Supreme Court Upholds Healthcare Reform Law

Kathy McCoy, MBA June 28th, 2012

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The U.S. Supreme Court upheld the healthcare reform law today, surprising many, when it ruled that the insurance provisions of the Patient Protection and Affordable Care Act are constitutional, reports ModernHealthcare.com this morning.

The court ruled that Congress has the power to compel individuals to purchase insurance as a tax on people who do not have health insurance.

In a complex 193-page opinion and dissent (PDF), the court ruled that Congress has the power to compel individuals to purchase insurance as a tax on people who do not have health insurance.

In response, Jeremy A. Lazarus, MD, president of the American Medical Association, issued this statement: “The American Medical Association has long supported health insurance coverage for all, and we are pleased that this decision means millions of Americans can look forward to the coverage they need to get healthy and stay healthy.”

Lazarus went on to say, “This decision protects important improvements, such as ending coverage denials due to pre-existing conditions and lifetime caps on insurance, and allowing the 2.5 million young adults up to age 26 who gained coverage under the law to stay on their parents’ health insurance policies. The expanded health care coverage upheld by the Supreme Court will allow patients to see their doctors earlier rather than waiting for treatment until they are sicker and care is more expensive. The decision upholds funding for important research on the effectiveness of drugs and treatments and protects expanded coverage for prevention and wellness care, which has already benefited about 54 million Americans.

“The health reform law upheld by the Supreme Court simplifies administrative burdens, including streamlining insurance claims, so physicians and their staff can spend more time with patients and less time on paperwork. It protects those in the Medicare ‘donut hole,’ including the 5.1 million Medicare patients who saved significantly on prescription drugs in 2010 and 2011. These important changes have been made while maintaining our American system with both private and public insurers.”

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Managing Receivables in Medical Billing: Which Method Works for You?

Amber M. Baylor, M.S., CHBME June 28th, 2012

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Managing Receivables in Medical Billing: Which Method Works for You?

As a business manager, business owner, or someone tasked with getting paid by the various payers & patients, what do you use to track the revenue for your practice?  In this article we talk about the types of reports for managing receivables in medical billing as well as their strengths and weaknesses.  We also include a little history lesson on the evolution of the reporting metrics as billing rules and strategies have changed over time.

A couple of months back I was curious as to what report the typical billing services business owner uses. After talking to some of our clients and crowdsourcing the question to some prominent billers on Twitter, the overwhelming response was accounts receivables or A/R.  A/R measures the monetary value of the money received vs. billed by the provider or health care system. 

You can measure A/R by:

  • Number of days payment taken to receive (i.e. 0 to 30 days, 31+-60 days, etc.)
  • Amount of A/R outstanding by which payer
  • Amount of A/R outstanding by the patients

A/R provides a great view of the macro or $10,000 foot level of our practice or client. 

Another measure of the overall performance of billing operations represents gross days receivables outstanding (GDRO).  GDRO measures the average time it takes for A/R to turn over completely.  You may have heard of GDRO as days outstanding, gross days outstanding, days, or gross days. 

GDRO can be calculated by:

Gross A/R (averaged over the last 3 months) divided by the Average Daily Gross Revenue.

GDRO gained popularity as a measurement tool in the 1980’s when Medicare modified the reimbursement process from periodic interim payment (PIP) to the prospective payment system (PPS).  This shifted payment responsibility from Medicare to the insurance company which turned around and shifted more of the payment responsibility to the patient.

Major advantages with using the GDRO metric are:

  • Evaluation of effective front office payment collection at time of service
  • Determination of how timely collections have been made

Major disadvantages include:

  • Seasonal averages lag time
  • Can be easily manipulated

Another reporting metric is the Net Days Revenue Outstanding (NRDO).  NRDO represents the net or actual amount of receivables collected because the contractual amounts have been deducted from the starting balance.  NRDO is a preferred metric over GDRO due to it providing the manager with a more accurate view of the efficiency of the office staff managing receivables.

I would love to hear from you, so please let me know what preferred measure or report you use to gauge the success of your business.

