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© Economedix, LLC – 2000 – Present

Welcome To The Digital Learning Center

Presented by …

Your Partner In Building High Performance Practices


Today’s Presentation

Appealing Third-Party

Insurance Claims


Course Faculty

R. Thomas (Tom) Loughrey, MBA, CCS-P

• Chairman, CEO & Co-Founder of Economedix

• Certified Coding Specialist

• BS Degree from Pennsylvania State University

• Earned an MBA in Health & Hospital Administration

from the University of Florida

• Former Hospital Administrator

• Former Owner of a Medical Billing Company

• Consultant to Physician Practices & Medical Societies

• Member of Various Professional Organizations

Dealing with Medical Practice Management

• Developed and Presented Thousands of Seminars

& Workshops Dealing with Practice Management

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Today’s Course

Overview of Third Party Claim

Processing Systems

The Most Common Errors In

Submitting Claims

Organizing Your Appeals

Sample Appeal Process

Tracking Results

Summary


What’s At Stake?

A practice has a collection rate of 55% on $500,000 in annual charges – ($275,000)

The physician’s income after expenses is $110,000

By collecting all claims that are collectible the practice increased its collection percent by 7% to $310,000

The doctor’s personal income went up to $140,000 – an increase of more than 25%

That’s What’s At Stake!


Overview of Third Party Claim Processing

The three key elements all third party payers look for in claims:

1. Is the person (patient) covered by the plan?

2. Is the service covered by the plan?

3. Should the plan pay for the service this time?

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Is the Patient Covered?

Problems:

Coverage dates

Dependent status

Names and spelling

Policy numbers

Correct insurer and address


Coverage Dates

Check effective dates of

coverage

May be on card

May have to obtain from

third party

Patient responsibility until

coverage dates can be

verified


Dependent Status

Is coverage available to dependent?

Cards frequently do not have

dependent’s name on it – check with

TPP

Dependent coverage can easily be

lost

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Names and Spelling

Name on card may be

incorrectly spelled – if claim

name is correct could be a

problem

Dependents with different

names

Name changes


Policy Numbers

Transposition errors

Changed policy numbers

Social Security number of

primary covered person

instead of dependent


Correct Insurer and Address

Use information on card and

obtain mailing address from

TPP

Blue Cross/ Blue Shield has

thousands of plans and

mailing addresses

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Is The Service Covered?

Problems

Physician may not be enrolled with

plan (managed care)

Service is not covered at all

Service requires pre-authorization

Service has limits that may be

exceeded or not yet met (deductibles)


Physician Not Enrolled

Managed care plans may not pay

physicians who are not enrolled

in plan (panel)

Payment may be reduced and

only sent to patient – no

assignment of benefits is

available


Service Is Not Covered

Policy exclusions

Preventive care

Well-child care

Psychiatric care

Reproductive services

Cosmetic services

Self-inflicted injuries

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Service Requires Pre-Authorization

Most managed care plans

Hospitalizations

Diagnostic tests

Therapeutic services

Referrals to specialists

Surgeries

Place of service


Service Limits

Service may be covered but not paid since deductible not met

Service may have exceeded policy dollar limits – psychiatric

Service may have exceeded pre-authorization limits

Total policy limits may have been exceeded - rare


Should the Plan Pay This Time?

Medical Necessity

Workers’ Compensation

Accidents

Primary or Secondary Insurer?

Pre-existing Condition

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Medical Necessity

A Diagnosis Related Problem

Correct ICD-9 Code?

Complete ICD-9 Code?

Specific ICD-9 Code?

Relationship of Diagnosis Code to CPT Code

Documentation – surgery – may need op reports

Bundled services – may not be unbundled unless special circumstances exist –modifier -59


Workers’ Compensation

Injuries in workplace may not be

covered by health insurer

Fees may be limited by state

statutes

Usually time-consuming

Often use review services who are

compensated based on savings


Accidents

Auto Liability Policies

Home-owners Liability policies

Accidents may first have to be

billed to liability carrier

Often have very low limits

Health insurers will be

secondary payers

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Primary Insurance?

Frequently a Dependent Problem

Which parent’s plan covers the kids?

General rule of thumb is that primary

insure for kids is the insurance of

parent with earliest birth date (Mom is

April, Dad is June therefore, Mom is

primary)

Almost always needs to have the

Explanation of Benefits (EOB) from the

Primary


Pre-Existing Condition

Usually a problem with

individual policies as opposed

to group policies

Will become a patient

responsibility

Usually have time limits


Top Ten Claim Submission Errors

10 Payer has no record of

the patient

9 Worker comp claim

sent to health insurer

8 Well-child care not

covered

7 Coverage expired

6 Coverage not in force

5 Secondary insurer

billed as primary

4. Pre-existing Condition

3. Physician is not part of

the provider panel

2. No prior authorization

1. No medical necessity

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Whether it is your fault, the insurer’s fault or the patient’s fault, some

claims will only get paid if they are appealed and you are the only one

who can do it!


