Denied claims are an ugly but common fact of life in every medical practice. Third party payers deny claims or refuse to reimburse for medical care for a number of reasons — some reasonable, others complicated and misunderstood.
After reading this article you will be able to:
- Determine ways to check payer deadlines
- Determine strategies for "write offs"
- Establish an appeal strategy
Denied claims are an ugly but common fact of life in every medical practice. Third party payers deny claims or refuse to reimburse for medical care for a number of reasons -- some reasonable, others complicated and misunderstood. Many practices don't invest the time to respond, but those that do bring in a lot of money for only a small amount of effort.
Appeal when you can. Appeal all properly billed claims of significant amounts that are denied by payers. When a claim is denied, write an appeal letter with all of the pertinent details. Check back on the account in 30 days to see if the payer has responded with payment. If not, appeal again. Practices report that more than half of their appeals — if written effectively — are paid. Before you go appealing madly, however, set a threshold based on your average claim, and the amount of resources you have available. We all have limited resources, so it's important to set those thresholds.
Check deadlines. Check the filing deadlines for all your third-party payers. Some are as short as 60 days. If you have missed the deadline, you're out of luck — you can't appeal and should immediately write off the account. Don't waste resources pursuing claims you have been specifically told you can't bill for. But if you filed a claim on time and the payer lost it, appeal with the transmission report from your clearinghouse confirming the original date of the lost transmission.
Don't automatically pardon patients. If you collect on insurance, don't simply write off any portion that the patient owes you. Insurance companies consider such automatic write-offs fraud because they are held the responsible — why shouldn't the patient be? That stated, if you determine a patient's portion of a bill to be uncollectable, you can write it off — provided you make those determinations on a case-by-case basis, using a consistent policy on all bills. Many practices are moving to shorter cycles (two statements and two letters in 90 days, for example) before reaching this point.
Consider "sort of" writing it off. Don't forget about delinquent accounts just because you've referred them to a collection vendor. When you move an account to an external vendor, you can write it off of your receivables, but still track it. Monitor the vendors recovery rate (how much it collects), and post payments collected as soon as they come in. Moreover, if the patient shows up two years later, it's great to still have the uncollected account balance showing so you can collect it then.
Limit the ability to write money off of your system. This should be reserved for the business office — or even better, for the experienced business office associates who are trained in the appropriate method to take adjustments. One embezzlement scheme to be aware of is an employee who posts a payment of $20, and then writes it off.
Monitor adjustments. In general, adjustments that are controllable (often referred to collectively as "bad debt") should equal between 2 percent and 5 percent of your revenue. To catch trends and reduce future write-offs, monitor how much money is being adjusted off of your system and why. Create adjustment codes in your practice management system that describe the most common reasons for write-offs, such as missed filing deadlines, too-small balances, professional courtesy, collection agency accounts, and general bad debt.
The average specialty practice has one out of every 10 claims denied, and following up on these takes significant staff time. It's an opportune time to ensure that the workflow dedicated to that process is effective — and efficient.
Pearl: Terms of Agreement
Contracts with payers are signed, but are they really living up to the terms? Insist payers provide the allowable amounts for your most frequent codes. Set up an automatic query in your practice management system to track "allowables" for filed claims by payer, at the charge line item level. Catch lower-than-contracted reimbursement every time it happens due to the payer bundling, down-coding or making other changes not called for in the contract. Flag every invoice in which the insurance payer reimbursed at 100 percent of the charge. This is an indication that you may be charging less than the allowable.
Out of necessity, practice management systems allow charges to be suspended. This functionality is enabled to permit billers to hold charges until a diagnosis is confirmed, the procedure note is finalized, or a physician is credentialed. For most systems, these charges aren’t recorded on the receivables (because they haven’t yet been billed, and aren’t technically owed by anyone yet). While there are legitimate reasons to suspend charges, this functionality is often abused. "Parking" charges in the hold bucket leads to challenges as employees prioritize other activities, turn over, or simply forget about them, particularly because they aren’t included on the receivables reports. When they are discovered as unbilled months later, they typically have to be written off. To avoid losing track of these suspended charges, request an accounting of suspended charges – volume and dollars — each month. Just knowing that someone is watching is often the key to accountability for getting the job done.
Pearl: Pay Plans
Track payment plans separately from patient receivables. Given that fact that you have agreed to allow these receivables to age, it's unfair to lump them in with the rest of the outstanding balances due from patients. Create a separate financial category for payment plans in your practice management system. When a payment plan is established, transfer the balance to this category. This new financial category can be reported on your receivables report, and monitored closely. A distinct tracking mechanism also allows your billers to effectively and efficiently monitor patient compliance.
Expect to be collecting copayments, deductibles and other patient responsibility payments at the time of service. Provide the patient's financial responsibility to those who question time-of-service payments. This information is on most insurance payers' websites. It's very likely that staff already obtained this information while checking on the patient's benefits. Show a copy of the explanation of benefits (EOB) to patients who have past-due balances of funds to be applied to their deductibles. Involve the insurance company when you have chronic non-payers. Insurance companies use patient responsibility to control utilization, they’re very interested in making sure that patients pay their share. Several cases have occurred in which an insurance company has threatened to drop a patient as a beneficiary unless past-due amounts were paid.