Are You Living in Denial

Did you hear about the insurance company that was losing money? The payer rejected every appendectomy claim it received for 30 days. Seventy percent of those denials were never resubmitted. The unclaimed revenue allowed the company to get out of financial trouble.

Sound like a bad joke or a conspiracy theory? It's not.

Sometimes it seems like payers will do anything to keep your money. But you shouldn't accept denials without a fight.

"I see it time and time again with incorrect payments that are never argued. Business office people often have the philosophy of 'the payer is always right,'" says Rhonda Koehn, president of Reimbursements Managers, a medical billing company in Greeley, Colo.
It's time to streamline your approach to reimbursement, anticipate payer problems, and learn ways to combat them.

Medicare Madness

Did you know Medicare denies up to 22 percent of medical services, depending on the specialty? If you're in dermatology (the lowest denial rate, at 5.5 percent) or pediatric medicine (a mere 6.22 percent), then you're one of the lucky ones. But if you're an anesthesiology practice (with a daunting 18.55 percent denial rate) or an obstetrics and gynecology practice (the highest, with a whopping 22.42 percent), then Medicare denials can easily become daily occurrences.

"The problem with Medicare is that you can talk to four different people and get four different answers," says Darlene Helmer, CPC, ANP-C, billing manager for Physician Anesthesia Associates of Towson, Md., and co-chair of the Third Party & Reimbursement committee of the Maryland Medical Group Management Association. "They don't always know their own regulations, so you have to be the expert on [them]."

Being an expert on Medicare reimbursement isn't easy, but it's not impossible. Lori Winstead, insurance and collections manager for A Woman's View, an internal medicine and gynecology practice in Hickory, N.C., says that at least with Medicare, "you get a clear explanation of the denial." Knowing why a claim is denied can be half the battle.

The other half is preventing denials. One of the most common reasons for denial is incorrect information. Both Koehn and Helmer see the same things occur repeatedly: incorrect identification numbers, CPT codes or modifiers in the wrong place, and names that are spelled incorrectly.

"If your name is 'John A. Smith, Jr.,' and that's how it appears on your Medicare card, but the claim is entered as 'John A. Smith' - that claim will be rejected," notes Helmer. Though it wasn't always the case in the past, any name variation - no matter how minor - is now automatically rejected.

The same holds true for identification numbers. Two digits that are accidentally transposed will result in a denial. Practices need to make sure they get complete and accurate information from patients at the time of their visits to avoid having to resubmit claims.

Dealing with denials based on type of service can be trickier. Koehn recommends that at least one person in the practice become a Medicare guru. "I think the number one thing is to know the Medicare policies," she says. "So basically [practices] can take their top codes and search [Medicare's Web site] by CPT code or procedure description for any medical review policies that apply to that particular code."

A certain number of Medicare claims denials are to be expected, but those specialties with the highest rates need to be extra vigilant. Take obstetrics and gynecology. Most denials are related to preventive service billing, "because Medicare has special codes they want for breast and pelvic exams instead of the normal well-woman exam code," explains Koehn.

For providers who think the Medicare codes are insufficient, Koehn recommends explaining any additional services to your Medicare beneficiary, getting an advance beneficiary notice (ABN) signed, and billing with the appropriate modifier. "The problem with that is many insured [patients] also don't understand, and so you end up explaining a lot to your Medicare patient population," she notes.

Anesthesiology has more Medicare coding problems than any other specialty. Knowing why can help you prevent denials.

"In anesthesia, there are codes called qualifying circumstance codes," explains Koehn. "Was it done as an emergency? Was it done with controlled hypertension? Was the patient over 70 years old? There are five codes that are qualifying circumstance codes."

Unfortunately, none of those codes are covered by Medicare. If you bill them, they are denied. Worse, if you repeatedly bill them, it could be seen as attempted fraud.

The problem is that Medicare doesn't recognize the physical status modifiers and qualifying circumstances codes used to bill private payers. Medicare makes anesthesiology practices bill like any other specialty. It's like forcing a square peg into a round hole - except that you have to do it if you want to get paid. Anesthesiology practices should carefully review all Medicare policies and make sure the right modifiers are in the correct slots.

If you're in a high-denial specialty, simply expect denials and plan to protest. Helmer, with the anesthesiology practice in Maryland, sees many of its pain management claims rejected because Medicare doesn't understand them. "Services often get rejected as being duplicates when they aren't. You have to get rejected, protest the rejection with a letter of explanation, and then they almost always reimburse the claim."

David vs. Goliath

If dealing with Medicare seems difficult, then confronting private payer denials can seem like one long nightmare.