Organizing The Appeals Work

Make Appeals a Small Job Done

Frequently

EOB Review When the Mail Is Opened

Give the Payers What They Need and

Only What They Need

Tracking Common Errors

Tracking Problem Payers


Make Appeals a Small Job Done Frequently

The problem occurs everyday, so deal with it daily!

It is easier to handle a few claims per day than it is to handle hundreds when the practice has a cash flow crisis

Treated as just one other aspect of billing and collections – nothing special

Use your system. What tools does your Practice Management System provide?

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Review EOBs When They Come In

The reason for the denial or reduction

is right there – so is the claim

information and the insurance

information

More than half of all problems can be

found quickly

The remainder can usually be found

out within 1 to 2 days


Checklist for EOB Reviews of Problem Claims

Keep a “to do” folder of problem claims – clear the folder by the end of the week

Review the initial claim submission for obvious errors

Get back to others you are waiting on within 24 hours

Keep common responses in word processor for quick mailing


Give the Payers What They Need … and Only What They Need

Needed information will be directly requested or implied

Example:

The TPP has rejected claim because diagnosis does not support the service. Dx: diabetes and the service was a pre-natal ultrasound

Implied information is a request for a diagnosis that supports the need for an ultrasound

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Give the Payers What They Need … and Only What They Need

Do not send lengthy reports if the payer

only needs a new diagnosis

Do send simple explanations of the

problem. Claims are not reviewed by

doctors and may not be reviewed by nurses

Keep problem claims separate. Do not try to

lump different patients together even though

the problems may be the same


Tracking Common Errors

Keep a log on why claims have been rejected – preferably a spreadsheet file

When a trend is spotted focus on training and then monitor for results

Example:An increasing number of claims are being rejected or changed

for lack of medical necessity. The problem turns out to be the new employee is using the most recent diagnosis in the computer system for each new claim even when the doctor circles a new Dx on the charge ticket. Training and monitoring for the new employee.


Spreadsheet Sample

Patient

Date

Dia

gnosis

Op

era

tive re

port

Patie

nt In

form

atio

n

Prio

r Auth

oriz

atio

n

Chang

ed P

rocedure

Oth

er

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Spreadsheet Sample

Patient

Account Number

Date

Dia

gnosis

Op

era

tive re

port

Patie

nt

Info

rmatio

n

Prio

r

Auth

oriz

atio

n

Chang

ed

Pro

cedure

Oth

er

Smith, Mary 234-12-7987 3/12/00 X

Jones, William 512-38-0986 3/14/00 X

Gonzales, Jose 315-54-9865 3/14/00 X

Peters, Rose 215-51-8723 3/15/00 X X

James, George 532-87-1458 3/15/00 X X

Benjamin, Ray 625-48-7491 3/15/00 X X



Gross Collection Percent

= Payments ÷ Charges

Net Collection Percent

= (Payments) ÷ (Charges – Adjustments)

Accounts Receivable Ratio

= Total A/R ÷ Average Month’s Charges



Gross Collection Percent

= Payments ÷ Charges

= $25,000 ÷ $40,000 = 62.5%

Net Collection Percent

= Payments ÷ (Charges – Adjustments)

= $25,000 ÷ ($40,000 - $14,000) = 96.2%

Accounts Receivable Ratio

= Total A/R ÷ Average Month’s Charges

= $90,000 ÷ $30,000 = 3

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Gross

Collection %

Net

Collection %A/R Ratio

Blue Cross 63.5% 95% 2.6

Aetna 58% 97.5% 3.1

IPA 55% 99% 2.9

Foundation 52% 81% 4.1

Workers

Comp60% 96.5% 4.5


Where Do The Problems Come From?

Delayed claims and underpaid claims

can directly affect payer statistics

Who creates the hassles for the

practice?

Are they worth it?


The Appeals Process

Five Levels in the Appeals Process

Medicare offers five levels in the appeals process.

The levels, listed in order, are:

1. Redetermination by an FI, carrier or MAC

2. Reconsideration by a QIC

3. Hearing by an Administrative Law Judge (ALJ)

4. Review by the Medicare Appeals Council within the

Departmental Appeals Board, (hereinafter “the Appeals

Council”)

5. Judicial review in U.S. District Court

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The Appeals Process

First Level of Appeal: Redetermination

•A redetermination is an examination of a claim

by the FI, carrier or MAC personnel who are

different from the personnel who made the initial

determination.

•The appellant (the individual filing the appeal)

has 120 days from the date of receipt of the initial

claim determination to file an appeal.