Amber M. Baylor is the founder of Ask a Medical Biller.com: Medical Billing in 3 easy steps, based in Orange County, CA. Visit her website at http://www.askamedicalbiller.com/

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7 Simple Ways to Improve Your Medical Billing Appeals Process

Lisa Eramo June 26th, 2012

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Seven Simple Ways to Improve Your Appeals Process

Spending the time and resources to appeal denied claims is crucial for any physician practice. Not only can appeals potentially help physicians recoup money, but they can also divert auditors from honing in on problematic claims.

If an auditor identifies a pattern of denied claims—and a practice can’t show that it’s made an effort to appeal those claims—it will appear as though physicians and their staff members aren’t even aware of potential compliance issues and/or patterns of incorrect billing let alone that they’re doing anything to rectify the errors.

However, how does a practice improve its medical billing appeals process? Are there ways to enhance efficiency and increase the likelihood that claims will eventually be paid?

There are certainly ways in which practices can be more efficient when appealing denied claims, Leola Burke, MHSA, CCS, independent HIM consultant in Jacksonville, FL. Burke provides seven tips to get started.

1.       Devise a strategy for what you’ll appeal. Most practices don’t have the ability or resources to appeal every denied claim that comes through the door, says Burke. That’s why it’s important to develop an appeals strategy that ensures return on investment. Practices should take into consideration the dollar amount and type of payer for each denied claim. For example, many practices choose to focus on high-dollar denials only. Other practices may approach Medicare and Medicaid denials with caution, as these payers’ appeal processes may be more onerous than others, she says.  

2.       Track and categorize denials. It’s important to categorize each denial by type/reason. Not only does this help identify patterns to address going forward, but it can also help streamline the appeals process, says Burke. Practices should develop and document the way in which it will handle each type of denial, including any payer-specific requirements, she adds.

3.       Draft a strong appeal letter. Practices may be able to use a standard/template letter for some types of denials, such as those related to use of an invalid code, incorrect subscriber name, or incorrect modifier. However, other types of denials (e.g., those related to medical necessity) require a customized appeal letter. Burke says standard appeal letters must include important details, such as the type of services rendered and the date of service, in order for payers to be able to process the information. If these details are missing, the appeal process is invariably prolonged, which creates more work for staff members at the practice.  Also be sure to quote industry guidelines, such as the CPT guidelines or CMS guidelines, as well as the payer’s own reimbursement guidelines in your appeal letter. 

4.       Only include relevant documentation. Any appeal should only include documentation that’s relevant to the particular claim in question. Including too much information is not only time-consuming to compile, but it could also leave practices open to potential HIPAA violations, says Burke. 

5.       Employ a physician or professional reviewer. This individual—who typically has experience with coding, billing, HIM, or utilization review—can oversee and manage the appeals process, including contacting payers directly, says Burke. A physician reviewer should possess a clinical background; however, he or she doesn’t need to be a clinician, she adds.  

6.       Open the lines of communication with payers. If practices don’t already have a formal list of contact information for each payer, they should definitely create one. Burke says the list should include each payer’s name, address for appeals, and the individual responsible at the payer for addressing questions related to appeals. Be sure to identify individuals whose title is either denial manager or denial coordinator—not a representative from accounts receivable, she adds.

7.       Get organized. In addition to creating list with contact information for each payer, it’s also helpful to create a spreadsheet that includes information about each appeal, such as: 

  • Date the appeal was sent
  • Payer to which the appeal was sent
  • Timely filing requirements for that payer

Also consider mapping out the stages of your appeals process, including: 

  • Stage 1: Contact payer by phone. Ask questions for clarification.
  • Stage 2: Request a full and fair review. Contact state agencies, such as the Department of Insurance, Office of Ombudsman, if necessary.
  • Stage 3: Consider legal action.

Burke says practices should obtain copies of each payer’s medical policy and maintain a list of routine payer-specific denials based on those policies. This helps ensure that staff members don’t appeal denials unnecessarily.

Lisa A. Eramo is a freelance writer and editor specializing in medical coding, health information management, and other healthcare regulatory topics. Visit her website at http://lisaeramo.wordpress.com/. Lisa wrote most recently for Getting Paid on Three Simple Tips for Managing Denials and Prevent Denials with More Accurate Medical Coding. Lisa has also written on Understanding RVUs: Ensure Accurate Reimbursement for the E/M Services You Provide.

