Team recovers $2 million per year in denied claims

One care manager is responsible for appeals

Having a dedicated team responsible for following up on denied claims has generated an average of $2 million or more in recovered revenue for United Health Service Hospital every year since the first full year of the initiative in 2001.

"We knew that the organization was leaving a lot of money on the table. In 2000, we organized a team to look at why we were getting denials and what measures we could put into place to make sure we get the reimbursement we are due," says Pat Chamberlin, RN, CCM, CCUR, care manager of the dedicated recovery unit at the Johnson City, NY, hospital.

The case management department has dedicated one care manager to handling the appeals of all denials that do not involve coding or billing problems. Those denials are handled by their respective departments.

"Having a dedicated case manager with responsibility for appeals has been a positive step for the organization. Now the finance department and the health information department know one person to contact when they have concerns, says Michele Gordon, RN, BSN, manager of the care management department

Payer groups like the system because they have one person with whom to correspond, she adds.

In the past, case managers were responsible for appealing their own specific denials in addition to their other duties, says Chamberlin, who has been the care manager of the dedicated recovery unit since 2006. The position was created in 2003.

The system has allowed the case management department to create summaries of denial information showing the staff areas where the hospital is at risk for denials and showing various departments practices that could be modified to prevent denials, Gordon says.

"When each case manager was tracking his or her own denials, we didn't have the ability to compile information in one place," Gordon says.

The hospital had 403 denials, totaling $3.6 million in 2006. The dedicated recovery team recovered $2.15 million and has more than $900,000 in appealed claims still pending.

The hospital has chosen not to appeal some denials; others have been appealed and lost.

How the system works

The dedicated recovery unit was created by a team that included representatives from the care management department, the finance department, medical records, coding, nursing, registration, insurance verification, and health information management.

As a result, the coding unit developed its own initiative to improve documentation concurrently. The finance department looked at ways to improve the accuracy of billing. The case management department dedicated a case manager to appealing all other denials to one case manager.

The dedicated recovery unit was launched in the last few months of 2000 and, that year alone, recovered $500,000 in denied claims.

Here's how the system works: When the finance department gets a denial that doesn't involve coding or billing, it sends the information to Chamberlin to determine if there are grounds for appeal.

She evaluates the new denials sent for review and sends the finance department an opinion on what the response should be. She initiates the steps in the appeals process and follows up on outstanding appeals.

The primary issues that Chamberlin deals with are admission status, lack of precertification or preauthorization, and medical necessity.

When Chamberlin gets a denial, she pulls the medical record and compares it with the reason the insurance company gave for issuing the denial.

"I look to justify the hospital records. If I feel they are denying us unfairly or incorrectly, I review the InterQual criteria and the medical record and draft a letter stating our side of the issue," she says.

For instance, if the insurance company denied the claim because of lack of precertification, Chamberlin checks the records to see if the precertification was documented. If the admission was an emergency, Chamberlin has grounds to challenge the precertification requirement.

"If they deny the claim because the patient met outpatient criteria and we billed the care as inpatient care, I look at the medical record to see if the patient did meet inpatient criteria. If the insurance company was correct, I make sure the procedure is billed as an outpatient procedure," she says.

Chamberlin is responsible for denied claims issued by commercial insurers, Medicare and Medicaid managed care plans.

"We have an increasing population of managed Medicare and managed Medicaid payers. I manage denials from those as well," she says.

If the hospital appeals and the insurance company upholds its decision, Chamberlin appeals on a higher level.

"If we think that we are correct, we can challenge it further and provide any justification needed, including involving the physician in some cases," she says.

If the insurance company's reason for denial is unclear, Chamberlin contacts them for clarification.

When she spots a pattern in denials, Chamberlin works with the staff to make sure that the hospital meets the insurer's criteria in the future.

"We were seeing a pattern in denial for patients who came to the emergency department for a short-stay surgical procedure. The insurer wanted to pay for outpatient treatment and we had placed them in inpatient status. I clarified with the payer their definition of inpatient and outpatient criteria and made sure the staff knew the difference," she explains.

Once the appeal is initiated, Chamberlin keeps track of where it is and contacts the insurance company if it doesn't issue a response in a timely manner.

The team has streamlined the filing system, creating separate files for open appeals, pending appeals, those waiting for more information, appeals that are at the second or third level, and closed appeals. Much of Chamberlin's work is done on the computer, but she also makes hard copies to back up all of the information.

When patients are from out of the area and become sick or are injured while traveling in the region, Chamberlin researches the insurers' requirements and finds out where to send the appeal.

"We're familiar with our local insurer's requirements for precertification and pre-authorization, but out-of-network insurers or those who are out of state require more investigation," she says.

Chamberlin attends monthly meetings with the finance department during which local payers give updates on their products and changes on admission or referral requirements.

"We stay on top of the payers so we can alert staff of changes in requirements so we can avoid denials," she says.

She acts as a resource for the staff, advising them when they have questions about documentation that may result in a denial.

"The staff is very good at working with me, and if they get any indication that we may get a denial, they give me a heads-up so I am aware of it," she says.

The hospital liaison for one of the hospital's largest payers conducts concurrent reviews on site and talks to Chamberlin on a daily basis about anything that may be a denial.