Handling Denials For No Coverage or Coverage Terminated

One of the most important parts of billing is handling denials. Many providers’ offices don’t handle denials and end up losing thousands of dollars a year as a result. In fact, I saw a statistic once that said that 47% of denied claims don’t ever get appealed. That is outstanding! Obviously based on that statistic the insurance companies have a great incentive to deny claims.

There are three reasons that denials don’t get appealed. The first is that the denial is correct and there is nothing to appeal. In that case, there is nothing to be done except bill the patient if that is appropriate. The second reason is because the person responsible for handling the denials doesn’t have the time to handle them. This problem can be rectified. If the right systems for handling denials are put into place then they can be handled in less time. Most time spent on denials is figuring out what to do about them, which brings us to reason number three.

The third reason that denials don’t get appealed is that the person responsible doesn’t know what to do about it. Many times they understand what the denial is for, but aren’t sure what steps to take to rectify it. So over the next several months we are going to be covering the most common denial reasons and how they can be handled.

One denial that is very common is “denied for no coverage or coverage terminated.” Seems pretty straight forward. But what do you do? There are actually a couple of things. First of all, receiving this denial does not mean that it is correct. Our local BCBS denies claims for this reason more often than I use a restroom. Many times it is just because BCBS issued the patient a new ID number or changed just the 3 letter prefix. It can actually be quite frustrating. If we receive a denial from BCBS for this reason we go to the BCBS website and do a search on the patient. In most cases we can pull up the correct ID number and resubmit the claim.

If the denial is for a company that does not have those issues, the next thing I do is look at the patient’s claim history. Has the payor been making payments but suddenly stopped? In some cases the payor may have paid claims before and after the date of service they are denying. In that case a call must be made to the insurance carrier to question the denial. Hard to believe but they actually do make mistakes! (sarcasm)

Lastly, if the denial appears correct, or if we cannot find any additional information thru the website or a phone call, then the patient must be contacted. Usually we send out a patient statement with the charges, and a note stating “Your insurance carrier states your coverage was terminated. Please contact
our office with updated insurance information.” Many times patients forget to notify the provider when they do have an insurance change. Receiving a bill will prompt them to notify you. Usually they call us and give us the updated information over the phone and the claim can get resubmitted.

The most important thing here is that you come up with a system that you will use every time you receive this denial. That way you won’t waste time trying to figure out what to do each time, and the denial will get handled promptly. If you do this for each denial you receive, all denials will be handled and
it will cut down on losses.

The Advantages of Flat Fee Billing

The most common way billing services charge providers for their services is with a percentage of the receivables. This is often based on what is actually paid by the insurance carriers and sometimes the patients depending on the agreement between the billing service and the provider. This type of arrangement often works well for both as it is an incentive for the billing service to do a good job as their pay depends on it. There are both advantages and disadvantages to this way of charging the provider.

First of all, in some states it is illegal for the provider to enter into such an agreement as it is considered fee splitting and prosecutions have resulted. It is not common for providers to be prosecuted for entering into this sort of arrangement but it is a possibility and should be considered. Two states we know of that have fee splitting laws in effect are Florida and NY. So as a billing service you may think you are off the hook because it is only illegal for the provider to enter into this sort of arrangement but not so. The problem for the billing service is that you have entered into a contract that is illegal and unenforceable. So if you end up in court for any reason such as the provider didn’t pay you for the last three months, basically your contract may not even protect you at all. It can be found to be an illegal contract and not enforceable.

So what’s a billing service to do? Why not consider flat fee billing? Most billing services do not want to consider it as they don’t know how to come up with a reasonable flat fee and providers are used to being quoted a percentage so they can’t compare your price as easily. So if we tackle these two objections, you can start offering a flat fee instead of a percentage and you may find many advantages.

When a doctor objects to a flat fee for his billing instead of a percentage it is usually just because he can’t compare it to other offers. Some providers are not aware that this practice is illegal and when they find out that it can get them in trouble they want to hear about other alternatives. A billing service can explain to the potential provider that they do not ever want to steer a provider toward an action that could be considered illegal or get them in trouble. They are here to help the provider and to keep the provider from doing anything that unintentionally that could be considered a problem later on.

Even if you are in a state that allows percentage billing it can be an advantage to the provider to know up front what it is going to cost him or her every month to have someone taking care of the billing outside of the office. From a billing service standpoint I much prefer a flat fee so I know what I can expect each month. With a flat fee I have a much better idea whether or not we are making a profit on that account. When charging a percentage it can fluctuate enough to leave you wondering if the account is worth the work. There are many circumstances that can affect payment that were in no way caused by the billing service who still did the full amount of work, but because the income was down that month, the billing service doesn’t get paid either. Here’s an example.

We had a provider sent his information by fax a couple times a month so we didn’t see him often. He moved his office and didn’t tell us. By the time we found out, so did Medicare who stopped his payments as they will if mail can no longer be delivered to the address they have on file. We filed a new 855I for him and waited three months for his application to process before he started receiving Medicare money again. We also waited three months before we could bill him again.

Just Do It

Ok so everyone thinks “Nike” when they hear that statement but it’s applicable in so many ways to so many situations. For example we’ve all read that one tip that we thought “that’s what I need to do” or “that will work great for me!”. Or we’ve read a chapter in a book about time management and said “I need to implement that” or “that will make me so much more productive”. But then days go by, and it turns into months, then a year or so and you still haven’t implemented the idea.
You reread the chapter, or you see the same message in another manner and you think “Oh yeah, I was going to do that.” You know it would make a huge difference in your life or business and it wouldn’t even take much to implement but you just don’t take the time to do it. Why? Because most of us will just keep stumbling along to the same beat, doing the same moves even though it’s not working that well because it’s easier than making a change. Even if that change won’t take that much effort and it will make things better, help you achieve your goals. People are resistant to change. So that’s why I say “Just Do It!”
When you read something or hear something that you know will help you to achieve your goals quicker, or easier then you need to implement it right away. Don’t say “That’s a great idea, that would really help me, I should do that”. Just Do It! Do whatever it takes to implement the idea immediately. If you put it off, most likely you will never implement it.
Then months later or sometimes years, you will hear the idea again or be reminded of it and think “oh I was gunna do that 9 months ago but I never did”. Then you will beat yourself up over the time that you lost and how much further ahead you could have been if you had just implemented the idea when you first heard of it.
We recently read a chapter in a book about time management. Time management is one of the most important things in being successful. In order to succeed you must be in control of your time and do the most important things first. Most people are reactive and spend their day doing things that ‘come up’. But successful people are proactive and plan what they do every day. We knew this already and tried to be proactive, but this chapter really gave some good tips on managing your time. We implemented them immediately.
The biggest item in the chapter was to always have a list (which we did). But then in addition to having the list it said that each day you must identify the top 6 things that need to be accomplished on that list and make sure that those things are done first. We already did identify the most important things, but we didn’t always pick six, and we didn’t always share our list. But the chapter went on to say that it was important to also make sure all of your employees also had a list and that they always accomplished the six most important things on their list as well.
That was new for us. We didn’t realize how important it was for us to have our employees items identified so clearly and to make them follow the same guidelines as us for time management. The book explained it clearly as to why this was so important in such a way that was eye opening for us that we began to implement it immediately.
My point isn’t that you change your methods of time management but that you recognize that if you come across a good idea that you implement it. One good idea can mean a huge breakthrough for a person. It can really turn things around. So if you come across a good idea, it’s important not to waste any precious time. Implement the idea right away to get the most out of it.