I once received a call from a provider wanting denial management consulting services. He claimed to have "not been paid all year" and wanted me to study the accounts to determine why all his claims were being denied.
After securing proper HIPAA paperwork and gaining access to the Practice Management and Document Storage systems, I went to work. I soon discovered that although my client did have some denial problems, the biggest problem was that the back office did not seem to understand that there are three major reasons a claim will remain on the aging receivables report:
- Zero Paid Adjudicated Claims
Most of the items on the aging report belonged in one of those three categories. Furthermore, the remedies taken did not always match the status, which ensured the items would never move off the aging receivables report.
Just as there are three likely reasons an item is hung up in aging, there are three remedies to curing the situation:
- Correction & Rebill
- Transferring Balance to Next Payer
The key to keeping a clean aging is to understand how to detect your blance status, and which remedy to apply.
When a claim is billed, it goes through many levels of edits, starting with the Practice Management system, continuing at the claims clearinghouse, and ending at the payer. If at any point any data field is determined to be in error or invalid, the claim will be rejected and progress stops. The claim is never adjudicated - in fact, it's not even entered into the payer adjudication system. A report will be produced by the rejecting party. That report will be found in your PM system or will be downloaded from your clearinghouse/uploaded to your clearinghouse's website. The reason for the rejection will be listed, which can be anything from a missing provider NPI to an invalid patient insurnce member number. In the case of the rare paper claim, a rejection letter will be mailed to the provider. Most rejection reports include the disclaimer that the claim has not been entered into the adjudication system. Medicare and some Medicaid rejected claims will show up on the bulk remittance advice. Rejected Medicare claims always have code "MA130" attached. Medicaid RAs will similarly be coded with the MA130 or a state proprietary code.
To remedy the rejection, you must correct the offending data and resubmit that claim as if it is brand new. Many of my client's rejected claims had been "appealed' - instead of being corrected and rebilled, a time-consuming appeal letter was prepared, giving the correct information in the body of the letter. It's no suprise that the play stopped right there - the payer had no claim to appeal. The proper and only course is to correct and rebill. You would only bill the patient if they were the sole possessor of the correct information and efforts to obtain the information were fruitless.
Zero Paid Adjudicated Claims
A previous employer once gave me a stack of EOBs with the demand that I appeal all of them, as they were all denied. As I flipped through them I realized that my employer clearly did not know how to read an EOB, as the claims were all for services rendered in January and the claims were all applied to the patient's deductible. These were "paid" claims, even if there was no check attached to the EOBs. I've already explained how to tell the difference between a rejection and an accepted claim - the issuance of a rejection report or an EOB - but it's equally important to determine if the zero paid claim is a zero paid adjudicated claim or a denied claim.
HIPAA-compiant zero paid adjudicated claims are often very easy to spot - the denial/reduction reason group code will be "PR". Care should be taken, however, to make sure the "PR" designation was applied correctly. If the balance is for deductible, coinsurance, or copay then you certainly bill the patient for those amounts. You may also see "PR 96", for instance, but after viewing the patient's plan documents you realize the denied amount is a payable service and requires appeal. As long as you keep an eye open for those possibilities, relying on the "PR" code is safe. Non-HIPAA-compliant EOBs will have "patient responsibility" columns on their EOBs and/or proprietary remark codes that will indicate to the provider what balances can be billed to the patient.
It behooves the provider to also pay attention to "CO45" codes or "exceeds usual and customary or contracted amount". If the patient is enrolled in a health care plan that the provider is not contracted with, these balances are billable to the patient and are not appealable unless the patient's plan is subject to ERISA and the plan document does not indicate a specific amount to be paid for the procedure, or it does and that amount was not paid. See my past article on "balance billing" for more information.
If you've followed the steps and determined the claim was accepted and adjudicted, but was processed incorrectly, you appeal. This is the only time you can validly appeal a claim. Now that you've pared down your aging list to show the true denials only, you may want to review some past articles articles dealing with denials and appeals.
If you follow the flow from start to finish, stay diligent in reading your reports and correspondence, and study more of your EOB data than just the amount paid, you will be assured of having few items on your aging report, and you will be assured that you are handling the few problem items in the appropriate way.
To simplify as much as the process can be simplified:
- Rejection - Correct and rebill
- Denial - Appeal
- Zero Paid Adjudicated Claims - Bill Next Payer
Be sure and call or email us if you need more help with your aging report!