You can learn more about improving your appeals success in our upcoming webinar, “Effective Appeals in Medical Billing: Breaking Through the Barricade to Get Paid.” Register now to learn about this important topic with expert speaker Elizabeth W. Woodcock, MBA, FACMPE, CPC.

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Using RVUs to Improve Your Bottom Line, Part 1

Kathy McCoy, MBA June 21st, 2012

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Learn how to calculate RVUs and use them to improve your practice profitability

What are RVUs, and can practice managers really use them to help improve their bottom line?  In a recent webinar sponsored by Kareo, noted practice management authority and author Sara M. Larch, MSHA, FACMPE delivered an information-packed presentation that explained what RVUs are, how they are calculated, and how you can use them to assess overall profitability using various metrics.

To learn about RVUs and how they are calculated, read on. Our next blog post on Sara’s webinar will explain using RVUs to price services correctly, evaluate payor productivity, and analyze your own reimbursement trends against RVU benchmarks. Check back soon for our second post from the webinar.

RVUs were born out of a process created at Harvard University in the 1980s to try and understand the relative value of a medical service. The national Resource Based Relative Value System (RBRVS) study determined that “RVUs take into account the training necessary to perform certain services, the technical difficulty, the intellectual complexity, the emotional stress, and the time that each service takes….to compare fairly the tasks of different specialists.” In 1988, the study results were submitted to the Health Care Financing Administration (today CMS) to be used by Medicare as a payment methodology. The RBRVS system took effect on January 1, 1992 but the name was changed to Relative Value Units (RVUs).

Sara explained that while the formula for calculating RVUs may not be perfect, it is the closest common denominator we have for comparing “apples to apples” when it comes to the delivery of medical services across the country.

How Do Medical Practices Use RVUs?

Medical practices use RVUs to:

  • Set their fees (charges)
  • Understand the Medicare fee schedule
  • Analyze reimbursement and payer contracts
  • Serve as a basis for physician compensation
  • Evaluate physician productivity
  • Analyze practice staffing
  • Analyze operating costs

Three measures multiplied by a conversion factor are used to create a fee schedule (allowable  reimbursement):

Expert Sara Larch explains how RVUs are calculated and used in this complimentary webinar

Total RVUs (TRVU) are calculated for each CPT by adding:

Physician Work RVU (wRVU)

+ Practice Expense RVU (peRVU)

+ Malpractice Expense RVU (mpRVU) (equals)

Total RVU (TRVU)

X Conversion Factor (CF) (equals)

Fee Schedule (allowable reimbursement)

Expert Sara Larch explains how RVUs are calculated and used to improve practice profitability

The Geographic Practice Cost Index (GPCI) adjusts each part of the RVU for geographic differences in wages, malpractice and practice overhead expenses. Some modifiers affect payment, such as use of an Assistant surgeon or bilateral.

Resources

You can read additional articles on RVUs and how to use them on our blog:

Kareo often features educational webinars on practice management strategies that can impact your bottom line. You can be notified about our upcoming informative webinars such as this one. You can also view our archived webinars to find more topics of interest to you. If you would like to learn more about Kareo’s innovative tools for streamlining your medical billing and collections, watch the demo.

You can also register now for our next informational webinar on Effective Appeals in Medical Billing: Breaking Through the Barricade to Get Paid with expert Elizabeth Woodcock. Register now!

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Complimentary Webinar: Successfully Appeal Denied Claims – Breaking Through the Barricade to Get Paid

Kathy McCoy, MBA June 20th, 2012

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Thursday, July 26, 2012
1:00 PM EDT, 10:00 AM PDT
Speaker: Elizabeth W. Woodcock, MBA, FACMPE, CPC

Learn how to appeal denied claims and break through the barricade to getting paid in this complimentary webinar

Preventing denied claims is a key skill of successful billers. But getting some denials will always be a fact of life in today’s complicated physician payment system. Appealing denials is your right:  it pays to exercise it. Learn how to successfully appeal denied claims in this fast-paced, informative webinar by revenue cycle management expert Elizabeth Woodcock, MBA, FACMPE.  In this webinar, you will learn to:

  • Learn the three-step process to determine when a denied claim needs to be appealed.
  • Build your case to create a successful appeal.
  • Discover key phrases to include in an appeal letter to get your denial overturned.
  • Recognize the process for following up on appeals.

