Denials can wreck your revenue stream, but physician practices often give up on payment too soon, says Richard J. Quadrino, JD, founding partner with the law firm of Quadrino Schwartz in New York City. Many of your "dead" claims are payable if you know the law, he says.
"Providers often have a lot of denials that they've written off, figuring that they don't have value," Quadrino says. "Especially with smaller providers, we sometimes see a whole group of claims that were only partially paid and should have been fully paid. These providers have a lot more leverage than they realize."
Much of that leverage comes from the EmployeeRetirement Income Security Act of 1974 (ERISA), which, among other things, requires that an ERISA retirement plan be reimbursed for medical care provided to a beneficiary. Payers are under obligation to comply with a number of deadlines under federal regulations, Quadrino explains, and if they fail to comply with the deadlines, that gives the provider the opportunity to obtain full payment for the claim. (See the story on p. 3 for more information on ERISA requirements.)
Consider an example in which the payer does not respond within the required 30 days, instead waiting until 60 days have passed to say the care was not medically necessary or that more information is needed.
"At that point, there are some very good arguments that their rights are waived completely and the claim just has to be paid," he says. "But 99 out of 100 providers don't realize that the lateness even matters, and instead they start trying to jump through all the hoops that the insurers want them to go through. They don't realize that they actually have leverage to get the claims paid."
If the claim response is late, you are not even obligated to provide more information when requested, Quadrino says.
Even so, don't expect the payer to respond well when you say no.
"Legally you should be able to politely refuse the request for more information and just tell them that the claim is payable. But if you do that, they're not always going to just say okay and send you the money, especi-ally if it is a large amount," Quadrino says. "Some of these requests will need to be made by your lawyer, and it would only be someone up the food chain at the insurer that would realize they have a problem and have to pay you."
Quadrino once represented a solo practitioner chiropractor who had $1.6 million in unpaid claims-all of the claims came from one insurance company because the chiropractor had treated a patient population whose members were all covered by the same plan. The insurer effectively cut the chiropractor off because it decided that he was getting too much money from that patient population, Quadrino says. The insurer delayed payment by repeatedly requesting more information and denying claims.
"He had something like a thousand appeals, and soon he had sold his house and was almost out of business," Quadrino says. "I showed that on all of these claims he didn't need to provide more information and he didn't even have to appeal."
Quadrino demonstrated how the insurer had violated multiple rules regarding claim denial, such as missing deadlines or failing to provide a scientific reason for saying there was no medical necessity. The attorneys for the insurer realized Quadrino was right and worried that a decision by the judge could affect class action lawsuits pending against the insurer, so they decided to settle the case for "an enormous amount of money," Quadrino says.
Many providers are reluctant to hire an attorney to fight for denied claims because they fear that insurers will find a way to punish them in the long run, says Quadrino.
"The insurers can act like bullies with their denials, but the way to fight a bully isn't just to take it. If you stand up and punch them in the nose they'll leave you alone," he says. "And if they do get vindictive, they're just digging their own graves. That's what physicians fear, but you really see the opposite. They're afraid to bully you again."
As part of the chiropractor's settlement, the insurer wanted the physician to join the network. He said no, and then the insurer negotiated how it would pay for services in the future.
"That's leverage. We negotiated how the insurer would pay for various procedures and actually put the CPT codes in the settlement agreement," Quadrino says. "Doctors have a lot more clout and a lot more power than they realize."
But on a day-to-day basis in a physician's office, will an administrator be able to convince the payer to pay a claim without further question because the response took 42 days instead of less than 30? Possibly, Quadrino says.
"You may have to press it and tell your contact at the insurer to move it up the food chain and check with their counsel," he suggests. "It's not going to be something they accept the first time you say it, but if you insist that this is the law and they should confirm it with their own people, they should realize you're right. Then maybe the next time they'll know that they should just pay."
Bills related to automobile accidents may be easier to handle in this regard, Quadrino says. Aside from other regulations, state laws typically require auto insurers to pay claims within a certain time frame, usually 30 days. The case law is more developed in this area, so the insurers are well aware that they must pay claims past the deadline, he says. "The office manager can just call Allstate and say the claim is at 33 days, and they'll say, ‘Oops, sorry,' and send the check in full," he says. "The six- or nine-month odyssey of how the claim was coded, all of the back and forth, is skipped. They just pay the claim."
Health insurers are not at that point of acceptance yet, but Quadrino says more court decisions in his favor will keep pushing the industry in that direction. A California appeals court recently affirmed the requirement for payment after the deadline is missed.
"This doesn't have to involve a lawsuit," Quadrino notes. "You may need to involve a lawyer who understands these requirements, but a lot of times it can be worked out with a high-level discussion between the lawyer and the insurer's legal counsel."
Use ERISA protections to your advantage, make insurers follow the law
The Employee Retirement Income Security Act of 1974 (ERISA) requires health insurers to respond to claims in a timely manner. Failure to do so can mean the claim is eligible for immediate payment, explains Richard J. Quadrino, JD, founding partner with the law firm of Quadrino Schwartz in New York City.
Quadrino offers the following explanation of how the ERISA rules apply and how a provider can respond to an insurer's violation:
- The insurer must pay or deny a claim within 30 days, or ask for additional information. The payer also can request a 15-day extension to this deadline. "They have to explain why they want the extension or more information," he says. "If you end up in court and they say you never provided documentation for why this was medically necessary, your response is that they requested it too late and therefore you did not need to provide it. And if that's the only grounds on which they denied the claim, all the other defenses are waived. It's too late to say it was coded wrong or unbundled."
- The insurer must provide specific reasons for any denial or partial nonpayment. Most explanation of benefit denials do not explain the insurer's position on why the care is not covered, Quadrino says. "They need to be specific and say where in the plan the treatment is excluded," he says. "If they say it is experimental, they have to cite the part of the plan that says it is not covered."
- A denial for medical necessity must be specific and include a scientific basis. "I've never seen them do it," Quadrino says. "The denials are defective all the time. If that's the only thing they've done in 30 days is say it's not medically necessary, and they didn't provide a scientific basis, that claim is payable. They can come up with something else 60 days or 90 days later, but that doesn't change anything."
- The payer must notify you of your right to obtain all relevant documents from the insurer regarding the denial or partial payment on a claim, and it must provide specific appeal rights and procedures. This requirement often is overlooked, Quadrino says. Don't be afraid to hold the insurer to the details of the law, just as it would hold you responsible for the fine print in its contract, he says. "You can ask for the e-mails from their doctor showing why it wasn't medically necessary or a copy of the journal article that they based their decision on," Quadrino says. "How can you appeal if you don't know what you're appealing?"