June 20, 2018

 

Medical Insurance Claims Dissected


We spent some time looking at the medical insurance claims process in general, but it’s worth taking a closer, more detailed look in order to see just how many places the whole thing can go wrong and end up with a claim denied. This is the medical insurance claims billing work flow in depth – how the sausage is made, as they say...

Pre-authorization (-certification, -determination). The office coding professional contacts the health insurer for authorization of the patient’s benefit coverage prior to a procedure or service. The insurer may require this step depending on the treatment, service, or equipment. The coding professional documents the authorization number and supporting documentation and forwards this information to the staff responsible for billing. (This is currently the number one cause of denials when it's required and not completed.)

 
Office/Facility Visit. A patient visits a doctor and explains his/her problem. The doctor then diagnoses what could be the ailment and draws a chart as to what treatment needs to be rendered. For example if a patient John Doe has stomach pain, a sequence chart would be drawn up by the provider to explain the treatment pattern. (The settings in which things get fouled up.)

Front Desk Documentation. The patient hands over his/ her insurance card to the receptionist. The office manager needs to verify current coverage and if a referral needs to be obtained and then contact the respective Primary care physician (gatekeeper) and get this documentation. (The patient may provide an out-of-date insurance card with the wrong benefits listed)

 
Scanning. Patient demographics, superbills/charge sheets, insurance verification data and a copy of the insurance card (i.e. all the information pertaining to the patient), is sent to the billing office. The billing office scans the source documents and saves the image file to an FTP site or on to their server under pre-determined directory paths. Using billing software, the scanning team splits the images from a file and arranges them according to patient names. Files are sent to the appropriate departments with the control log for number of files and pages received. Illegible/missing documents are identified and a mail is sent to the billing office for rescanning. (Obviously a lot can go wrong here mainly in the areas of human error/carelessness or a glitches in the various hardware systems.)
 
Pre-Coding. Pre-coders then enter the key-in codes for insurance companies, doctors and modifiers. Pre-coders also add insurance companies, referring doctors, modifiers, diagnosis codes and procedure codes that are not already in the system. (Mixing up the actual pre-codes for which insurance company and policy is applicable is the main offender at this stage)
 
Charge Capture. After the visit/procedure/surgery, an encounter form documenting the charge is entered into the practice management system in a timely and efficient manner.  By complying with clear and standard internal rules, practices meet any time filing limits set by various insurance carriers. At the same time, there needs to in place a method that the staff can ensure that every visit/procedure/surgery has been captured.  It is not acceptable to the provider that a service performed has not been billed. (Again human error/ carelessness is generally the culprit here)
 
Coding. Coding team assign the Numerical codes for CPT(Current Procedural Terminology) and the ICD-9 (Diagnosis) Code based on the description given by the provider. (See "Charge Capture")
 
Claim Scrubbing. "Scrubbing" (i.e. ensuring all carrier rules for payment have been followed) is a critical step that can make a huge difference in the reduction of denied medical insurance claims. Ideally, this needs to be performed prior to or at the time of charge entry to the practice management system.  This allows the practice to make corrections to the charge that would has resulted in a denied claim.  This saves valuable re-work of claim later that typically accounts for the single most costly event  of the billing process. This investment pays for itself in saved time and paid medical insurance claims. The job of continuously updating the claim scrubbing tool must also be maintained.  New rules must be put into this product immediately. (The main problem here is that not all practices have the resources to perform this function.)
 
Charge Team. In this department, individuals enter the patient personal information from the demographic sheets. They also would check for the relationship of the diagnosis code and CPT. Then a charge is created according to the billing rules of specific health insurance carriers and locations. All charges are accomplished within the agreed turnaround time with the client which is generally 24 hours. (Matching up the diagnosis and the procedure codes leads to most of the denials at this stage.)
 
Audit. The daily charge entries then need to be audited to double check their accuracy and to make certain that all billing rules are being followed accurately. This department also verifies the accuracy of carrier requirements to ensure that all "clean" claims will be submitted. (Problems ensue when staff is in a hurry to leave and it's not done carefully or at all)
 
Claim generation. The billing staff then enter the codes and fees accurately as they appear on the physician practice’s superbill or patient encounter form and then generate a paper or electronic claim. At this point, the billing staff also reviews each claim for completeness and accuracy before submitting it to the health insurer. (More possibilities for human error.)
 
Claims Transmission. Claims are filed and information sent to the transmission department. Transmission department prepares a list of claims that go out on paper and through the electronic media. Once claims are transmitted electronically, confirmation reports are obtained and filed after verification. Paper claims are printed and attachments done, if necessary, put into envelopes and sent to the US for postage and mailing. Transmission rejections are analyzed and appropriate corrective action is taken. (Fortunately, with advances in the technology of electronic claims submission, there aren't too many screw ups here. On the other hand, it's truly surprising just how many paper claims are sent through the mail, and then when you follow up a couple weeks later, customer service says that they have no record of the claim ever having been received.)
 