The webinar also includes a sample appeal letter for you to download – and start using right away!

Register now to learn how to successfully appeal denied claims in medical billing

You can download the handout for this webinar now. You can also download a sample appeal letter now.

CEU Credit

Applications pending.

Question-and-Answer Session — Ask your tough questions and get answers to your current appeal challenges.

Who Should Attend
Private practice owners, office managers, billing managers, billers, billing service owners and others concerned about improving their appeal process and improving cash flow will benefit from this informative session.

About Your Speaker

Expert Elizabeth_Woodcock will explain best practices for appealing denied claimsElizabeth W. Woodcock, MBA, FACMPE, CPC is a speaker, trainer and author who is passionately dedicated to helping physician practices achieve and sustain patient satisfaction, practice efficiency, and profitability. An expert at practice operations and revenue cycle management, she is nationally recognized for her outstanding presentations and writings aimed at improving the business of medicine. Her education and expertise, combined with her humor and an engaging delivery, make her popular with physicians and administrators alike.

With rich experience in consulting, training, and industry research, Elizabeth has led educational session for the nation’s most prominent health care professional associations, specialty societies, and medical societies. She consults for many clients including Kareo medical billing software.

Register now to learn how to successfully appeal denied claims in medical billing

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Getting Paid Accurately: What the National Health Insurer Report Card Means to Your Practice and How You Get Paid, Part 2

Kathy McCoy, MBA June 19th, 2012

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Learn about the National Health Insurer Report Card and how to evaluate payers in this complimentary webinar.

When was the last time you were able to purchase $100 worth of groceries by handing over only $80 to the check-out clerk?

It may seem unimaginable, but that is essentially what the American Medical Association’s (AMA) National Health Insurer Report Card shows is happening to physician payments nationwide. The data states that 20% of the time, insurance companies are not paying precisely what they’re contracted to pay.

In our recent webinar Getting Paid Accurately: What the National Health Insurer Report Card Means to Your Practice and How You Get Paid, Frank Cohen, principal and senior analyst at the Frank Cohen Group, took an in-depth look at the AMA’s latest NHIRC. Frank was integrally involved in creating the study and analyzing the results of the AMA’s 2011 Report Card. (www.ama-assn.org/go/reportcard). Our first blog on the webinar discussed some of the results on how insurance companies do—and do not—pay claims. Keep reading for Frank’s insights on how to analyze an insurance contract’s value to see if it really pencils out for your practice.

In the webinar, Frank urges practice owners to do their own report card for each significant payor with whom they have contracts. The bottom line: Is the contract profitable for your practice? To answer that question, practices need to compare their charges to what is actually paid by each payor. In one example, Frank showed a current fee for procedure 10040 as $210; Medicare pays $84 and other insurance payments ranged from $76 to $118. Calculating payments as a percentage of your fee schedule amount, by payor, for each code you use frequently will allow you to determine how reasonable a payor contract is. Frank says it is also useful to know what percentage of your overall business each payor represents.

Compare your payers using factors based on the National Health Insurer Report Card

Another metric to consider is the average payment versus the contractually allowable payment. Reimbursement that consistently falls short of what you negotiated is a very big red flag against a profitable payor contract. There are other factors to consider when analyzing a contract’s value: what are the average days in accounts receivables? Are excessive denials bleeding your practice of any meager profits? What is the hassle factor in working with a payor?

Anyone who wants a great primer on analyzing an insurance contract’s value should be sure to check out Frank’s webinar. Kareo also maintains an archive of past webinars on a variety of medical billing and practice management issues. If you would like to find information on any other topics of interest, feel free to check our webinar archive. To join our notification list for upcoming informative webinars such as this one, click here.

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Prevent Denials with More Accurate Medical Coding

Lisa Eramo June 14th, 2012

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Prevent denials and increase your practice revenue with more accurate medical coding

Many physicians don’t want to admit that coding is a necessary—and even crucial—aspect of running one’s practice. Instead, they often choose to focus entirely on providing good patient care.

