Combating the Problem of Rejected Claims

One practice opts for a Web-based solution.

BY BARBARA SCOTT

The first of 80 million baby boomers become eligible for Medicare in 2011. As the nation's population ages, demand for services will increase. And whereas previous generations tended to underutilize eye care treatment and services, baby boomers are not shy as patients or consumers.

This elevated demand is arriving at a time when more ophthalmologists are retiring than being trained. In most parts of the country, it's safe to say that most ophthalmologists will see greater patient volumes in the coming decades. All other things being equal, having more business might seem like a good problem to have. But of course, all other things are not equal. A continuation of the trend of persistent cuts in reimbursement would complicate matters.

To really make things interesting, practice management is about to experience a quantum leap in complexity with the transition to ICD-10 codes. The U.S. Department of Health and Human Services has extended the target deadline to 2013. But that should offer little comfort.

All of these factors will challenge ophthalmologists' ability to keep up with demand, get a grasp on profitability and keep up with regulatory requirements and standards compliance. One key will be controlling costs per patient visit. For most ophthalmologists, the solution will in large part rely on managing expenses, working smarter and gaining efficiencies through automation.

One Practice's Story

One practice that is leading the charge in this regard is Baker Eye Institute, a four-physician practice located in Conway, Ark.

When Baker Eye management assessed the practice's revenue cycle 5 years ago, it discovered what many ophthalmology practices see today: a great deal of frustration with claims management and limited information with which to improve reimbursement.

With the procedures and service providers it had been using prior to 2004, Baker Eye had limited visibility into its financial situation. At the most basic level, it had no good way to verify claims for accuracy before submitting them.

Perhaps more problematic was the fact that staff had no reliable source of assistance for dealing with rejections. To learn why a claim was rejected, the Baker Eye staff had to open a trouble ticket with the clearinghouse vendor, who would then research the matter. It often took 2 or 3 weeks to get the necessary information.

Thus, for example, when a private payer would deny a claim based on timely filing, Baker Eye had little recourse. In reality, the payer may have failed to respond at all upon receipt of the initial claim. Proving that Baker Eye had submitted the claim on time involved a series of phone calls, correspondence and a significant amount of administrative effort that kept the billing staff busy.

Of course, Baker Eye had virtually nothing in the way of access to business intelligence. It lacked software tools for detecting rejection or denial trends based on payer, demographics, department or coding. Without this analytical ability, the practice had no information with which to eliminate the sources of recurring billing problems.

Searching for a Solution

Realizing that they could convert challenges into opportunities with the right procedures and tools in place, the practice began to reassess its revenue cycle. In 2004, Baker Eye began to evaluate the effectiveness of its clearinghouse service and consider what it would be like to utilize an enhanced claims management solution.

Because carriers seem to grow more creative in their ability to reject claims from year to year, it was vital to acquire a reliable process for ensuring that Baker Eye's claims were submitted with all appropriate diagnosis codes for establishing medical necessity. Likewise, ophthalmology coding and billing staff needed a tool for consistently applying and verifying use of payer-specified modifiers. These objectives seemed simple, but mistakes were surprisingly common — even on the payer side. For instance, payers routinely deny some charges saying the claims were duplicative — not realizing that they were submitted twice because patients were having procedures performed on two eyes (not just one).

It may seem counterintuitive, but helping payers is a way of helping one's practice; any improvement provider organizations can offer makes insurance carriers' jobs easier and therefore minimizes complications overall. After all, payers are also overwhelmed and always adjusting to rapid changes in technology. Making their work as easy as possible by automating, standardizing and submitting cleaner claims is an advantage to the provider as well.

Enhancing Claims Management

Based on a recommendation from its practice management system (PMS) vendor, Baker Eye opted for a Web-based medical claims clearinghouse provided by Atlanta-based Navicure. The transition was simple, with all staff training conducted via phone conference. Integrated with the group's PMS, Baker Eye was able to begin using the new claims management system immediately.

The process now begins with advanced claims editing, where claims at risk of rejection due to non-specific diagnosis codes or simple format errors are identified. Baker Eye's charge entry or coding staff can make the change before the claim is sent, directly on-screen within the CMS 1500 form — not several weeks later, after a printed rejection arrives. Front-end claims editing, including payer-specific edits, increases the practice's first-pass rate.

For the few rejections that do return, the staff has all the resources they need to re-submit the claim. An exhaustive, online repository of information about payer policies, transmission and formatting requirements, rejection and error messages, and other claim errors answers any questions that arise. If, however, the source of the problem isn't apparent, Baker Eye staff can quickly reach a clearinghouse representative on the phone for an explanation.

Baker Eye now monitors the status of all of its claims online, in real time. Plus, the system offers a framework to more efficiently structure the billing office's workload. Using this framework, Baker Eye can prioritize and assign claims "rework" to individual staff members based on payer, rejection type, denial code, facility, physician, claim value or other variable. This efficiency has special value for a busy practice like Baker Eye, because billing staff now has more time to dedicate to other revenue-generating tasks, such as contacting patients about outstanding balances or analyzing payer contracts to negotiate favorable rates.

Finally, the organization uses reports to spot trends, understand which processes are causing problems and modify documentation or other aspects of practice workflow accordingly. Baker Eye can analyze claims data, for example, to see which codes tend to cause the most problems, how rejection rates vary by payer or which billers are most productive.

Financial Impacts and a Solid Foundation

By reducing rejections, enhanced claims management has decreased receivables aging and accelerated cash flow. Their A/R is better than the national average now, with payments frequently arriving in less than 2 weeks. Depending on the medical specialty, national averages range between the mid 40s and the mid 70s.

Looking to the future, Baker Eye will explore additional automation, which is offered by the practice's current clearinghouse, to enhance its billing and receivables management processes. Because insurance ineligibility is the most common reason for rejections and denials, eligibility verification will be particularly helpful in identifying termination dates, benefit ceilings and other details that can affect reimbursement later. Electronic remittance advice and electronic billing for secondary claims promise to save staff time and boost reimbursement.

As ICD-10 and baby boomers add complexity and elevate demand for services, business as usual will no longer be viable. Enhanced claim management solutions with greater access to — and more advanced use of — information will continue to gain importance as a way to support operations with a solid foundation. OM