Chapter 1 Denials Management

Question 1

When payers adjudicate (evaluate and determine) a claim, it results in payment or denial notification.

Answer 1

*Provide additional info

*Appealing the denial

*Seek payment from patient

Question 2

Challenge: low-dollar, high-volume revenue stream.

Goal: keep denial rates low.

Answer 2

Fix:

*Claim errors
*Denials
*Will delay payment process and decrease effectiveness of revenue cycle.

Question 3

A common failure is the lack of effective denials management.

Answer 3

Maintaining good control of denials management is best accomplished by regularly reviewing the denial reason codes to determine why the claim was denied and making corrections to prevent similar denials

Question 4

Run and review a denial reason report, at least monthly.

Answer 4

the six fundamentals to prevent denials are:

1.Educate and communicate

2.Verify Insurance prior to service

3.Know your payers

4.Document appropriately

5.Take advantage of technology

6.Monitor, analyze, revise

Question 5

Tips For Preventing Denials

Answer 5

*Use the 80/20 rule: As a rule of thumb 80 percent of issues are caused by 20 percent of the problems.

Question 6

Tips For Preventing Denials

Answer 6

Determine actions needed to correct identified problems.

Question 7

Tips For Preventing Denials

Answer 7

Implement updated policy and educate staff to prevent continued issues with problems identified.

Question 8

Tips For Preventing Denials

Answer 8

Utilize practice management software rules engine (ifavailable).

Question 9

Tips For Preventing Denials

Answer 9

Create a culture of zero tolerance for preventable denials.

Question 10

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Tips For Preventing Denials

Answer 10

1.Use the 80/20 rule: As a rule of thumb 80 percent of issues are caused by 20 percent of the problems.

2.Determine actions needed to correct identified problems.

3.Implement updated policy and educate staff to prevent continued issues with problems identified.

4.Utilize practice management software rules engine (ifavailable).

5.Create a culture of zero tolerance for preventable denials.

Question 11

“provider not enrolled.” The next box describes a review of the enrollment process to identify why denials are resulting from the process.

Answer 11

*It is identified that the provider is not enrolled with some insurances,

*that there is not a good tool to track the enrollment process,

*and that the staff involved with scheduling are unaware of what insurances the provider is enrolled with.

Question 12

what is being done to modify the process to reduce these denials,

Answer 12

identifying a better tool to track the enrollment process so that providers get fully enrolled and escalating those that are still pending approval

Question 13

notifications and training for staff so that they know when a physician is not contracted with a payer.

Answer 13

With this information, schedulers can assign patients with these payers to different physicians who are already enrolled.

Question 14

Explanation of Benefits (EOB) and Remittance Advice (RA)

Answer 14

*An explanation of benefits (EOB) is a statement sent by an insurance carrier to the covered individual explaining what medical treatments and/or services were paid for on their behalf.

A remittance advice (RA) is a statement sent by an insurance carrier to the medical provider which explains the adjudication decisions on those claims submitted by the provider.

Question 15

An electronic remittance advice (ERA)

Answer 15

is an electronic statement sent by an insurance carrier to the medical provider which explains the adjudication decisions

Question 16

Cut Down on Denials With This Handy Primer

Answer 16

If your practice is spending precious time and money on processing appeals for too many denied claims, it’s time to fix your claims issues upfront. Now is the time to revisit your denial trends and get the pay you deserve.

Question 17

To prevent denials in the first place, you’ve got to sift through all of your claims data and analyze the information and your remittance advice (RA), looking for inconsistencies.

Answer 17

Large-scale organizations may have revenue cycle management (RCM) teams to scrutinize denial data, but even small practices can develop systems and processes that pinpoint problem areas and come up with solutions to cut down on claims issues.

Question 18

Spot Denial Issues with These 6 Steps

Here’s the step-by-step process experts recommend.

Answer 18

Step 1: Start by downloading ERA files from your payers. You can translate ERA files into readable formats using software such as Easy Print, PC Print, vendor applications, or home-grown processes.

Question 19

Step 2

Answer 19

Step 2: Review claim adjustment reason codes (CARCs) to fully understand why the Medicare Administrative Contractor (MAC) or private payer didn’t pay your claim.

Question 20

Step 3

Answer 20

Track down the remittance advice remark codes (RARCs) associated with the CARCs. Remember, not all CARCs will have them, but sometimes you’ll see them along with CARCs providing additional information about why the claim was denied.