However, coding is often the backbone of a physician’s practice. Inaccurate medical coding can lead to denials and potentially a substantial loss of revenue over time.

Deborah Robb, BSHA, CPC, director of physician services at TrustHCS in Springfield, MO, says she often works with physician practices that experience denials because they don’t place enough of an emphasis on compliant coding and overall data integrity. Robb, who regularly contributes to the company’s blog, The Coding Compliance Blog, provides these pointers for how to get back on track and keep the cash flowing.

1.       Don’t rely entirely on the claim scrubber. Claim scrubber software analyzes data on a claim to ensure accuracy before the claim is submitted. Although scrubbers catch many errors before claims are sent, they don’t catch 100% of them, says Robb.  

For example, the software can’t scan documentation to ensure that a particular ICD-9 code is justified. Thus, physicians may be surprised when certain codes pass through the scrubber because they meet medical necessity only to be subsequently denied by insurers because documentation simply doesn’t justify their assignment, she adds.

Claim scrubbers also don’t catch every modifier-related error. Although the software flags claims for which modifiers might be missing, it won’t catch errors on claims for which modifiers are already appended incorrectly. 

Robb says many practices incorrectly append modifier -59 (distinct procedural service) as a general rule of thumb when more than one service is performed. By doing so, the practice is paid 100% for each service rather than 100% for the first service and 50% for any additional services. However, automatically appending modifier -59—as well as appending it when a physician only performs one service—will most likely send up a red flag for auditors, she adds. 

Coders and those charged with coding and billing functions within the practice should take the time to review proper modifier usage. In particular, check out free Webinars about modifier -25 (significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service) and modifier -59, which the American Medical Association (AMA) offers.

2.       Designate the principal diagnosis. The principal diagnosis must indicate the reason the patient presents for the visit on that particular day, says Robb. Although physicians may document or check off a list of multiple diagnoses on a superbill, what they don’t do is indicate which diagnosis is principal. Physicians must number the diagnoses, and those numbers must indicate the order of importance, she adds. This will help avoid medical necessity denials.

3.       Watch for invalid codes. Invalid codes refer to codes that have been deleted, and in most cases, replaced by new codes. Robb says outdated superbills often perpetuate errors due to invalid codes. At a minimum, superbills should be updated in October when new ICD-9 codes become as well as in January when new CPT codes become effective. If physicians perform new procedures in their practices, CPT codes to reflect those procedures (as well as any new ICD-9 codes to justify them) should be added to the superbill immediately.

4.       Establish a procedure to identify non-covered codes. Non-covered codes refer to codes that payers simply won’t cover. Patients presenting for non-covered services should receive an Advanced Beneficiary Notice (ABN) indicating that they are responsible for payment. For example, if the practice anticipates a denial due to lack of medical necessity, the patient should receive an ABN so the practice can report the service with modifier -GA. By appending this modifier, the practice indicates that the patient received and signed an ABN. Practices should also report it when a patient receives an ABN but refuses to sign it. Reporting this modifier ensures that upon denial, Medicare will automatically assign liability to the beneficiary.  

Practices that don’t obtain a signed ABN in anticipation of non-covered services will receive a denial and have no option to bill the patient. For more information about modifiers, visit the Wisconsin Physicians Service (WPS) Insurance Corporation’s Web site. WPS is a Medicare Administrative Contractor for Iowa, Kansas, Missouri, Nebraska, Indiana, and Michigan.  

Lisa A. Eramo is a freelance writer and editor specializing in medical coding, health information management, and other healthcare regulatory topics. Visit her website at http://lisaeramo.wordpress.com/. Lisa wrote most recently for Getting Paid on Three Simple Tips for Managing Denials. Lisa has also written on Understanding RVUs: Ensure Accurate Reimbursement for the E/M Services You Provide.

You can learn more about denial management in our upcoming webinar, “Stop Denials in Their Tracks: Get Paid the First Time by Health Care Insurers.” Register now to learn about this important topic with expert speaker Betsy Nicoletti, M.S., CPC.

