Transforming Bad Debt into Revenue

4 Non-traditional approaches to mitigating write-offs and improving hospital collections

Multiple factors continue to fuel an increase in hospital bad debt, squeezing already-thin hospital margins and undermining financial stability.

Learn how the following four non-conventional approaches can reduce write-offs and improve collections:

  1. Zeroing in on denial management
  2. Price transparency capabilities
  3. New technological tools
  4. Pre write-off AR management

How can we help?

ParaRev specializes in AR recovery and resolution. We work as a virtual extension of your hospital central billing office to help you resolve and collect more of your insurance accounts receivable faster and help improve operating margins through a seamless and collaborative partnership with your internal team.

Download the whitepaper by completing the form below:


Order-of-Insurance Denials Costs Money, Damages Patient Experience

February 18, 2020

Dan Low
Director of Operations

When it comes to payment denials, some of the most common and potentially damaging involve Claim Adjustment Reason Code (CARC) 22, or order-of-insurance coverage problems.

Not only do CARC 22 denials reduce cash flow, they can also trigger unnecessary patient invoicing. This, in turn, may undermine customer goodwill and harm the hospital’s overall patient experience and brand.

To maximize collections and avoid antagonizing patients, organizations should develop procedures for addressing the root causes that lead to CARC 22s. The good news is that once the core issues are identified, avoiding the denials isn’t difficult.

Increasing cash flow

Claim Adjustment Reason Codes are used by all payers on electronic and paper remittance advice and coordination of benefit (COB) claim transactions to categorize payment adjustments and denials.

CARC-22 states: “This care may be covered by another payer per coordination of benefits.” In essence, a CARC-22 is generated when a COB-related problem occurs. A common example involves instances in which the patient’s secondary insurance coverage is being billed as the primary coverage. This can occur with Medicare, Medicare Advantage, Medicaid or a commercial payer as the primary insurer. Typically, the patient is automatically balance-billed following a CARC-22 denial.

From our experience with clients nationwide, Healthcare Financial Resources’ (HFRI) has found that CARC 22 order-of-insurance denials typically account for about 7-8% of all hospital denials. With average balances generally of between $500 and $1,500 per claim, preventing CARC-22s could mean an additional $100,000 to $1 million in monthly collections, depending on the hospital’s size

Denial triggers

While CARC-22s occur in both inpatient and outpatient settings, the denials are most frequently associated with emergency department services. This is largely due to the fact that staff may not have the time or the systems in place to positively identify the patient’s primary insurance, or the patient may not be in a condition to provide the required information.

Specific CARC-22 triggers can include:

  • Incorrect plan codes loaded for primary insurance
  • Failed transfer in the attachment of the primary EOB to the bill

Medicare CARC-22s may also result from situations in which the beneficiary’s spouse has an employer-based health plan. For example, if the spouse’s employer has 20 or more employees, the group health plan pays first. However, if the employer has less than 20 employees, Medicare is the primary coverage. Rules regarding other primary payer scenarios involving Medicare and Medicaid, Tricare and workers compensation claims vary. Detailed information about Medicare and coordination of benefits can be found here.

Reducing denials

Registration staff represents the first line of defense when it comes to reducing and eliminating CARC-22s, particularly in the emergency department. Organizations should ensure that systems are in place to verify the correct order of insurance and plan code prior to billing. Staff should also have direct access to state-based websites in order to effectively validate Medicare and Medicaid order of coverage.

Creating an aftercare department to double-check the billing information provides an important second line of defense. Additionally, third-party robotic process automation systems can be deployed to identify registration issues that could trigger a CARC-22.

Partnering with a vendor

Because CARC 22 denials typically involve low-value, high-volume claims, many hospitals ignore them to focus limited resources on other, higher-value denial areas. However, ParaRev is equipped to handle these kinds of claims using our advanced technology, which relies on robotic process automation or bots and intelligent automation to identify potential CARC denials and flag them in the workflow.

This helps ensure that any denial issues will to be worked quickly. That means hospitals can receive faster reimbursement and, when necessary, generate the patient bill sooner. Our approach not only improves hospital margins, it helps ensure patient satisfaction doesn’t suffer due to unnecessary, surprise bills.

ParaRev has focused exclusively on the challenges associated with hospital payment delay and denials for nearly 20 years. From this effort, we’ve perfected a system that relies on advanced technology and staff specialization to identify denial root causes while streamlining and accelerating the resolution process. Contact us today to learn more.

Want to avoid 90% of your hospital denials? Learn 7 strategies to improve your AR.

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CMS Imposes Prior Authorization for Specified Outpatient Procedures

February 4, 2020

Monica Lelevich
Director, Audit Services

Medicare recently finalized a plan that will require hospitals to obtain prior authorization before performing certain outpatient procedures. Understanding these changes will be critical to avoid unnecessary denials beginning on July 1, 2020.

The new prior authorization rules, which were outlined in the 2020 Medicare Hospital Outpatient Prospective Payment System (OOPS), are primarily for services that are sometimes performed for cosmetic purposes and have been identified by the Centers for Medicare and Medicaid Services (CMS) as being at-risk for incorrect payment due to medical necessity concerns.

The prior authorization final rule was published in the Federal Register on Nov. 12, 2019, in Section XIX under “Prior Authorization Process and Requirements for Certain Hospital Outpatient Department (OPD) Services.”

