Denied claims are just a part of doing business, but that doesn’t mean you can write them off. You knew it was a legitimate claim when you submitted it, so you should be willing to fight for the money you are rightly owed.
But how do you successfully appeal a denied claim? What strategies work and when do you know it’s time to cut your losses? For starters, look at the appeals process as a normal part of business and not an improvised response to an unexpected denial. After all, the denials aren’t really unexpected.
Providers should consider the appeals process a routine part of managing the practice’s revenues and have a standardized, formal plan for appealing denied claims, says Shelly Cronin, CPC, CPMA, CANPC, CGSC, CGIC, director of business and member development for the American Academy of Professional Coders in Salt Lake City. That means having at least one person in the office who understands the appeals process and is responsible for appealing claims quickly and effectively.
The provider also should have a policy that clearly states what your appeals process is, Cronin says. New staff can refer to the policy and existing staff can be held accountable to following the process outlined there, she says.
“One of the most common problems is not appealing in a timely fashion,” Cronin says. “Once that claim is denied, you only have a certain amount of days to file your appeal and get it looked at again. A lot of people will let these denials stack up rather than addressing them quickly, and by the time they get around to them, they find out that the window has closed on some of the claims.”
Cronin recommends following up on denied claims at least once per week, and possibly more often depending on the volume of claims and denials. The appeals process should include documenting the reasons for the denials and the eventual outcome, and then using that information to educate coders so you are not dealing with the same denial issues over and over again, she says.
Bundling similar denied claims and appealing them all at once can improve efficiency, Cronin says, but that strategy runs the risk of interfering with the required time frames.
“So you have to balance that effort to be efficient with meeting those deadlines. You haven’t achieved anything if your efficiency is offset by losing money on the claims that expired,” she says.
Managed care companies have their own rules about how long you can wait before appealing, as well as their own preferences for how they want appeals submitted. It is to your benefit to know each insurer’s timelines and processes, Cronin says. Keep a notebook that outlines each insurer’s specifications and quirks for easy reference, she suggests.
“If you don’t know what your payers are requiring for a timely appeals process, you are really taking another step back, setting yourself back even further than when you had the claim denied,” she says.
Call the payer right away
Appealing improperly is almost as bad as not appealing in a timely fashion, Cronin says. Some providers have a stock appeal letter that they send out for all denied claims—that’s a bad idea.
“If you’re sending out these stock appeal letters, they’re just going to be denied again because it is not pertinent to why the claim was denied in the first place,” she says. “A lot of places use the stock appeal letters, and when it is denied again, the staff can say, ‘Well, we tried,’ and let it go. That’s a waste of money that you are rightfully owed.”
The first thing you should do when you receive a denial is call the insurer for more information, Cronin says. Ask why the claim was denied, even though the reason will be stated in the denial. By talking to someone about the claim, you often can glean more useful information that will help make your appeal letter more focused and convincing, she explains.
“In some cases, the problem may be something simple that can be resolved over the phone,” Cronin says.
Send a proper letter with appeal
When submitting an appeal, make sure you get the details right and don’t cut corners. Don’t merely send the denial letter back with a note on it, Cronin says. Use a cover letter that states your reason for disagreeing with the denial, and provide any written backing for your position—any information that demonstrates why you coded the claim the way you did and why the insurer should pay it. This could be information from the payer’s own guidance, Medicare, or CPT coding guidelines, Cronin says.
“Or have your physician write you a paragraph or a letter explaining why they wanted to use a certain procedure or take a certain action with the patient and why it was medically necessary,” she says. “The more information you can add that is pertinent and fact-based, the better. You don’t want to get emotional and demand that they pay this or criticize the process. Be polite and professional.”
Don’t resubmit a claim without explanation, says Bill Gilbert, president of AdvantEdge, a Warren, NJ–based company that provides billing services, practice management, and coding for specialty physicians and surgery centers. The carriers don’t like that and will reject the claim again.
“It clears the paper off your desk, but you’re just deceiving yourself. It doesn’t accomplish anything and, in fact, it just further delays the resolution,” Gilbert says.
Keep a paper trail on all denials and hold on to them for future reference. When you receive a similar denial in the future, you can refer back to those earlier claims to see what worked in the appeals process with that insurer, Cronin says.
Watch for omissions, simple errors
The most common cause of denials is usually related to the insurance information submitted with the claim, explains Gilbert. For instance, the insurer may deny a claim by saying that the patient is not insured with that company. Instead of huffing and puffing about the insurer’s error, look for clues as to why you got that response. “Often it’s just because the insurance number was entered wrong somewhere. Maybe a couple of numbers were transposed and the insurer’s computer kicked it out when it couldn’t find that incorrect number in the system,” Gilbert says. “If you can find that error, you can resubmit the claim with a letter explaining what the problem was and providing the correct information.”