Related Posts:

Why Isn’t “Dog Bite” a Valid Diagnosis Code? Diagnosis Coding Rules Explained

Denials: A Removable Obstacle on the Road to Getting Paid

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Mitigate Potential Loss in Your Medical Practice with Controls and Visibility

Thom Schildmeyer June 13th, 2012

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Take a look at two important ways to mitigate potential loss in your medical practice

My previous post on theft and embezzlement indicated that such loss can occur within any practice, but many practices lack the ability to quickly and easily identify the symptoms.  Let’s take a look at two important ways to mitigate potential loss in your medical practice through greater controls and visibility.

Controls

More than 10 years ago, I read an article in The Physician Advisory related to a Controls Checklist that I found valuable then—and still has value today.

The author strongly recommended using your certified public accountant (CPA) to help establish controls and cash handling processes. CPAs are experts in this area and can be a valuable resource in establishing controls and helping to monitor those controls on a monthly basis. Even if you don’t use your CPA to assist in this area, the following list of controls can help reduce the opportunities and temptation for staff to steal or embezzle.

Personnel

  • Adequately screen applicants, including reference and background checks
  • Bond your employees
  • Require vacations (prime time to uncover possible thefts)

Handling Cash

  • Make the person who takes payments responsible for balancing, but have a second person verify it
  • Write receipts for every payment received over the counter (OTC)
  • Establish separate petty cash and patient change funds and randomly verify balances
  •  Make all payments with serially numbered checks, printed by your bookkeeper , signed by the designated physician (rotating duty if multiple physician owners)
  • Don’t sign blank checks or checks lacking documentation like invoices or statements
  •  Reconcile bank statements monthly and consider having the statements sent directly to CPA (or physician home)

Accounts Receivable

  • Use and account for serially numbered encounter forms for every service
  • Occasionally track a random sample of cash receipts through your whole system, from the appointment register all the way to the counter ledger to confirm no payments are missing
  • Set up a clear policy for write-offs that
    involves either physician approval or review
  • Never allow financial records to be taken home.

Visibility

The idea that someone is actually looking is a huge deterrent to those who may have the urge to steal or embezzle. It’s how ill-informed some physician owners are on their cash, cash handling process, and responsible staff that creates the lack of visibility and deterrent. Worse, they don’t regularly review reports that may indicate there is a problem.

Reviewing month-end reports that include charges, adjustments, collections, and patient volume is very important. Many providers review these reports as a report card for physician performance. Even more important is reviewing reports related to the billing performance—for example, how much is actually collected, or what is being written off correctly and incorrectly.

Many practices encourage their providers to work hard, see more patients, and stay on time. The providers understand this and are willing to work hard. But how do you know your work is being maximized? Do you know if your biller is entering claims in a timely, accurate manner, and adding the appropriate modifier? Are they posting payments, aggressively pursuing claims not paid or partially paid, and watching payment versus allowables? And, are they sending statements to patients, following up with secondary insurance, and not taking “no” for an answer when pursuing accounts receivable (AR)?

What reports and ratios are you looking at to know for certain what is happening in the critical revenue cycle management area of your business? This is your cash flow—your livelihood—and if you don’t watch it, who will? Certainly not the person who is stealing from you, not working your claims, and is more worried about getting caught than taking care of the business.

You have to look, let staff know you are looking, and not just look at what they show you. Ask questions. Dig for details and backup data. You must have visibility to the activities into your revenue cycle management, as it is the most critical to your success.

If you are not setting up proper cash handling controls and not providing visibility, then you are providing an atmosphere that will likely result  in bad things happening. This will impact your bottom line and result in bleeding that may result in the death of your practice.

In my next post, I will cover the importance of sound revenue cycle management processes, including what reports you should be looking at and how often, versus relying on information from a staff member—perhaps someone who doesn’t have your best interest at heart.

