Denials Management for the Medical Coder
Managing denials is more difficult in 2018 than it was in 2005, 2000, or 1998. Not because practices are necessarily receiving more denials from payers but because unlike the early to mid-2000s and 1990s, we are now posting payments via auto remit programs, so denials and underpayments get automatically applied without a coder/biller questioning the validity of the denials or underpayments.
In the “old days” (which is not many years ago), when we manually posted our remittances, we had the opportunity to critically evaluate every line on the remittance advices and question any payments that did not pay as we expected. Now, these denials and underpayments easily fall into a black hole without anyone looking at them, without anyone questioning them. That is very favorable to the third-party payers and detrimental to providers.
Denials Management and ERA
This means that the payment posting process is not complete until the Electronic Remittance Advices (ERAs) are reviewed in detail, looking for any denials or underpayments. That review will point to where the Denials Management process starts, the identification of improperly denied claims by the third-party payers.
Just because a payer denies a claim, do not assume the claim is not payable or there is something wrong with the claim. Back in 2000, there was an article in Time Magazine stating that 30 percent of valid, payable claims are denied by third-party payers. Frank Cohen did a study in 2016 and found similar data. Yet, 50 percent of those invalid denials are never appealed, Cohen found. And of those that were appealed 67 percent of the appeals were paid by the payers. There is a good chance that the other 33 percent of claims were not paid due to a few reasons. One of those reasons could be that the appeal letter was not sufficiently strong enough and did not make a case for payment. Another reason for the other 33 percent is that there is little to no due process with private commercial insurance. The party reviewing an appeal is the same party who denied the claim to begin with. But, with the correct tools in your tool belt and utilization of the correct content in your appeal letters, more appeals can be won than those ignored or lost.
Third-party payers who are denying or underpaying payable claims are counting on practices not appealing them. That is a way that they preserve capital for their shareholders and C Suite bonuses. It is up to those of us who stay on top of Denials Management to call the payers on these invalid denials and get these claims paid.
The first step is identifying the improperly denied or reduced claims. These claims will only be captured with today’s billing processes if we review the ERAs in detail to capture all underpayments. Since most payments are auto-posted via electronic remittances, it is easy to miss improper denials and underpayments. Before auto-posting, the payment poster would catch these improperly paid claims. These claims, requiring appeals, now easily sneak through with auto-posting if the practice does not review the ERAs with a fine-tooth comb and review all the denials and underpayments to determine what must be appealed. This may appear to be very labor intensive. It is, but it requires less labor than manually posting all the remittances as practices had to do prior to auto-posting of ERAs were possible. The person reviewing the ERAs for improper denials and underpayments must be a billing employee with a high level of understanding of coding and billing rules so that aberrations can be identified.
Once these have been identified from the ERAs, we need to then go to our documentation and make sure that the documentation supports how we coded and billed the services. If we identify that the documentation does not support the coding as the services were billed, we need to do a few things. The first is to determine what does the documentation support in terms of coding. If the claim was paid consistent with the documented coding, the documentation and coding should be copied and put in a folder to be used for educating the providers since the claim was submitted with coding that was not supported with the documentation. If it is determined that the payer over paid or under paid the claim based on coding that is not supported in the documentation, we need to send a corrected claim to the payer for re-processing and a refund. This corrected claim may pay less than what was already paid, or it may pay more, but either way, a corrected claim must be sent to the payer with an explanation of the under or over coding.
Denials Management: The Third Step
The third step will be to go to the provider and address how they had documented and coded the service(s) originally and educate them why they had coded the service(s) wrong, and why the service(s) should be coded as the corrected claim reflects. This education for the provider is an important part of your practice’s compliance program. Document the corrected claim submission and education of the provider and include this as part of your compliance plan.
On reviewing the documentation and we find that the documentation does support the coding that was submitted on the claim, we will have then identified a claim that must be appealed.
Appealing Denials Management
An appeal letter to the payer includes the case for why the claim is payable or was underpaid. The letter should explain to the payer the coding rules and reimbursement guidelines on which the claim is payable. It should be clear and as uncomplicated as possible so that whomever is reviewing it at the payer can understand the case for reimbursement that is being made.
If the denial is based on medical necessity or the claim is for newer technology, include supporting articles from authoritative sources that support the payment for the service. Authoritative sources and authoritative adjacent sources include AMA CPT® Assistant, articles and references from the payer, articles and references from other payers, articles from specialty societies, CMS, your state Medicaid guidelines, specialty newsletters, specialty reference manuals, etc. Refer to the references that are included with the appeal in the cover letter and indicate specifically what in the references apply to your appeal and why the claim is payable.
The letter along with any reference material will be making your case to the payer why the claim is payable (or why more money is due) when they did not pay (or underpaid) the claim. The appeal letter is where you can convince the payer that they have made a mistake and clarify to them why the original processing of the claim was incorrect, giving them the opportunity to correct that error. Sending in an appeal letter that just says: “Please reprocess this claim” is not sufficient to be successful. Since the payer processed it improperly to begin with the first time, they will continue to process it improperly if they just reprocess it without any further information as to why the claim is payable (or payable at a higher level).