"At least with Medicare you know the rules ahead of time - you know what you can and can't do," says Helmer. "But private payers make their own rules, and they can change them whenever they want."

Many payers make changes that seem completely arbitrary. One insurance company Helmer worked with changed its policy on how a certain procedure was to be coded but didn't notify clients of the change until a month after it went into effect. "How was I supposed to know about that? Everything we'd sent in for four weeks had to be redone."

Keep in mind that it benefits the insurance company to deny claims and have practices accept those denials. Whatever money your practice gives up on goes to the insurance company's bottom line. "Practices want to get their money, and payers want to keep that money," says Helmer. "We all know it."

That can sometimes make the relationship between practices and private payers adversarial. Winstead remembers customer service representatives who seemed purposely rude - in the hopes that her billing office would hang up and abandon the claims. "It's kind of a David versus Goliath mentality," she says.

But appealing denials isn't hopeless. "The number-one most important thing is to know each payer's medical policy for payment," says Koehn. "Know if they don't pay certain add-on codes, or if they only pay under certain circumstances, and what modifiers are required to get those paid." Many of the larger insurance companies now post those policies on the Internet. You can also ask your provider representatives for the information.

Still, with so many different insurance companies, billing offices can feel overwhelmed by all the information they need to know. Koehn has this advice: "Choose your top five payers and try to at least know those. Most of the smaller payers don't necessarily have developed policies, but if you can appeal based on a larger payer, or specifically based on Medicare guidelines, you usually will win those appeals."

Successful Strategies

Though every practice is different, successful practices generally adhere to a few basic principles when dealing with claims denials:

Review your explanation of benefits (EOBs). Both Koehn and Helmer recommend careful review of your EOBs. First make sure you're getting paid what you've contracted for, and then see if there are any trends in claims being denied. If staff is incorrectly billing every venipuncture, for example, some simple coding education can reduce the number of denials.

Put it on one person. "The most successful practices have [denials] focused with one or two people with some coding and reimbursement background," says Koehn. "There are just too many rules to not have someone whose primary job is to know those rules and bill accordingly."

Practices should also consider separating payment posting from denial follow-up. Having one person do both could create problems. "If that person gets behind, they're kind of in control because they're the one looking at that EOB," says Koehn. Very often, and especially in smaller practices, that person can build up a backlog. It's easy to get caught up by writing off denials, but practices could be costing themselves revenue by doing so. Make it one person's job to follow up on denied claims and see they get paid.

Take it personally. In the labyrinthine world of payer policies, Winstead considers it essential to make personal contact with the payer. "The majority of the time if you have a claim getting denied, you have to call somebody to work it out. It's crucial to a practice."

Don't be put off by rude or uninformed customer service representatives, either. If you aren't getting the response you want, Helmer suggests going higher up. "I teach my billers to move quickly to asking to 'escalate this to a supervisor.'"

Koehn suggests using your provider reps, since they are the people your practice will deal with when it is time for contract renewal. "If [the provider rep] knows the issues that we've been facing, she can be a lot more supportive. They tend to be more responsive than just customer service."

Go electronic. If your practice isn't filing electronically or using claims editing software, it should be. With Medicare and many private payers, you can track claims status on the Web. Even if the claim is denied, you'll usually find out why within 48 hours and be able to appeal much faster than if you were still depending on paper.

Plus, claims software can alert you to little mistakes before a claim is submitted and inevitably rejected. Did you accidentally drop a digit from an ICD code? Claims software will let you know something is wrong.

And going electronic is fairly inexpensive. With graduated payment based on the number of providers and claims, even a small practice can afford to work with an electronic claims clearinghouse. It often costs less than $100 to $200 a month per provider. "The benefits far outweigh the expense," says Koehn.

Enough is Enough

Though practices would like to reduce denials, "the bottom line is they'll probably never go away," says Koehn. The important thing is to keep fighting for your money.

Helmer urges practices not to give up on collecting denials. "If a claim is $32, I might say we'll only pursue this so far. But if it's a type of claim that is rejected regularly, then I'll keep at it," she explains. "If that $32 claim is rejected 10 times a month, that's $320. Twelve times a year? That's a ton of money."

Koehn suggests going a step further and using claims software to track denials. If a payer consistently bundles services or denies 30 percent of claims, it might not be worth working with that payer any longer. "As a provider it might look like a great contract," but it doesn't do you much good if you never get paid, she says.

Robert Anthony, a former editor for Physicians Practice, is a freelance healthcare writer. He can be reached via editor@physicianspractice.com.

This article originally appeared in the January 2006 issue of Physicians Practice.