Masking cosmetic procedures

According to the rule, CMS conducted an analysis of over 1 billion claims relating to outpatient department services (OPD) dating from 2007 to 2017. The agency determined that utilization volume increased significantly during that period, from approximately 90 million to 118 million. In addition, the Medicare allowed amount for OPD more than doubled, from $31 billion in 2007 to $65 billion in 2017.

To reduce improper outpatient claims, CMS specifically targeted Medicare cosmetic surgical procedures that may be combined with, or masquerade as, therapeutic services. CMS’ analysis indicated the following outpatient procedure categories had higher-than-expected volume:

  1. Blepharoplasty
  2. Botulinum toxin injections
  3. Panniculectomy
  4. Rhinoplasty

July 2020 deadline

Prior authorization for the specified list of procedures found under these categories (see below) must be obtained for services performed on or after July 1, 2020. In theory, the authorization process should take no more than 10 days. Either the physician or the hospital may submit the request for prior authorization, but the hospital will remain ultimately responsible for ensuring that authorization is obtained prior to the surgical procedure.

To help prevent unnecessary denials, be sure your staff is fully aware of the specific procedures that now require prior authorization. Be sure to watch for news from your local Medicare Administrative Contractor (MAC) as the July 1 implementation date approaches because the MACs will be responsible for organizing the authorization request process.

Table 65: Proposed List of Outpatient Services That Would Require Prior Authorization [1]

Code(i) Blepharoplasty, Eyelid Surgery, Brow Lift, and Related Services
15820Removal of excessive skin of lower eyelid
15821Removal of excessive skin of lower eyelid and fat around eye
15822Removal of excessive skin of upper eyelid
15823Removal of excessive skin and fat of upper eyelid
67900Repair of brow paralysis
67901Repair of upper eyelid muscle to correct drooping or paralysis
67902Repair of upper eyelid muscle to correct drooping or paralysis
67903Shortening or advancement of upper eyelid muscle to correct drooping or paralysis
67904Repair of tendon of upper eyelid
67906Suspension of upper eyelid muscle to correct dropping or paralysis
67908Removal of tissue, muscle, and membrane to correct eyelid dropping or paralysis
67911Correction of widely opened upper eyelid
Code(ii) Botulinum Toxin Injection
64612Injection of chemical for destruction of nerve muscles on one side of face
64615Injection of chemical for destruction of facial and neck nerve muscles on both sides of face
J0585Injection, onabotulinumtoxina, 1 unit
J0587Injection, rimabotulinumtoxinb, 100 units
Code(iii) Panniculectomy, Excision of Excess Skin and Subcutaneous Tissue (Including Lipectomy), and Related Services
15830Excision, excessive skin and subcutaneous tissue (includes lipectomy); abdomen, infraumbilical panniculectomy
15847Excision, excessive skin and subcutaneous tissue (includes lipectomy), abdomen (e.g. Abdominoplasty) (includes umbilical transposition and fascial plication) (list separately in addition to code for primary procedure)
15877Suction assisted removal of fat from trunk
Code(iv) Rhinoplasty, and Related Services
20912Nasal cartilage graft
21210Repair of nasal or cheek bone with bone graft
21235Obtaining ear cartilage for grafting
30400Reshaping of tip of nose
30410Reshaping of bone, cartilage, or tip of nose
30420Reshaping of bony cartilage dividing nasal passages
30430Revision to reshape nose or tip of nose after previous repair
30435Revision to reshape nasal bones after previous repair
30450Revision to reshape nasal bones and tip of nose after previous repair
30460Repair of congenital nasal defect to lengthen tip of nose
30462Repair of congenital nasal defect with lengthening of tip of nose
30465Widening of nasal passage
30520Reshaping of nasal cartilage
Code(v) Vein Ablation and Related Services
36473Mechanochemical destruction of insufficient vein of arm or leg, accessed through the skin using imaging guidance
36474Mechanochemical destruction of insufficient vein or arm or leg, accessed through the skin using imaging guidance
36475Destruction of insufficient vein of arm or leg, accessed through the skin
36476Radiofrequency desctruction of insufficient vein of arm or leg, accessed through the skin using imaging guidence
36478Laser desctruction of incompetent vein of arm or leg, accessed through the skin
36479Laser desctrustion of insufficient vein of arm or leg, accessed through the skin using imaging guidance
36482Chemical destruction of incompetent vein of arm or leg, accessed through the skin using imaging guidance
36483Chemical destruction of incompetent vein of arm or leg, accessed through the skin using imaging guidance

Your AR specialists

ParaRev specializes in accounts receivable recovery and resolution and serves as a virtual extension of your hospital central billing office to help you quickly resolve and collect more of your insurance accounts receivable.

We utilize proprietary intelligent automation and staff specialization to efficiently process all claims regardless of size or age. In addition to our resolution capabilities, ParaRev also can provide denial management assistance by conducting root cause analysis and recommend process improvements to help decrease aged and denied claims going forward.

Contact ParaRev today to learn more about how we can help you with your hospital’s accounts receivable management.

  1. Federal Register / Vol. 84, No. 218 / Tuesday, November 12, 2019 / Rules and Regulations. Pages 61450-61451.

Gaining control over denials to reduce chronic revenue loss and costly remediation requires accurate information about where, when, and why denials are occurring. ParaRev has identified the top three departments where denials are the most prevalent. Download our whitepaper to learn how to decrease denials and improve margins

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