October 21, 2013
Healthcare revenue cycle management is complicated. With ICD-10 looming on the horizon, it doesn’t look like things are going to get any easier. However, as billers we try to simplify the process by answering three key questions for our clients:
- Did you get paid?
- If you didn’t get paid, why not?
- If you did get paid, did you get what you should have according to your insurance contracts?
Question one is pretty cut and dry. Question two gets a little more complicated. It’s not that difficult to look at the remit or EOB to find out why a particular claim was denied, but do you know the source of the denied claim? Is it a coding issue, or do you have quality issues with the front desk/registration staff? Do you have a configuration issue inside your PM/billing system or are the charges not being input incorrectly? Can you tell how frequently claims are being denied for this reason? Can you improve your revenue cycle with this information?
If your denial data is buried in stacks of paper, I can tell you that it is going to be cumbersome to find out.
I can’t tell you how many practice leaders that I have met who report that they post all of their insurance payments, but not the denial reasons. I always get a little queasy when I hear this. When I ask “why not?” the most typical answer is that there isn’t enough time and that it is just easier to work the denials straight from the EOB rather than running reports from the billing system. In reality, the primary reason they aren’t keying that data into the billing system, is that they don’t realize how much money they are leaving on the table by not doing so. Their billers will say they know what the biggest denial headaches are but if you ask them to quantify them, they can’t. Typically you get answers like “it happens all the time” or “a lot”. They definitely can’t give you the volume of Medical Necessity denials by CPT code and payer.
The fact is that if they knew, they would be taking a more strategic stance on denial management and resolution. To them it just seems more efficient to direct their billers to work denials right off of the carriers EOBs. The billing staff methodically plods through the EOBs, calling on claims or fixing them on carrier websites, while never fixing process issues causing the denials in the first place. The first step is to get the denial data posted into the billing system.
It’s important to know where in the claim cycle payers will alert you that they aren’t going to pay the claim. Let’s take a look at how much detail there really is when it comes to rejections and denials.
During the claims submission process, the payer will analyze your claim file in two areas; Format and Content. Forget about billing to “optimize revenue” for right now, we just need to get some claims to the payer. The respective HIPAA X12 formats are all the same from one payer to another. Loop segment 2000B doesn’t vary inside a particular format. If your claim file doesn’t meet the minimum format standards the payer will reject the entire file, even the good claims get kicked out. Not all billing systems have a place to track rejected claim files, but if you are using a clearinghouse or billing service they definitely will. Ensure that you have strong controls in place to track when claim files were submitted, and that they were accepted by the payer.
Even if you meet the standard format requirements, within a particular claim format, the payer is welcome to use its own guidelines determining the content delivered in a claim file. As an example (Table 1), one state’s Medicaid plan may require you to bill all of the CPT detail for a visit at full fee while another state will expect you to leave the CPT detail at $0.00 and bill the T1015 at full fee.
Two distinct payers using the same claim file format can demand they be filled with different content.
|State Medicaid A
99213 – $200
94642 – $25
94640 – $50
|State Medicaid B
T1015 – $115
99213 – $0
94642 – $0
94640 – $0
Once a payer has accepted your claim file, they start to scrub those claims to see if they pass their most rudimentary payment rules (i.e. does the patient’s Insurance ID match their ID number format rules). At this point in the process, individual claims that don’t pass muster will be “rejected” from the payers system. The insurance company won’t even file the claim in their system. It is just kicked out altogether. This is an important distinction between rejections and denials. These rejections are communicated to you on scrubber reports that you can download, (typically from the same place to which you uploaded your claims). If you don’t have a strong process for tracking these rejected claims you can lose revenue to filing limits and other items. Not having a claim in the payer’s system sets you up early on for failure. These won’t show up on your EOBs anywhere in the future, so again you have to track them and fix them right away.
If the claim passes this scrubber process, it will then be adjudicated for payment or denial.
Denial Reason Codes CO-45 & CO-109
These denial reasons are communicated using “Reason Codes”. These codes are the life-blood of your billing process. The Washington Publishing Company has published free lists of these codes and their descriptions at http://www.wpc-edi.com/reference/. Make this link one of your favorites.
Many reason codes are informational in nature so they tend to muddy the waters a bit. For example, if you sent out a charge for a $100 dollars and the insurance contract only covered the service for $80, they may pay the claim and return a code of CO-45 (Charge Exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement). In this case you got paid, and the payer is simply telling you what portion of the bill was not allowed according to your insurance contract.
Other codes get a lot more specific. CO-109 (Claim/service not covered by this payer/contractor) tells you that you might have a coordination of benefits issue to resolve. If you are getting a lot of these you know you need work at the front desk. Of course, if you aren’t posting your denials and running reports you can’t really define “a lot” of these very well.
CO-16 Denial Code
Some denial codes point you to another layer, remark codes. Remark codes get even more specific. On a particular claim, you might receive the reason code CO-16 (Claim/service lacks information which is needed for adjudication. At least one Remark Code must be provided). By itself the CO-16 is informational only and doesn’t tell you what you need to fix. When paired with the remark code and CPT you get the full picture. If you are going to post your Denials, you need to include the remarks in there as well.
Now multiply all of this type of information by the number of procedure codes that you send out annually. It ends up being a lot. Way more, in fact, than you can expect your staff to analyze straight from the EOBs. So if all of this information is available, why does it need to be posted into the billing system? Well for starters, your billing system should be the “source of truth” when it comes to your revenue cycle. All of your billing work and reports need to tie back to the financial reports produced by the billing system.
Most importantly, posting the denial data into the billing system sets to you up to run denial reports where you can start to compare them by volume and payer. Without this you lose the opportunity to produce actionable data for your staff (both administrators and care givers). You might find that you are getting the same 5-10 denial reasons over and over again, and with a simple process change at the front desk or a correction in your PM system you can keep those claims from ever getting denied in the first place. You might uncover that you have a Nurse performing visits that you will never get paid for, so you are throwing that money down the drain (money that is important for meeting the other needs of your health center).
Without denial “data” you can’t know where to focus your efforts effectively. You’ll spend a lot of time chasing issues that might have minor impact. The time spent posting these reason codes during payment posting can be one of the single most impactful changes you can make to your revenue cycle operation.