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Four steps to help physicians get reimbursed for what they earned.
The average First Pass Resolution Rate (FPRR), otherwise known as the “clean claims rate,” for an efficient, well-run physician practice should be more than 90%.
The FPRR tells a practice what percentage of the time its claim is paid the first time it is submitted to an insurance company for review and payment.
On average, however, most physician practices fall in the range of 70% to 80% FPRR, which means that such a practice could have as many as 30% of its claims denied or contested on the first submission. If these claims are ultimately paid (some will not be), the delay in payment, coupled with the time and effort necessary to resolve the cause of the denial or contest, can cause serious financial strain for a practice.
While no strategy is foolproof, there are a few simple but effective methods that you can implement to increase your FPRR and increase your likelihood of success should legal action be required to collect.
The easiest, but most frequently overlooked, way to improve insurance reimbursement rates is to familiarize yourself with your provider contract.
While the payment process is almost entirely automated, that process begins with an individual at the insurance carrier “loading” the contracted rate for reimbursement into the system that processes and pays your claims. Simple human error in the loading process could cost your practice thousands of dollars or more before being noticed, if noticed at all.
As a general business practice, implementing semi-annual claims payment reviews to verify you are receiving your contracted rate is an effective way to avoid this problem. Such a practice is particularly important if your contract contains any provisions for an increase in reimbursement rates associated with annual milestones or panel membership.
The provider contract also will include provisions relating to the appeals process for contesting a denied or partially denied claim. While the appeals process may seem like a hassle, if used properly it can be the most cost-efficient way to remedy the denial and provide a learning opportunity to prevent future denials.
Regardless, many of these provisions mandate that you exhaust the appeals process before pursuing any legal action against the insurance carrier for reimbursement. Those provisions also may impose deadlines for contesting and appealing a denial of a claim. Failure to contest the denial within these deadlines may result in waiver of your claim. In some instances, the provider contract will also mandate “alternative dispute resolution” processes such as mediation or arbitration that can limit your legal remedies.
When treating a patient who is insured by a carrier with whom you do not have a contract, obtain as much information as possible about the patient’s insurance plan.
As is standard practice, most providers secure an assignment of insurance benefits from the patient that, in essence, places the provider “in the shoes” of the insured patient and bestows upon the provider all the rights and obligations of the patient’s insurance plan.
In an emergency setting it can be difficult, and sometimes impossible, to get complete information relating to the patient’s insurance plan. In that case, it should be standard business practice to follow up with the patient to obtain necessary information. Establishing a general practice of gathering such information can be critical to obtaining reimbursement.
For example, many patients will be covered by an employer-sponsored group plan governed by the Employee Retirement Income Security Act; a Medicare Advantage Plan governed by the Medicare Act; or a federal employees benefit plan governed by the Federal Employees Health Benefits Act. If the patient is covered by any of these plans, a provider-as an assignee of benefits-must, as a matter of law, pursue and exhaust all available administrative remedies under the patient’s insurance plan before bringing any lawsuit for recovery of allowable benefits.
A failure to exhaust these administrative remedies provides a federal preemption defense to the insurance carrier against any and all state law claims (e.g. breach of contract or other statutory claims) which will result in the dismissal of any lawsuit.
Of course, this is a very broad and simplified overview of a complicated and nuanced area of the law, but it is accurate to say that where any of these types of plans are involved there are greater legal impediments to reimbursement which makes identifying these plans up front the best practice.
Ultimately, when you are able to identify these types of plans before providing services, the best practice is to obtain a pre-authorization for services from the carrier. Here, it is important to distinguish, as insurance carriers do, between a “confirmation of coverage” and a “pre-authorization of services.”
Too often a provider or his or her representative will call in advance of service to confirm that the patient still has coverage under the plan and will take that as meaning that the provider’s services will be reimbursed. However, what you obtained was nothing more than a confirmation that the patient was still insured which says nothing about whether your services are covered and will be paid.
In order to obtain a “binding” pre-authorization you must be clear that you are seeking exactly that and detail the services that you anticipate providing. Typically, the average insurance representative answering the “coverage call” has no authority to provide a pre-authorization for services so, in a non-emergency situation, you may have to request a pre-authorization in writing, a process that may take a few days.
The value of a pre-authorization is significant because most courts find a pre-authorization to be a binding promise between the provider and the carrier for payment that is not subject to the federal preemption defenses discussed above.
Most states have “prompt pay” statutes which, as the name implies, mandate that insurance carriers promptly pay claims. Because these statutes vary from state to state, you should consult with a local attorney area for a complete explanation of the law in your state.
Generally, these statutes set out the obligations of the provider and carrier in terms of submitting and paying “clean claims.” A “clean claim” is generally defined as a claim which has no defect or impropriety, including lack of required substantiating documentation. Some states have avoided defining in detail a “clean claim,” but even those states require that the claim be complete and include proper coding and documentation remains.
For example, under Florida’s prompt pay statute, all claims for payment must be submitted within six months of the date of service or discharge. Within 24 hours, the carrier must acknowledge receipt of the claim and within 20 days, pay the claim or notify the provider if the claim is denied or contested.
For a contested claim, the carrier must provide an itemized list of additional information or documents needed to process the claim. The provider has 35 days to provide the additional information. The carrier must pay or deny the claim within 90 days. Failure to pay within 120 days creates an uncontestable obligation to pay the claim.
Again, while the law (and timeline) in each state varies, the foregoing is the general framework required for claims processing which could ultimately lead to an uncontestable claim should a provider follow its obligations under the statute.
One of the most frequent causes of a claim denial is improper documentation and coding resulting from poorly trained staff.
With the 10th revision to the Clinical Modification, (ICD-10) having gone into effect on October 1, 2015, proper documentation and coding has become even more critical. At the same time, coding has become more difficult due to the increase in the number of codes available from approximately 4,000 procedure codes and 14,000 diagnosis codes under ICD-9-CM to 72,000 and 70,000, respectively, under ICD-10 CM/PCS.
It is important to remember that under many prompt pay statutes, the provider has a limited window within which to provide any additional information needed to rectify a denied or contested claim. As a consequence, practices should consider providing proper and additional training to staff relating to the new billing codes and procedures.
As an alternative, a practice might consider outsourcing claims coding to minimize the impact of the ICD-10 change. No matter the decision, serious consideration must be given to employing a dedicated team to address denied or contested claims in a timely fashion or risk not being paid at all
Ultimately the goal for every practice should be to minimize claims denials or contests and maximize reimbursement while, at the same time, perfecting claims as much as possible should litigation be necessary to collect on denied or contested claims. While a FPRR of 100% is a virtual impossibility, by implementing some or all of these methods, a practice can minimize the negative financial and operational impact of denied or contested claims.
George W. Wickhorst, III, is an attorney with the Miami office of Young Berman Karpf & Gonzalez, where he focuses his practice on healthcare and business litigation. He may be reached at firstname.lastname@example.org.
Miguel A. Lopez is Vice President of Sales, MTBC, where he focuses on medical billing and EMR solutions for physicians. He may be reached at email@example.com.