Rebilling unpaid claims at 60 to 90 days has long been a rule of thumb in medical receivables management. However, a California hospital has found a much more appealing method of handling aged claims that resulted in an immediate drop in aged accounts.
Presbyterian Intercommunity Hospital in Whittier, California, recently started appealing all unpaid claims at 70 days rather than sending a rebill or tracer on the claim. The process is simple. The hospital generates an appeal letter indicating that the claim was previously submitted. The letter goes on to cite California’s prompt payment mandate requiring carriers to pay clean claims within 45 days. The appeal is mailed to the carrier’s appeal department along with another copy of the claim.
REDUCED RECEIVABLES AGING
The result has been an eight percent drop in the hospital’s over ninety day accounts.
“We are finding that payers have a whole different mechanism in place for handling appeals than tracers. The tracer they treat like a brand new claim, which usually takes 45 to 60 days for a response. With an appeal, we get paid in eight to fourteen days,” said Sue Ponce, Administrative Director of Business Services for the 339-bed hospital.
Ponce said the hospital business office implemented the change shortly after bringing hospital rebilling back internally as a business office function. The hospital had been outsourcing low balance accounts and found that the vendor was primarily rebilling the claims. When they took over these duties, Ponce said her business office management team, Ana Sanchez, insurance supervisor and Dan Martinez, Manager of Business Services, noticed the wide discrepancy in the response time carriers have for new claims versus appealed claims.
Appeals are typically directed to a different department with most carriers. Many state laws have separate statutes governing how appeals are processed. Such statutes often require the carrier to process and track appealed claims differently than new claims.
“We just sort of stumbled on to this. My business office wanted to try addressing a few of these claims as appeals rather than rebills. It worked and now we are appealing everything – underpayments, wrongful denials and tracers – with an appeal letter at 70 days,” Ponce said.
MAJORITY OF STATES HAVE PROMPT PAY LAW
The majority of the states have passed prompt payment legislation. In addition to California, states which have indicated a specific time frame for clean claim processing include: Alabama, Arizona, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas and Wisconsin.
In Texas, the Health Maintenance Organization Act requires HMO’s to pay new claims within 45 days after receipt of the claim and documentation reasonably necessary for the HMO to process the claim. However, the act requires that an HMO acknowledge a complaint within five days within receipt of the complaint. The HMO then has 30 days to investigate and respond in writing.
“When they get the appeal in the mail, they have a 30 day window and if they don’t do something they are liable to the department of insurance,” said Milt Reichek. Reichek, a former insurance executive, provides practice management consulting for Arlington-based, J And R Consulting.
Reichek states that most claims which remain unpaid and undenied at the 45-day prompt payment deadline are usually pended in the claims payer system. Claims can be pended for a number of reasons, including lack of medical necessity documentation, coordination of benefits reviews and eligibility issues. Therefore, a simple rebill of the same claim does not likely address the cause of the payment delay.
“The perception that the first claim is lost is not a good perception. Our experience indicates that HMOs do not lose many submitted claims,” he said.
INCLUDE SUPPORTING DOCUMENTATION
Reichek believes the idea of immediately appealing claims after the statutory deadline has passed is a good one because it allows you to enter the appeal process earlier. Texas statutes require the provider to exhaust first and second levels of appeal before seeking an external or independent review of the claim. However, Reichek indicates that it is critical for the provider to include as much information as possible to support the claim at the time of the appeal.
“A lot of times, if you are just sending the HCFA or UB, you are just sending demographic information and coding information, but that is not sufficient to justify why the service was performed. It is not enough to establish medical necessity. Because medical necessity issues are clinical issues, they need to have a clinical-oriented person generate those letters.”
“The problem with appealing a claim before a denial is received is that you do not know the basis of the denial. You could end up submitting an appeal before you know what happened to the claim. If the issue is medical necessity, the initial appeal letter should have verbiage that justifies the service that was performed.”
This is especially important under provider agreements wherein the provider only has one opportunity for appeal. Under some agreements, the second level of appeal requires the participation of the insured. Getting the participation of the insured is sometimes difficult, particularly if the insured is not responsible for denied services.
“You don’t want to waste your first appeal,” he said.
Ponce discussed the change in Presbyterian’s billing process with other hospital officials during an accounts receivables seminar at Annual National Institute held by the American Association of Healthcare Administrative Mangers in Phoenix in October. Ponce is the President-elect of the Southern California Chapter of AAHAM.
Ponce said the appeal form letters have been particularly effective on underpaid claims. Because the insurance carrier’s appeal personnel routinely deal with problematic claims rather than routine claims, appeal personnel may be more familiar with identifying incorrectly paid claims and, thus, can more easily reprocess such claims for the correct payment.
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