Thom Schildmeyer is co-founder and president of Aesyntix Health, Inc. , which provides revenue cycle management and procurement cycle management (GPO) to physicians. His recent posts include:

Is Your Practice Bleeding? Medical Practice Embezzlement Is Not Uncommon

Medical Practice Theft and Embezzlement: Believe It or Not, It Can Happen to You

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Three Simple Tips for Managing Denials

Lisa Eramo June 12th, 2012

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When physicians don’t have a solid process for managing denials, they not only lose revenue, but they also lose the opportunity to recover costly overhead expenses

In these times of increased scrutiny and financial hardship, it’s in every physician’s best interest to ensure that claims are sent out the door without errors.

Why?

Accurate claims result in accurate payments. Denied claims not only potentially equate to revenue lost, but they’re also costly from an operational standpoint. Managing denials is key to your practice’s profitability.

Deborah Robb, BSHA, CPC, director of physician services at TrustHCS in Springfield, MO, says it can take an hour or more of a staff member’s time, on average, to address denied claims. This includes reading through the denial itself, reviewing documentation that was originally sent, and resubmitting the bill with an explanation of why payment should be made. These hidden operational costs can be exponential, depending on the volume of denials occurring at the practice.

What you can do

When physicians don’t have a solid process for managing and appealing denied claims, they not only lose revenue, but they also lose the opportunity to recover costly overhead expenses. Robb provides three tips to consider.

1. Invest in education. Physician practices are setting themselves up for financial failure if coders or any individuals responsible for coding, billing, and appealing denials don’t understand the appeals process or possess a solid understanding of coding and billing compliance.

Staff members—and particularly those without a formal coding education—should receive regular and ongoing training about important regulatory changes (e.g., ICD-9-CM and CPT coding updates, the appeals process, common denials, etc.). Not only does this help in terms of successfully preventing and appealing denials, but it also enhances efficiency, especially when the bulk of staff members’ time is divided among various other non-coding/billing-related tasks.

The good news is that CMS and many Medicare Administrative Contractors (MAC) offer free training and educational sessions. Consider the following free resources:

  • Medicare Learning Network (MLN): Provides general educational products and information for Medicare Fee-For-Service (FFS) providers. Providers can also sign up to receive email alerts about new MLN publications.
  • Quarterly Provider Updates: Quarterly publications regarding regulations and major policies under development as well as new and revised manual instructions. Be sure to sign up for quarterly provider email updates.
  • Wisconsin Physicians Service Insurance Corporation: Educational resources provided by the MAC for Iowa, Kansas, Missouri, Nebraska, Indiana, and Michigan
  • TrailBlazer Health Enterprises, LLC: Educational resources provided by the MAC for Colorado, New Mexico, Oklahoma, Texas, and Indian Health Service
  • Cahaba Government Benefit Administrators, LLC: Educational resources provided by the MAC for Alabama, Georgia, and Tennessee
  • Palmetto GBA Jurisdiction 11: Educational resources provided by the Part B MAC for North Carolina, South Carolina, Virginia, and West Virginia
  • Palmetto GBA Jurisdiction 1: Educational resources provided by the Part B MAC for California, Hawaii, and Nevada

2. Identify top 10 denials to look for trends. It’s important to track the types of denials (e.g., medical necessity, incorrect modifier, incorrect coding, registration error, untimely filing, etc.) that occur because aggregate data can reveal larger trends that might otherwise go unnoticed, says Robb.

For example, many physicians are often surprised to discover that denials occur most frequently due to registration errors, such as incorrect date of birth or transposition of insurance ID numbers. These types of errors automatically result in denials, regardless of whether coding and other information on the claim is accurate. It’s important to address this problem with registration staff directly.

Another trend might relate to medical necessity denials for tests performed for conditions documented as ‘ruled out.’ When test results come back normal, coders must be able to code a documented symptom (not a ruled-out condition) that necessitates the need for the performance of the test. Without the symptom code, medical necessity denials are inevitable. 

Looking for a good resource? Robb says Palmetto GBA provides easy-to-understand information about denial resolution on its Web site. The information includes resources for resolving the top claim rejections and denial reasons.

Medicare also provides free resources. Be sure to check out CMS’ educational brochure about the Medicare appeals process as well as this diagram that depicts the appeals process visually (click on the image to see a larger version on the CMS website). 

