Denials are claims which have been adjudicated (fancy word for processed) by the insurance but not paid. A denial usually comes to the provider in the form of an EOB. The denial can be on an entire claim (meaning all of the services billed) or a single claim line item (each individual service).
First, let’s have a refresher on line items. Sometimes when a doctor sees a patient s/he will perform multiple services. Each service is billed with a separate CPT code within the confines of the Correct Coding Initiative (CCI – more on this later). So, for example, if the doctor examines a patient for diabetes and performs an EKG for a complaint of palpitations, the biller will bill two different CPT codes. One CPT code will indicate the examination and the other will be for the EKG. Each CPT is billed on a separate line on the claim form. Since they are on separate lines, they are referred to as line items.
It is also possible to use the same CPT on separate lines, if, for example, the same service was billed on different dates. As an example, consider a patient in the hospital. The doctor will examine the patient on 1/2/2012 and 1/3/2012. Since the dates are not consecutive, you cannot bill a date range therefore, the two dates may have the same CPT code but must be billed on separate lines. There are other examples, but for now understanding that will suffice.
So back to the main point. A denial can be for the entire claim (all claim lines) or just one claim line from a claim with multiple lines.
Some denials are legitimate due to quirks in patient’s policy or insurance guidelines. Other denials are insurance processing errors and yet others are errors by the doctors billing staff or the doctor. Regardless, it is imperative that denials be followed up on.
So what is ‘following up’? Basically, it means action! Some denials are obvious and you can correct it without much ado. Other denials are more confusing. Following up on a denial may require a phone call to the insurance to discover the nature of the problem. If the error is on the insurance side they will usually correct the error over the phone and automatically reprocess the claim. If you find that the error is due to a billing mistake you made will have to make the corrections and resubmit a corrected claim.
Some insurance, such as Medicare, will allow an electronic resubmission of a corrected claim without you including any indication about the correction other than the correction itself. Other insurances will require that you send a paper claim with a note stating that the claim is corrected. For these carriers, if you do not indicate that the claim has been corrected, they will reject the new (corrected) claim as a duplicate.
In some situations the practice will receive a denial on a claim that the insurance insists is valid according to their rules or the patient’s policy. You may not agree with the denial. In that case you can have a claim reviewed at a higher level through a process called an appeal. A couple of examples of claims that may require appeal are timely filing denials (claim not sent to insurance within their contractually specified claim submission time frame) or sometimes medical necessity denials (diagnosis doesn’t justify the service rendered).
Before you appeal any claim, check first that you didn’t make any errors. Don’t waste your time filing an appeal if the problem is a simple error. Generally, appeals are pretty uncommon. For example in the event of a timely filing denial, check your records to verify that you did in fact send the claim initially within the period allotted by the insurance. If you receive a denial if for medical necessity, check if you linked the correct diagnosis to the procedure. Once you are sure that there is no billing error, you must write a letter to the insurance to request that the claim be reviewed by the appeals department.
An appeal will include a letter or appeal form, a CMS 1500 claim form and sufficient proof that you have a valid request for appeal. The proof can take the form of documentation from your doctor, or a trusted medical source and for timely filing appeal, you must send a printed copy of the electronic claim report (EDI Report) showing a clean claim submission and insurance acceptance. Medicare has a specific form that they require you to use for appeal. The form can be downloaded from your local Medicare web site. Here is a sample Medicare appeal form. You can create your own appeal form for most other insurances. Use Medicare’s appeal form as a template / guide.