Take proactive approach to prevent claims denials

Patients may be dissatisfied

When a claim denial occurs, the underlying cause is not necessarily the payer's requirements, says Silva Gramlich, director of registration services in the finance department at Nationwide Children's Hospital in Columbus, OH. Gramlich reports that in order to save costs, employers are modifying the type of coverage that they are offering their employees.

"In some cases, they are limiting the number of visits or treatments," says Gramlich. "Or, the denial can come back because that particular employer has chosen not to cover a specific service any longer."

Visits for certain types of therapies may have been unlimited in the past, but now the employer is covering only a limited number, says Gramlich. "That means more work for the billing team. We have been paid in the past, but now you have to rework the claim," she says. "That adds to the days in accounts receivable."

It also can lead to patient dissatisfaction, notes Gramlich. "The majority of people have a tendency not to read the material about their benefits," she explains. "They may think they can go for unlimited services because the hospital is a provider, which is not the case. The consumer is sometimes surprised that coverage is reduced, or that a service is not covered at all."

Fixable denials

Judith Toth, the hospital's director of patient accounts, says that many denials are "fixable rejections. There are rejections that can be corrected. Then there are denials that the payers are not going to pay us for, such as when we find out retrospectively that the patient doesn't have coverage."

Patient access staff analyze denials to see if any improvements are needed, says Toth. "For those that are contractual issues, we get payer relations involved," she says. "There are denials where they are asking for additional information, which I call technical denials. Those are sometimes a little harder to understand."

The patient accounts department implemented software to address some of those, says Toth. "Sometimes you have what we call 'local review policies,' which the payers use to determine medical necessity. So you have to work those," says Toth.

Denials may involve a difference of opinion on what the payer and the hospital consider to be non-covered services. "Those can sometimes be a grey area. We think that we should be paid for certain things, and payers will disagree with that," says Toth. "Then, we have to go to payer relations and talk about how we are going to resolve it."

Another type of denial that is difficult, says Toth, involves technical difficulties on the part of the payer. "We have had some payers recently who have installed new software. They are denying things they should not deny, because the software is not set up appropriately," says Toth. "That is kind of challenging, because it backs up your A/R."

Toth notes that certain Medicaid HMOs have begun to install Correct Coding Initiatives (CCI) edits, which they did not have previously. These CCI edits are used widely by Medicare and other payers for reimbursement, as a result of a Centers for Medicare & Medicaid Services (CMS) mandate, says Toth.

Because of this, she says, "things are getting denied for inappropriate reasons, or they are not recognizing things that should be paid. That's been our major challenge. And it is going to be ongoing, because that mandate is out there. Our payer mix is pretty heavily Medicaid."

Medicaid was mandated by CMS to install these specific edits in order to limit services from being billed into one procedure, says Toth. "They limited things from being unbundled, because they feel there is a tendency for overpaying for certain things," she says. "More of the payers are adopting those CCI edits. It makes billing a lot tighter and more complex."

Brett Taylor, director of payer relations for Nationwide Children's, says that more stringent requirements, and resulting claims denials, are partly a product of the increase in Medicaid managed care plans. "More states are going to that, and they are playing catch up to where the commercial plans were a few years ago," he says.

Payer-specific requirements

There are many payer-specific requirements that staff need to watch out for, says Toth, giving the example of a claim denied for an invalid CPT code. "It may be a valid CPT code, but one that that particular payer does not recognize," says Toth. "So you have to research it, and supplement it with one that fits appropriately for the situation, if at all possible."

Another claim might be denied as "medically not necessary" because it was billed in the physician field as inpatient, and the insurance company feels it should be have been observation, says Toth.

Other claims denials involve Medicaid patients who are admitted to the facility from another hospital, says Gramlich. "That information is now always passed to the patient access staff member who is doing that admission," she explains. "Potentially, you are going to get a denial. Medicaid wants you to code that as a transfer, yet the personnel didn't know the patient came from another hospital."

The good thing about those particular denials is that they are very easy to fix and resubmit, says Gramlich. "There isn't a lot of utilization of resources going into those, but we do re-educate staff that they need to work collaboratively with the transport team," she says.

The transport team now indicates that the patient was picked up from another hospital, not from a doctor's office, home or the scene of an accident, says Gramlich.

"We are doing much better with that. But as a large organization, we have turnaround and people that come and go," says Gramlich. "We are always educating staff, as soon as we see those type of errors."