Whether your claims are primarily paid by one payer or many, chances are high that not all of your claims will be paid, or paid in full, after the initial submittal.
More and more payers are developing review systems to reduce the charges they will pay. Here we discuss some of the different types of payer reviews, how to respond to these reviews and what proactive measures you can take to prepare your organization for this challenge to your revenue stream.
How payers are denying claims
Some payers may pay a claim initially, then review and then request a partial or full reimbursement. Conversely, payers may review at the outset and deny part or all of a claim.
In some instances, payers base these decisions solely on the diagnosis and procedure codes on the claim form. Other times, payers request medical records and deny charges or alter the prospective payment calculation.
In these more comprehensive reviews, the payer may cite the opinion of their own physician to challenge the clinical indicators substantiating a diagnosis or the medical necessity of a service that was performed.
You may find that payers are denying entire sets of claims. It’s important that your organization determines whether there is a pattern to the type of claim being denied or reduced. Certain payers will focus on a particular provider, service or date range. They may suspect that there are erratic billing practices or that there is fraud or abuse. In some instances, payers have made a unilateral decision to stop reimbursing for a service that they previously covered.
The Centers for Medicare and Medicaid Services conducts reviews that are often focused on stopping fraud and abuse. These reviews are typically done post-payment and focus on high-cost services and/or focus on noncompliance with regulations. With any government review, there is the potential for civil and even criminal charges, depending on the situation that is alleged.
What you can do
With any type of payer review, it’s critical to remain organized and vigilant with responses to the payer.
As some of these reviews are conducted by third-party vendors that are paid a percentage of funds that are recovered, these companies obviously have a strong incentive to deny charges and/or entire claims. By determining any trends in the types of services, particular providers or date range being targeted, your organization can conduct an internal review to determine whether there is potential risk. If you are confident that denials are not based on coding errors or documentation issues, you can formulate your written response to these denials.
Early on in the payer review process, you must determine if the payer is seeking reimbursement only or is alleging wrongdoing. If the payer does not disclose their reasoning for denial or method of calculation for payback, request this immediately, along with any and all supporting documentation such as the Explanation of Benefits.
If you have a contract with the payer, perform a thorough review of your contact terms to determine whether the denials are consistent with those terms. If there is no contract, perform a review of applicable laws.
Do you have the resources you need?
Once you understand the scope of the payer review and any alleged wrongdoing, you must determine whether you have the time and resources to devote to challenge these denials. If not, you will need to supplement your team with outside consultants and/or attorneys to ensure you have the necessary support.
As more and more payers are developing review systems to reduce the charges they will pay, we have often been engaged to assist clients with the response to payer reviews as well as support the litigation process. Often there are strong arguments against the tactics that payers have developed, and we have been very successful assisting our clients in these matters. Always keep in mind that just because you have claims under review by a payer, it does not necessarily mean that your providers, coders or billers have done anything wrong.
In particular, we have identified that some payers are focusing on complex surgical cases and that these payers do not always suggest appropriate coding alternatives. Additionally, some payers will challenge the coding of diagnoses, regardless of clear documentation, if they are the only complication or comorbidity (CC) or major complication or comorbidity (MCC) to reduce the reimbursement based on the diagnosis-related grouping payment system.
By understanding the scope of the review, conducting an internal review and supplementing your team as necessary, your organization can maintain a strong position. In the cases where there are internal issues, you should view this as an opportunity for education and improvement of documentation, coding and billing practices.
We recommend that providers develop ongoing internal and external coding and billing processes that identify potential issues that may lead to pre- or post-payment reviews and denials by payers. As always, we are happy to assist where we can with the preparation and response to your payers. Contact us to learn more or get started.
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