Sloppy errors account for a substantial number of denials, Gilbert says. Many claims are submitted to the wrong carrier, for instance. The problem is not just one insurer versus another, but also submitting a claim to a commercial carrier when it should have gone to the patient’s workers’ compensation insurer.
“It’s fairly common to see claims denied on the first round because you simply didn’t send it to the right place,” Gilbert says. “Accuracy in your billing office has to be a top priority because even if you eventually get the claim paid, bouncing it back and forth a few times before you get it right will cost you money.”
Many medical necessity denials also can be traced to incorrect or insufficient information, Gilbert says. He recently saw a claim for anterior cruciate ligament surgery that had been denied as medically unnecessary, but he found it was rejected because the claim did not outline all the previous steps that had been attempted in treating the patient’s shoulder injury.
“When an amended claim was resubmitted with updated information, the claim was paid,” he says.
Sometimes the reason for the denial is not clear. Gilbert recently addressed a problem in which a practice was seeing multiple denials for the same type of claim although virtually identical claims were being paid. “It turned out the ones that were being denied were all coming from the same claims processor in the carrier’s office,” he says. “That one person was denying the claims—incorrectly—and when we pointed out to the carrier that they were being inconsistent, they fixed it.”
If a claim or set of claims are important enough, you usually have the option of suing the carrier, says Eileen Parsons, JD, an attorney with Ver Ploeg & Lumpkin in Miami. Going to court is a big step, but it sometimes is worth it when the potential revenue is high enough, Parsons says.
Making that decision, however, can be difficult.
“That’s what still puts payers in such a terrific position,” says Parsons. “Their goal is to keep your money and force you to sue, knowing that it is only 1% of 1% that are in a position to do that and make it all the way through. I have providers who say that their denied claims are a significant part of their business—$100,000 or $200,000—but the price of going through the legal process to collect it is so high.”
To get the most bang for your buck when appealing, Parsons recommends grouping claims into categories and appealing them in batches. Don’t wait for a number of claims to stack up. Rather, group your denials into categories that can be covered with one appeal to the payer. You still have to be careful not to let claims sit so long that you miss the deadline, she says, but for high-volume practices, this type of grouping can be more efficient than appealing them one at a time.
“If you have many claims that were rejected for the same reason, and you’re going to appeal each one with the same explanation or additional information, you can group them,” Parsons says. “This doesn’t mean just putting off your appeals until the stack gets too big to ignore, but rather it’s a matter of making the most of your time and resources.”
Source---Adapted from Managed Care Contracting & Reimbursement Advisor, November 2010.
Know when to cut your losses with appeals
Appealing denied claims requires tenacity, but when do you know enough is enough? If you are appealing a denied claim but getting nowhere with the payer, how long do you keep at it?
The answer will vary depending on each situation, but there definitely will come a point when further efforts are not justified, says Shelly Cronin, CPC, CPMA, CANPC, CGSC, CGIC, director of business and member development for the American Academy of Professional Coders in Salt Lake City.
“Every time you handle that claim, it costs you money,” says Cronin. “If it’s been touched so much that by the time you win the appeal you’re not even covering the costs of the appeal, then it is really beyond the point where you should continue.”
Providers often don’t realize how much they are expending on the appeals process, says Bill Gilbert, president of AdvantEdge in Warren, NJ. Gilbert’s company has analyzed the cost of appealing a denied claim, including physician and staff time for researching the case and preparing the appeal. The figure came to an average of $50–$100 per appeal, he says.
To make the call, look at the claim for clues. Is this a high-dollar claim? The more money that is at stake, the harder and longer you should fight for payment, Cronin says. Is it a type of claim that you submit often? If so, it may be worthwhile to establish that the claim is valid so the insurer doesn’t continue denying them later.
But if it is a claim for a relatively small amount of money, or a one-off procedure, the answer may be different.
“Sometimes those have to be put aside and you chalk it up to how the system works,” Cronin says. “You lost that one but you’ll win others.”
Avoid denials by reading the contract carefully
Many denials can be avoided by knowing the payer’s payment policies well, says Eileen Parsons, JD, an attorney with Ver Ploeg & Lumpkin in Miami. You should study the payer’s policies before signing the contract, particularly if your practice provides a certain type of treatment or procedure that is new or different or otherwise might be denied, Parsons says.
“This is particularly important when this care makes up a large part of your practice and your revenue stream,” she says. “You don’t want to get into this contract and then realize down the road that they are going to deny all of those claims. At that point you could be forced to appeal claims all the time, when it could have been avoided with a careful reading of the contract.”
Contracts also should be scrutinized for language that restricts your ability to renegotiate or void the contract if the payer substantially changes payment policies, Parsons says. If the payer changes the way it reimburses you for a type of care that is key to your business, you need the ability to renegotiate or terminate your contract. “At least understand up front what the requirements are going to be for the claims that matter most to you,” she says.