Clearing House/Electronic Filing. After the charge has been "scrubbed" and is eligible for first time payment, electronic filing of claim through a clearing house is scheduled multiple times during the week. This process ensures claims reach the carrier faster.  The clearing house typically supplies the practice reports that must be checked to ensure all claims went to the carrier.  Claims that did not pass clearing house rules must be addressed immediately for timely payment of claim.  Electronic filing can also provide the ability of a practice to know that a claim has reached the carrier.
 
The insurance company processes the claims usually by auto-adjudication or manually by way of medical claims adjusters. For higher dollar amount claims, the insurance company has medical directors review the claims and evaluate their validity. Approved claims are reimbursed for a certain percentage of the billed services. These rates are pre-negotiated between the health care provider and the insurance company. Failed claims are denied or rejected and notice is sent to provider. Most commonly, denied or rejected claims are returned to providers in the form of Explanation of Benefits(EOB) or Electronic Remittance Advice. (Not much you can do about most the above since any errors at tis stage are mostly y the province - and fault - of the insurance company with the exception of clearing house errors addressed immediately)
 
Cash Application. Once the claim form has been received by the insurance company it will either be paid or denied. A statement called an "explanation of benefits" (EOB) is then sent from the insurance company to the medical billing office. This EOB can explain the reason for a claim denial, the payment distribution or un-billable amounts and patient obligations.
 
The cash applications team receives the cash files (Check copy & EOB) and apply the payments in the billing software against the appropriate patient account. During cash application, overpayments are immediately identified and necessary refund requests are generated for obtaining approvals. Also underpayments/denials are reported to the billing analysts.
 
A billing specialist will then enter this information into their records. Statements can then be sent out to individual patients regarding their account balance. Billers are also responsible for submitting appeal requests back to the insurance companies for denied claims and writing off un-billable services. Payments made by patients may or may not be part of their responsibilities.  (Accuracy is the key here in all these functions. Beginning to see a pattern?)   

Analysis. Upon receiving the denial message the provider must decipher the denial code, reconcile it with the original claim, make required corrections and resubmit the claim. This exchange of claims and denials may be repeated multiple times until a claim is paid in full, or the provider relents and accepts an incomplete reimbursement. 

 
There is a difference between a “denied” and a “rejected” claim, although the terms are commonly interchanged. A denied claim refers to a claim that has been processed and the insurer has found it to be not payable. Denied claims can usually be corrected and/or appealed for reconsideration.
  
A rejected claim refers to a claim that has not been processed by the insurer due to a fatal error in the information provided. Common causes for a claim to reject include when personal information is inaccurate (i.e.: name and identification number do not match) or errors in information provided (i.e.: truncated procedure code, invalid diagnosis codes, etc.) A rejected claim has not been processed so it cannot be appealed. Instead, rejected claims need to be researched, corrected and resubmitted.
 
The frequency of rejections, denials, and underpayments is high mainly because of high complexity of claims and/or errors due to similarities in diagnosis' and their corresponding codes. This number may also be high due to insurance companies denying certain services that they do not cover (or think they can get away without covering) in which case small adjustments are made and the claim is re-sent. Depending on the denial, filing an appeal with the appropriate documentation and proof can successfully overturn the original decision.
 
Accounts receivable analysts are a main cog in any medical group. They research claims for completeness and accuracy and submit work orders are set up for the call center. They also research the claims denied by the carriers, rejections received from the clearing house as well as underpayments, and appropriate actions are taken. (Analyzing the denials correctly is the key to reducing future denials and errors.)
 
Calling. The calling team receives the analysts' work orders on delinquent claims. They then contact the insurer's customer service department verifying if the claim is with the carrier, the current status, and whether it is being processed for payment or denial. The caller/analyst then goes to work on ascertaining the requirements for payment and compiles a list of payment details. If a claim is to be denied, what type of corrective action is required. (It's imperative that they maintain their cool and professionalism in order to get successful outcomes when dealing with customer service.)
 
Month End Reports. All the above data is then compiled in Excel and is made available to staff who need to review past records to identify solutions to any particular present scenario.  End of the month is when "Doctor Financials" are run as well as other procedure code usage reports and aged summary reports in order to ascertain what, if any, momentum has been achieved this month, and if not see where there is a pattern of non payment. In this way, any bulk pending issues are addressed. Any claim beyond the 60 day pending needs to be acted upon, if it is pending for clarification then that needs to be informed to the respective account manager at the center so that remedial steps can be initiated. (Another step that is sometimes easily overlooked and problems ensue.)
 
I know... "More than we really wanted to know!!" I feel your pain.



   
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