Top Two Contractual Issues That Trigger Denials

December 11, 2018

Dan Low
Director of Operations

Paying close attention to the fine print is critical in any business agreement, and healthcare is no different. If you want to be sure payers consistently reimburse your organization in a timely and accurate manner, it’s important to comply with all contractual requirements – while making certain the payer does, too.

  1. Underpayments Payment delays and denials stemming from contractual issues can involve a wide range of issues. One of the most common entails underpayments for specific services like surgery, emergency department, lab, radiology, therapies and observation.Problems may occur when a patient undergoes multiple procedures at the same time or during the same surgical event. Payer contracts stipulate how each procedure is paid and generally, each is classified either by relative value units (RVU) or ambulatory patient classification (APC) designations, from the highest to lowest level. Reimbursement is commensurate and proportional — typically 100% of the allowable for the most significant procedure, 50% for the secondary and 25% for the tertiary service.If, however, the procedures are incorrectly classified by staff, reimbursement may be inverted, with the lowest paying service paid at 100%, and the highest-paying, most complex procedure paying just 25%. It is therefore important that the billing staff has ready access to accurate contract management information that will enable them to ensure the appropriate classification for each procedure in real time.
  2. Outdated or inaccurate information Contractual denials also can arise over misinterpretations surrounding per diems, bundled payments and carve-outs. Root causes can be as simple as including the wrong plan code (HMO vs. PPO) on the claim, or as complex as a miscalculation of a stop-loss limit.The failure to maintain an accurate fee schedule by loading appropriate contract data into the hospital’s contract management application is another frequent cause of denials. Constant maintenance and regular audits are required to ensure the contract management software is up-to-dateSite liability rejections involve denials stemming from the location where the service was performed. Because of division of financial responsibility agreements, conflicts can arise over whether the payer or site is ultimately responsible for covering the service.

To avoid contractual-related denials, it is critical that hospital staff be cognizant of, and responsive to, the multiple deadlines associated with the filing and appeals process. These time limits can include deadlines for submission of medical records, corrected claims, appeals, and reconsiderations. Creating the capability to automatically track and flag deadlines in real-time therefore is essential.

Comprehensive denial resolution

ParaRev, a leader in accounts receivable recovery and resolution has focused exclusively on the challenge of hospital payment delay and denial resolution for nearly 20 years. From this effort, we’ve perfected a powerful approach that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization to streamline and accelerate the resolution process.

Equally important, our root cause analysis enables us to recommend process improvements to help decrease aged and denied claims on the front end of the revenue cycle. For more information about how ParaRev can help you, contact us today.

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

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Keeping the Power On: Tracing Problems that Can Trigger Coverage Denials

Nov 26, 2018

Dan Low
Director of Operations

Insurance coverage issues that result in denials are a bit like electrical problems: If there is a faulty link or bad connection between the patient and payer, the circuit is broken, a denial is sparked and power — in this case, cashflow — is interrupted.

That’s why it is important to trace the provider-payer “wiring” early on to ensure a clean claim and proper reimbursement for services rendered. Let’s troubleshoot several common types of coverage denials:

Registration issues

Providers depend on front-end registration staff for patient scheduling, check-in and payment. In many instances, registration personnel have access to real-time insurance eligibility software that uses the patient’s insurance number to confirm whether coverage is in place. Although these systems provide direct connections to insurance company databases and generally are from 75-90% accurate, staff too often fail to use the applications properly or even use them at all. Reasons vary:

  • They may not trust the system’s results
  • They may be under pressure due to productivity quotas and simply scan the insurance card without checking eligibility
  • They may assume verification will be done later

It’s true that registration personnel are frequently overworked and underpaid, and the daily flow of patients can be relentless. But that’s all the more reason for hospitals and physician offices to develop processes that systematically flag rejections and provide staff with an opportunity to resolve them, either before the patient arrives or before service is provided.

Simply put, hospitals need to focus on accuracy, slow the process down if necessary, and create an environment that allows front-end personnel to be as effective as possible in achieving coverage verification. This may require an increased outlay of time and resources, but it’s an investment that will more than pay off in reduced registration-related denials.

Coverage discrepancies and overlap

A frequent problem for many hospitals involves denials triggered by confusion over which payer is responsible for reimbursement. This often happens with patients covered through Medicare Advantage policies or similar Medicaid managed care products. The provider may be unaware of the replacement policy and bill original Medicare or Medicaid directly, only to be informed days later that another policy should have been billed first.

