Practices that want to thrive in the current healthcare environment must have deep insight into their performance on key revenue cycle metrics. That’s why Texas Retina Associates—a 14-office sub-specialty ophthalmology practice—began looking for ways to easily quantify rejections and denials. The group wanted to be able to scrutinize the data and identify opportunities for improvement.

The goal was to proactively address any trends in the revenue cycle that were negatively affecting the number of rejected and denied claims. The practice believed that uncovering the root causes of rejections and denials would have a powerful impact on the entire revenue cycle.

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In the great TV series “M*A*S*H,” the character Radar could hear incoming helicopters carrying wounded soldiers from a long distance away  and he would yell “Incoming!” as they were getting close to the hospital. Well, the 5010 launch date is January 1, 2012 and all I can say is…. “Incoming!” Hopefully, most practices have been working diligently with their technology vendors, so they do not anticipate a large volume of new payer rejections when 5010 is implemented. However, it’s still a good idea to have your ‘radar’ ready and know how to quickly spot these rejections if they do occur.

The first step is to spot new rejections that you have not seen before. Assuming you use a clearinghouse, you will probably have access to data detailing each rejection category and rejection message. In this case, you can easily compare the top rejection messages for January 2012 to the previous few months. You should be on the lookout for any messages that are new – these can be easily spotted because the previous months will have zero rejections for that message.

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When a claim is denied, one of the first questions you should ask yourself is whether prior authorization was obtained for the services listed on the claim. If the answer to this question is “yes,” then you have to dig deeper to determine why it was denied—and how to prevent such denials in the future.

Unfortunately, claims with prior authorizations are denied more often than you might think. There are five common reasons for these denials that you should take into account and ways to avoid them:

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In today’s complex world of healthcare billing, practices can make some common—yet costly—errors that lead to incorrect billing, denied claims, and lost revenue. The good news is that many of these mistakes are avoidable with some adjustments to process, approach, and training.

Mistake 1: Incorrect data on the front end. This error often involves inaccurate patient demographic/insurance information or invalid insurance coverage. The main culprit: lack of verification. The best way to avoid this type of mistake is training, training, and more training! Staff responsible for patient check-in should be educated on the importance of collecting appropriate information and verifying insurance, as well as specific steps to accomplish these tasks. (Ideally, these processes should occur before the date of service to identify potential problems early, and to ensure patients understand their fiscal responsibilities.)

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Customer service is a big deal for ACT Health Management Services. We pride ourselves on offering quality client service to the 65-70 providers that make up ACT Medical Group of Wilmington, N.C. We expect the same dedication to service from our vendors, but unfortunately we haven’t always received it. In fact, lack of good customer support was one reason we left our former clearinghouse. We wanted a system with more robust and better functionality, as well as a business partner that would take our unique challenges as seriously as we do.

In 2010 we decided to go live with a new clearinghouse at the same time that we adopted an electronic health record (EHR). With two implementations going simultaneously, we discovered firsthand just how valuable a teamwork approach can be. When the inevitable snags delayed parts of our EHR installation, for instance, we ended up going live with our clearinghouse’s Electronic Remittance Advice (ERA) feature before we had any place to store the data. The situation could have been a nightmare, but it wasn’t. Our clearinghouse was supportive throughout the process, helping us develop the necessary “workarounds.”

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This is the first in a series of articles that will answer some commonly asked questions about different aspects of the revenue cycle.

Today, more than ever, practices are focusing on ensuring they have a strong revenue cycle – this includes making sure denials are minimized and appealed when appropriate. Today, we are answering some of the most commonly asked questions about denied claims and the appeals process:

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Thank you to everyone who joined us on April 20 for our latest webinar, Hidden Denials and Appeal Letters: Tips and Tricks to Maximizing Your Reimbursement. During this one-hour, industry expert, Tammy Tipton, president of Appeal Solutions, Inc. the leading denial management training and resources company, discussed: what the hidden denial effect is and how to detect revenue lost to hidden denial; tactics to identify payer-specific hidden denials and tips for dealing with payers; and best practices for writing appeal letters.

To learn more about hidden denials and avoid letting them become a revenue drain, click here to download the recorded webinar.

*This program meets AAPC guidelines for 1.0 Core A or 1.0 CPCO specialty CEUs. On Demand product requires successful completion of a Post-Test for continuing education units

Despite every practice’s best efforts and best practices, not every claim is 100% clean of errors when it is first submitted – and that is OK because an effective and efficient clearinghouse should be able to help you catch many of these errors before the claim is ever sent to the payer.

Even if your clearinghouse catches a majority of errors, it is essential for all practices to know if a claim was rejected by the clearinghouse’s edits or by the payer’s edits. This knowledge is important to a healthy bottom line because rejections slow down revenue.

Given the choice between the two types of rejections, I always think that it is preferred to have your clearinghouse catch claim errors rather than the payer. At this point, people often ask me why one type of rejection is better than any other. The answer is simple – time. If you submit a bad claim to a clearinghouse – a good vendor will edit it and, if there are any edit errors, they will let you know very quickly—within minutes. Otherwise, it will take some time (possibly days or weeks) for the claim to go out to the payer, fail payer edits, and then return to you for your review. All of these steps take time, which slows down your revenue stream.

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Keeping track of prior authorization policies is difficult. Each health plan has its own set of requirements, which often change with regularity. Some Medicaid payers, for instance, want one “blanket” referral authorization before patients see certain specialists; the specialist isn’t required to obtain prior authorizations for every procedure. Other plans are much more restrictive, approving prior authorizations for specified procedures only when certain criteria/diagnosis’ are met.

The problem, of course, is that failure to obtain proper authorizations can have a drastic affect on practice income. The bottom line is simple: no authorization, no payment. Insurers won’t pay for procedures if the correct prior authorization isn’t received, and most contracts restrict you from billing the patient as well.

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With 5010 and ICD-10 looming on the horizon, now is the time for practices to begin safeguarding against spikes in rejections and denials. Rejections and denials are, obviously, important barometers of financial health that must be tracked at all times. But accurate tracking becomes even more important during times of change.

In my opinion, practices should begin considering periods of transition as “the new normal.” After all, fresh legislative mandates seem to be hitting the healthcare industry with increasing regularity. It might be wise to invest a little time in developing policies and processes to monitor key practice indicators during times of upheaval.

Rejections and denials offer the perfect place to start. Right now is a good time to begin establishing benchmarks for these numbers in your practice. Don’t wait until December 31 to determine your average rejection and denial levels—do this in the months prior to the 5010 conversion on January 1, 2012. That way, you have an accurate yardstick against which to measure your post-conversion rejections and denials.

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