Question 21

Important: The alpha-numeric CARC and RARC themselves won’t tell you much. To get full definitions, go to the External Codes List on the X12 website located at

https://x12.org/codes.

Answer 21

Once at the website, you can click on the link for “Claim Adjustment Reason Codes (CARC)” to see the complete list of current codes with their definitions, such as, “6- The procedure/revenue code is inconsistent with the patient’s age.” You’ll also find a link for “Remittance Advice Remark Codes (RARC),” which provides a complete list of current codes with definitions, such as “N472 Payment for this service has been issued to another provider.”

Question 22

Stay up to date: MACs update CARC and RARC three times annually based on WPC’s schedule,

Answer 22

typically March 1, July 1, and November 1. That means your practice needs to keep current with the updates if you want to be able to translate your RAs. In addition to the updated list of codes, the website also contains links to deactivated codes, and codes scheduled for deactivation at the next update.

Question 23

Step 4

Answer 23

Step 4: Look for the group code, which describes who has financial responsibility for the charge that’s been denied

*“CO (Contractual Obligation) assigns responsibility to the provider” while “PR (Patient Responsibility) assigns responsibility to the patient,” according to two examples of financial responsibility outlined by CMS guidance.

Question 24

Step 5

Answer 24

Step 5: Compile your data into a denial trend report that lists reason codes, remark codes, and group codes. Sort your report by reason code so that you can quickly spot denial trends at your organization.

Question 25

Step 6

Answer 25

Step 6: Once you spot denial patterns, you can find the root cause for why they are happening so that you can educate staff or tweak systems. You’ll find your root causes in one or more of these areas:

Question 26

You’ll find your root causes in one or more of these areas:

Answer 26

*Patient access and registration, including pre-authorizations

*Clinical encounter and documentation

*Charge capture/entry

*CPT® and ICD-10-CM coding

*Claims preparation and submission

*Account reconciliation and posting

Question 27

A thorough review of your denial trends will make it easier to root out your claims errors so that you can take the necessary steps to eradicate them.

Answer 27

*This may involve staff training, educating clinicians,

*Beefing up your advance beneficiary notice (ABN) procedures,

*Redesigning workflows,

*Reviewing national coverage determinations (NCDs) and local coverage determinations (LCDs),

*or refining your ICD-10-CM coding to better express medical necessity.

Question 28

Question: Our billers are stating they are seeing a lot of denials but are not able to quantify specific denials. Is there a good denial tracking tool that can help us?

Answer 28

Answer: Many practice management systems (PMS) will have the ability to run a denial report. Here is an example of what a denial report may look like.

Question 29

Example: create an excel with the following information.

Answer 29

1. Denial Code/ Reason (468- Duplicate claim) etc.
2. Count (how many were denied) in a batch.
3. % what percentage of claims are being denied and why. (denials/count in batch) divide denials by count in batch.
4. Amount in $

Question 30

Keep in mind that the denial report will only reflect what is posted in your PMS. If your PMS system has not been set up appropriately, or your payment posters are not posting denials, you may need to track denials manually. You can do that in a simple Microsoft Excel spreadsheet like the one shown below

Answer 30

Once you have gathered enough information, sort the worksheet based on denial and you may start to see some trends appear.

Question 31

Insurance companies send EOBs to patients two to three weeks after their appointment.

Answer 31

EOBs are insurers’ way of explaining their reimbursement, based on the CPT® codes and ICD-10-CM codes you submit.

Question 32

Question: What is the difference between an EOB and an RA?

Answer 32

Answer: While an EOB is sent to the patient, an RA is sent to the provider who billed the service.

Question 33

Question: What information do RAs and EOBs contain?

Answer: In general, both RAs and EOBs contain this information:

Answer 33

*Information regarding the patient

*The service provider
Any adjustments made to the claim

*The type of procedure performed

*The date the procedure was performed

*The cost of the procedure
An explanation if the payment was denied

Question 34

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Question: How can practices utilize their RAs to streamline their processes?

Answer 34

Answer:

*All billing staff should spend time studying the reasons cited for adjustments or denials from the RA they received.

*Each RA message should be tracked to ensure that any patterns of inappropriate adjustments (incorrect use of a modifier, bundling issue, reduction for secondary procedure, etc.) or denials (code not covered, code bundled, demographics incorrect, not medically necessary, etc.) are addressed to evaluate processes, work to improve them as needed, and ensure maximum reimbursement.

Billers should also use RAs to compare what was paid to the published fee schedule from the insurer to ensure payments were made according to payer contracts.