Practice Management Alert

Are you tossing aside the explanation of benefits (EOB) that your insurance company includes with your checks? If so, you may be losing out on a valuable collection tool. You can use your EOBs to improve your billing process and raise your collection ratio by 5 percent or more, says Michael J. Wiley, practice management consultant with Berdon Healthcare Consulting in Jericho, N.Y. "That can add up to a lot of money." Examine the Denial Carefully scrutinizing your EOBs can show you why payers are denying your claims. EOBs can help you spot problems in your claims filing process such as referrals lacking preauthorization, procedures that haven't been precertified, diagnosis and procedure codes that don't match, services that you have mistakenly unbundled, or late claims submission.

To focus your EOB research, ask yourself whether these factors are causing denials: 1. Lack of timeliness. If you file a claim after the deadline, you won't get paid. Carriers typically give you between 90 and 180 days to file a claim, but some give you much less time. 2. Unbundling. Denials may result if your billing office has improperly unbundled charges from a global fee (comprehensive code). For instance, surgical fees usually include postoperative care. If you are billing the two separately, it will show up on the EOB.

"If your physician performs services that, according to the Correct Coding Initiative (CCI), can be billed separately under certain circumstances, then it is important to use the appropriate diagnosis code(s) and modifier(s)" to support these services' being unbundled, says Adrienne Rabinowitz, CPC, billing manager, Western Monmouth Orthopedic Associates, Freehold, N.J. 3. Lack of medical necessity. If an EOB says a claim was denied for lack of "medical necessity," it usually means that the ICD-9 code did not substantiate reason for performing the service, namely the CPT code. Because insurance companies have software that links ICD-9 codes to CPT codes to determine each service's medical necessity, it is difficult to appeal this type of denial. To prevent such denials, consider employing a qualified certified professional coder (CPC). Alternatively, you can buy coding software that checks if the ICD-9 codes support the CPT codes' medical necessity prior to claims submission. "Coding programs that range from $600 to $1,300 and work with most leading practice management systems quickly pay for themselves," Wiley says. 4. Lack of preapproval. If the EOB indicates that your doctors are seeing patients without referrals or performing procedures without approval, you'll need to talk with the front-office staff to find out why this is happening and make sure these issues are addressed.

But it's not always your practice's fault. "Some carriers typically deny claims the first time around as not having a referral [...]