Medicare also provides free resources such as this diagram that depicts the appeals process visually and helps you when managing denials

3. Draft a clear and concise appeal letter. An effective appeal letter is crucial. The American Medical Association (AMA) provides several free resources on its Web site. The association also provides member-only benefits that include appeal letter templates for specific types of denials. The AMA’s National Managed Care Contract database allows AMA members to research state laws and regulations and then copy and paste this information into their appeal letters.

Lisa A. Eramo is a freelance writer and editor specializing in medical coding, health information management, and other healthcare regulatory topics. Visit her website at http://lisaeramo.wordpress.com/. Lisa wrote most recently for Getting Paid on Understanding RVUs: Ensure Accurate Reimbursement for the E/M Services You Provide. Lisa has also written recently on CDI in two posts entitled Clinical Documentation Improvement (CDI): How and Why Your Practice Could Benefit and Clinical Documentation Improvement (CDI) in Physician Practices: What’s It All About?

You can learn more about denial management in our upcoming webinar, “Stop Denials in Their Tracks: Get Paid the First Time by Health Care Insurers.” Register now to learn about this important topic with expert speaker Betsy Nicoletti, M.S., CPC.

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Getting Paid Accurately: What the National Health Insurer Report Card Means to Your Practice and How You Get Paid, Part 1

Kathy McCoy, MBA June 7th, 2012

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The National Health Insurer Report Card demonstrates the need for good denial management and payer contract analysis

If you often feel that you aren’t getting paid accurately—or at all—for every clean and legitimate claim you submit, you are right. That is the conclusion from the American Medical Association’s National Health Insurer Report Card (NHIRC), the subject of the recent webinar sponsored by Kareo. During the webinar, Frank Cohen, principal and senior analyst at the Frank Cohen Group, LLC, submitted the findings from the study and discussed ways to improve your cash flow and reimbursement.  And he should know: in addition to being a prolific author whose latest book is “Lean Six Sigma for the Medical Practice: Improving Profits by Improving Processes,” Frank was one of the major architects and lead statisticians analyzing the results of the AMA’s 2011 National Health Insurer Report Card. (www.ama-assn.org/go/reportcard) Our blog today discusses some of the startling findings from the study. Check back soon for Frank’s strategies for improving your reimbursement and cash flow.

According to the study, administrative waste in the claims process costs physicians between 10-14% of their gross revenue—estimated to be as much as $210 billion annually.  Prior authorization is a big portion of the time spent on administrative tasks. Frank also presented data that looked at the percentage of time that a submitted claim went unpaid by insurer. The numbers varied from 25% for Anthem/BCSS to 17% for Regence. Much of this percentage was comprised of deductibles owed by the patient.

What about the accuracy of payments? Physicians were paid correctly according to their contractual agreements only 62% of the time by Anthem/BCBS. The most accurate commercial payor was UHC, with over 92% of submitted claims paid according to contractual rates.

In this complimentary webinar on the National Health Insurer Report Card, Frank Cohen explained that physicians were paid correctly according to their contractual agreements only 62% of the time by Anthem/BCBS

Timeliness of payments also varied widely among commercial payors, according to the study. Medicare, HSC and Humana had the highest percentage of claims paid within 15 days, while Regence had the lowest percentage of claims paid in that time frame.

Denials are particularly draining on a practice’s cash flow, and it’s not just the loss of that revenue. Frank notes that the average cost to appeal a denial is $110. There could be many reasons a claim is denied. This is where statistical analysis can pay big dividends, he says. Every time a denial comes back, he suggests you put it into a “denial bucket’ that you then aggregate by payor, reason code and remark code. This simple tactic will allow you to spot trends that are contributing to an ongoing loss in revenue. The webinar gives greater detail on examining payor denials.

Kareo regularly sponsors informative webinars such as this one on a variety of timely topics. If you would like to find information on any other topics of interest, feel free to check our webinar archive. Register now for our next educational webinar, Stop Denials in Their Tracks: Get Paid the First Time by Health Care Insurers, and learn how to improve your denial percentage with expert Betsy Nicoletti, M.S., CPC.

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Welcome to Getting Paid, a weblog by Kareo offering ideas, news and opinions about medical billing and practice management with the goal of making medical billing easier and yes, getting you paid. Visit the Product Blog for more information on our products.

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