Similarly, a patient may have Medicare Part A coverage for inpatient services but lack Part B benefits for outpatient services. Yet the hospital assumes Part B coverage is in place and bills an outpatient claim, which inevitably is denied.

A third common coverage discrepancy problem involves billing a secondary insurance company, such as an AARP supplemental policy, without including an explanation of benefits (EOB) from the primary carrier. This will usually result in a delay or denial, since the secondary will want to see the primary EOB to make sure the secondary is contractually obligated to pay.

Coordination of benefit issues also can arise due to uncertainty surrounding worker’s compensation, auto or personal injury coverage. In these instances, resolution typically involves carefully tracing the policy guidelines as well as the nature of the illness or injury to determine which coverage is most appropriate.

Coordinating benefits between primary and secondary insurers likewise can be complex when a dependent is covered under both parents and the birthday rule applies.

Comprehensive denial identification and resolution

As with all insurance coverage issues, the cost of denials and potential write-offs is high. It’s therefore essential that hospitals take the time to ensure procedures are in place to help staff quickly and consistently sort out primary and secondary payer responsibilities.

ParaRev, a leader in accounts receivable recovery and resolution, has focused on the challenge of hospital denials for nearly 20 years. From this effort, we’ve developed a powerful approach that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization to streamline and accelerate the resolution process.

Equally important, our root cause analysis enables us to identify core issues like those examined here and recommend process improvements to help prevent denied claims on the front end of the revenue cycle. For more information about how ParaRev can help you, contact us today.

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

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Utilization Denials Take Many Forms

Nov 26, 2018

Dan Low
Director of Operations

Automated safeguards don’t generally exist in most hospital billing systems when it comes to filing insurance claims. The result is that errors that should be caught on the front-end slip through to cause denials down the road.

Who hasn’t experienced this? You’re trying to buy something online and think you’ve filled out all the necessary purchase and shipping details, but the order locks up because some key piece of information is missing or wrong. Usually, the online interface will flag the box associated with the data in question – whether it’s a zip code or credit card number — and you can quickly make the change and submit your order.

Unfortunately for hospitals and health systems, this kind of automated safeguard doesn’t exist in most billing systems when it comes to filing insurance claims. The result is that errors that should be caught on the front-end slip through to cause denials down the road.

Populating the incorrect field

Here’s one example of how bad data can lead to utilization denials: Prior authorization may have been obtained by the hospital from the insurance company for a specific procedure or service. But the department staff fails to populate the authorization code in the appropriate field within the billing system. (This can happen when the platform has more than one place to include the code). That means the utilization bill (UB) doesn’t receive the code. Alternatively, the location of the code may be right, but the code itself is wrong.

Either way, the hospital will face a denial that requires time and effort to resolve. Avoiding the problem in the first place is straightforward: Create a rigorous, systematic procedure to ensure the billing staff clearly understands the sole, appropriate field for the authorization code, and understands which services require an authorization based on carrier guidelines.

Skipping prior authorization

Another common mistake that hospitals make which results in utilization denials is to assume prior authorization isn’t required when in fact it is. The culprit may be aging software loaded with dated and/or inaccurate information. It may be that the procedure is considered experimental by the payer. Or it may simply be complacency on the part of the staff.

Regardless of the reason, the solution once again is simple: Make sure you’re up-to-date on procedures that necessitate prior authorization for each and every payer. And be sure you have the personnel and technology to check every claim against the list.

Missing elective procedures

Utilization denials can also occur when staff believes a prior authorization is necessary for a procedure that is typically self-pay, such as cosmetic surgeries like a lap band, breast enhancement or tummy tuck.

By chasing an authorization or submitting a claim with the expectation that it will be paid, staff wastes valuable time and delays billing the appropriate party, the patient. The solution? Develop a system that automatically moves claims for these kinds of procedures to the self-pay bucket.

Comprehensive denial resolution

ParaRev, a leader in accounts receivable recovery and resolution has focused exclusively on the challenge of hospital payment delay and denial resolution for nearly 20 years. From this effort, we’ve perfected a powerful approach that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization to streamline and accelerate the resolution process.

Equally important, our root cause analysis enables us to recommend process improvements to help decrease aged and denied claims on the front end of the revenue cycle. For more information about how ParaRev can help you, contact us today.

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

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