = 120d AIC = $0 TLP = 30 d

Reconsideration (FI) TTF = 120d AIC = $0 TLP = 75% - 60d; 90% - 90 d

Carrier Review (Carrier) TTF = 120d AIC = $0 TLP = 95% in 45d

Redetermination (FI or Carrier) TTF = 120d AIC = $0 TLP = 60d

Carrier Hearing Reconsideration

Carrier Hearing (Carrier) TTF = 6 mo AIC = $100 TLP = 90% - 120d

Reconsideration (QIC) TTF = 180d AIC = not specifiedTLP = 30d

Carrier Hearing (Carrier) TTF = 6 mo AIC = $100 TLP = 90% - 120d

Reconsideration (QIC) TTF = 180d AIC = $0 TLP = 60d

Administrative Law Judge (ALJ)

ALJ TTF = 60d AIC = $100 TLP = none

ALJ TTF = 60d AIC = $100 home health; $500 all else TLP = none

ALJ TTF = DHHS discretion AIC = $100 TLP = 90d



ALJ TTF = 60d 1AIC = $100 TLP = 90d

Departmental Appeals Board (DAB)

DAB TTF = 60d AIC = $0 TLP = none (may decline)


DAB TTF = DHHS discretion AIC = $0 TLP = 90d



DAB TTF = 60d AIC = $0 TLP = 90d

Federal District Court (FDC)

FDC TTF = 60d AIC = $1000 TLP = none



FDC TTF = 60 AIC = $1000 TLP = none

FDC TTF = 60 AIC = $1000 TLP = none

FDC TTF = 60 1AIC = $1050 TLP = none

TTF = Time to file; AIC = Minimum Amount in controversy; TLP = Time limit for processing of appeal


Part 5. Accounts Management Version 1.0 C. Medicare Appeals Process Comparison Part 5 - C-2 July 2006

Table Notes

1. In 2005, the AIC requirement for an ALJ hearing and Federal District Court will be adjusted in accordance with the medical care component of the consumer price index.