Practice Management Alert

Although practice managers and billers agree that following up on claim denials helps ensure a healthy bottom line, working them can be a problem. For many physicians offices, getting claims out the door is the main priority and checking on those that have been denied is something a staff member might do when they have spare time.
 
As a result, practices see a lot of claim denials and rarely know why. The Medical Group Management Association (MGMA) estimated last year the average practice has a denial rate of nearly 14 percent, says Sara M. Larch, FACMPE, MS, chairperson of the MGMA board of directors and chief operating officer of University Physicians Inc., a 1,000-physician multispecialty practice at the University of Maryland in Baltimore. I think there are too many claims that need follow up. she says. If we understand why we are getting denied, we could use that information to fix the problems in our practices.
 
Larch says that denial data can show you what you need to change in your practice. She learned it the hard way. The first hint of problems involving claim denials came about three years ago when her practices cash was declining. The billing staff was complaining about increases in denials and getting upset with the payers. The practice administrators met with one of the larger payers to complain about the denials and discovered the payer had more information about the reasons for denials than the practice did.
 
This was a lesson I would not like anyone else to repeat, Larch says. They told us that they wouldnt keep denying us if we would stop sending them claims in which the patient cant be identified and is ineligible for coverage on the date of service. We had no idea what the problems were. We have issues with payers, but we decided that we wanted to fix our own problems before we battled with them.

 
To try to pinpoint the problems that caused the denials and find a place to start focusing corrective efforts, Larchs practice needed data, she says. You dont need a fancy computer system to do this. We took one doctor in one specialty at one practice site and looked at all denials from one payer for one week. We took the explanation of benefits statement that came in and we manually entered each invoice, the amount and the reason for the denial in a spreadsheet and ran the totals. Then, we said based on those results, if we extrapolated that across all payers and all sites and all doctors, how much would that be? It was a huge number. And, we could see from those denials that we had registration and insurance verification problems.
 
The practice concluded that if it had such problems for one payer, it likely had them for all payers. And, if it was making mistakes in patient registration and insurance verification at one site for a week, it was likely to be making the same mistakes repeatedly throughout the practice. We were careful with this data. We didnt want to use it to start making a whole lot of decisions. But, it was a way to get started, she says. When physicians and other practice administrators looked at the study results, they questioned whether the problems could be as bad as the results indicated. But, even if the practice assumed the results were 50 percent incorrect, Larch says, the number of denials was still too high to accept. Later, when the practice-management computer system was set up to track denials across all its sites, the amount of denials was close to the sample study findings, and the same problems found in the first study were confirmed, she notes.
 
To avoid claim denials for patient information and insurance verification problems on the front end, the practice hired a couple of full-time employees for three months to see if calling insurers and checking information and contacting patients to obtain correct information if the insurance information was wrong would reduce denials. When it did, the practice hired a central team to contact insurance companies and verify patient eligibility and information for every visit. Denials for patient-registration information and insurance eligibility were cut in half. We had a high denial rate for problems on the front end of the claim. When you think about the effort it takes to rework a denial, its better to use data to figure out whats wrong and fix it, Larch says. When the problem is fixed on the front end, then you dont have to rework claims. Since the practice began focusing on denials on the front end of the claim, its net revenues have increased.
 
Although University Physicians has addressed its two top sources of claim denials, like any other practice, it still has denied claims that need follow-up. The practice plans to apply the same principle it used on the patient registration and insurance verification problems that created denials: Look at the denials by reason, and try to fix the problem.

 
What I think makes working denials hard is that we dont take the time to sort them out by the real reason for the denial. We sort them by payer, and thats not efficient, she says. For example, if a claim is denied because it lacks a referring physician and you have 10 payers, you may not get to a denial with that reason if you are sorting by payer. It would be better to sort the denials by no-referring physicians, and within that sort the denials alphabetically by patients. Then, go to the patients medical record, write down the referring physicians names, come back and enter those names, and reprocess all those claims, she suggests.
 
After sorting denials by reason, prioritize them so you spend your follow-up time on the claims that have the greatest impact. Denials can be prioritized by dollar amount, how long theyve been waiting to get paid, or by payer. Going after the big dollar denials alone isnt always the best strategy, cautions Brian Smith, MHA, executive director of USF Physicians Group, a 350-physician practice at the University of South Florida in Tampa. If youre dealing with a multispecialty group, pursuing $25 for a family-medicine doctor is a huge dollar amount to that doctor. But, $25 to a surgeon is insignificant, he says. We now do our follow-up by specialty instead of by payer, so that we are comparing dollar significance within a department. If you prioritize surgery and family medicine together, youll never be working the family-medicine claims because they are just too small.
 
A dedicated team of people who focus on denials and follow-up can make handling denials easier, says Larch. You only have a certain amount of time to file a claim, and the timely filing is even shorter for resubmission than it is for first-time claims, she says. In Maryland, we have a state law that says we have six months to file a claim. But, we dont have any law about how much time we have to refile or appeal. So, once we get denied, the amount of time we have to refile or appeal depends on the contract, and it can be as short as 30 days. You better be organized if youre going to get a claim turned around in 30 days, especially if you have to go back to the medical record and do a lot of work. A denials team could ensure that all the denials are examined and expiring ones are attended to. If you have your denial work mixed in with all of your accounts receivable work, how do you know whether you should work this denial, as opposed to another one?

 
Making denial follow-up someones responsibility could help ensure denials are examined. Larch says, some practices give the denial work back to the people who are responsible for gathering the information that triggered the denial. For example, if patient information verification is the front desks responsibility, give the denial work to them and ask them to gather the missing information. Point out that such work wouldnt be necessary if the patient information was collected correctly at check-in. If the denial reason is the referral office is missing from the claim, print all the claims that were denied for missing information and hand it to your referral coordinator, Larch says. Ask that person to look up the information. The billing staff doesnt always have to do this work. But, someone has to.
 
Such feedback is important because staff members need updating in a constantly changing reimbursement environment, Smith says. For example, you have to train the front desk staff to get a copy of the insurance card and the group contract number for the insurer that has 20 or 30 different products in the market or youre likely to get a denial. If you fail to train the staff members so they know the critical nature of that, getting claims out the door and paid will be difficult. You can keep providing feedback on how the behavior at the front end of the visit affects the back end of the collection, he says. We should do as much as we can at the point of service, when the physician has the patient there, because thats the strongest point in our relationship with the patient.