•A minimum monetary threshold is not required to

request a redetermination.


The Appeals Process

Second Level of Appeal: Reconsideration

•A party to the redetermination may request a

reconsideration if dissatisfied with the redetermination.

•A QIC will conduct the reconsideration.

•The QIC reconsideration process allows for an

independent review of medical necessity issues by a

panel of physicians or other health care professionals.

•A minimum monetary threshold is not required to request

a reconsideration.


The Appeals Process

Third Level of Appeal: Administrative Law Judge

Hearing

•If at least $130* remains in controversy following the QIC’s

decision, a party to the reconsideration may request an ALJ

hearing within 60 days of receipt of the reconsideration. (Refer

to the reconsideration decision letter for details regarding the

procedures for requesting an ALJ hearing.)

•Appellants must also send notice of Official CMS

information for Medicare Fee For Service Providers to the

ALJ hearing request to all parties to the QIC reconsideration

and verify this on the hearing request form or in the written

request.

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The Appeals Process

Fourth Level of Appeal: Appeals Council Review

•If a party to the ALJ hearing is dissatisfied with the ALJ’s

decision, the party may request a review by the Appeals

Council.

•There are no requirements regarding the amount of money in

controversy.

•The request for Appeals Council review must be submitted in

writing within 60 days of receipt of the ALJ’s decision, and

must specify the issues and findings that are being contested.

(Refer to the ALJ decision for details regarding the procedures

to follow when filing a request for Appeals Council review.)


The Appeals Process

Fifth Level : Judicial Review U.S. District Court

•If at least $1,260* or more is still in controversy following the

Appeals Council’s decision, a party to the decision may

request judicial review before a U.S. District Court judge.

•The appellant must file the request for review within 60 days

of receipt of the Appeals Council’s decision.

•The Appeals Council’s decision will contain information

about the procedures for requesting judicial review.


The Appeals Process

For More Information

http://www.cms.gov/OrgMedFFSAppeals/

http://www.cms.gov/MLNProducts/downloads/MedicareAppealsprocess.pdf

http://www.cms.gov/OrgMedFFSAppeals/

http://www.cms.gov/MLNProducts/downloads/MedicareAppealsprocess.pdf

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Sample Appeal Letter - Commercial

To claims processing unit:

Our claim for Mrs. Mary Jones, policy number 213-48-9792, was changed

from CPT code 99204 to 99213 and paid by your check #112512 dated

May 4, 2006.

Mrs. Smith is a new patient, not an established patient. She required a

complete physical exam and history. Her condition was acute and

exacerbated by her pulmonary disease and congestive heart failure. This

is a new problem that required considerable explanation of her options to

both her and her husband along with detailed instructions for injections of

insulin, diet, exercise and lifestyle modifications.

A copy of the relevant progress notes and history are attached.

Please reconsider the claim as originally billed. We look forward to

receiving complete payment on this claim shortly.

Sincerely


The Commercial Appeals Process

Follow-up Appeals

If the first appeal, or review, is denied

the next appeal usually requests a

hearing.

Most hearings can be made:

• In writing (On the record)

• On the telephone

• In person

As a practical matter most are made in

writing



Follow-up Appeals

The Hearing is usually conducted by

senior staff with more training, experience

and authority (they did not get to this

position by giving away the company’s

money!)

On complex cases they may be able to

get physician review. It should be

requested and it should be reviewed by a

physician familiar with the specialty

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Hearings

Most hearings will have a minimum

dollar amount that is in controversy

Systemic problems involving numerous

claims for small amounts may be

aggregated for a hearing

Unless the amount is very significant or

the matters very complex, the hearings

are best done on the record



Hearings

If the practice chooses to be heard on the

phone or in person:

• Be brief

• Be factual

• Answer succinctly

• Be prepared – chart, letters from consultants,

literature, patient statements

Usually hearing decisions will not be given

immediately



Further Appeals

If the practice is unsuccessful at the

hearing level the next steps may involve

use of the legal system or arbitration

The procedure may be set out in the

contract – if not, the plan medical director

should be consulted for a procedure

If none is available the only alternative may

be a law suit – obviously requires that

significant dollars be at stake

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Summary

Every practice will have some level of

claims that must be appealed

Organization and attentiveness will

prevail

Patients want to get all the benefits

they are entitled to including making

sure you get paid. They are in your

corner!


Thank you for participating in

this seminar presentation from

Economedix!

Please direct questions to …

[email protected]

To earn CME credits for this course please complete the Evaluation / CME Form and

FAX it back to Economedix within 7 days of the teleconference.

Please direct questions to …

[email protected]

To earn CME credits for this course please complete the Evaluation / CME Form and

FAX it back to Economedix within 7 days of the teleconference.

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