How to appeal inappropriate health plan claim denials
In 2008, 66 percent of one physician practice’s total revenue came from claims originally underpaid or denied by health plans and other third-party payers. This revenue would have gone uncollected had the practice not implemented auditing and appeals strategies. Based on this example, it is estimated that physicians are losing billions of dollars in revenue each year by not appealing inappropriate claim denials.
There are many reasons why physician practices do not appeal denied claims; the most common is that they believe appealing claims will create an increased administrative burden on the practice. However, not appealing denied or partially paid claims can be quite costly to your practice and can often result in decreased revenue. Since introducing claims editing software into their claims processing systems, health plans have generated an increased number of inappropriate claim denials and reductions in payment.
An effective way for your practice to combat these erroneous payment reductions and denials is to be diligent in submitting appeals.
Why appeal?
When your practice increases its appeals for wrongfully underpaid or denied claims, the health plan may correct its claims editing software and processes. This, in turn, may result in improved claims processes and appropriate payment to your practice for the provision of health care services.
The following 12 steps simplify the claims auditing and appeals processes and can help to reduce your administrative burden. These processes make it easy for your practice to identify and appeal health plan claim denials when the health plan misapplies the American Medical Association (AMA) Current Procedural Terminology (CPT®)* codes, guidelines and conventions or the health plan’s contracted policies.
When a physician performs a procedure or service and then reports it according to CPT codes, guidelines and conventions, the health plan should recognize the physician work involved in providing this patient care. To ensure that your work is recognized, your practice should identify all inappropriate claim denials and communicate with the appropriate health plan representatives through each plan’s claims appeals processes.
What is lost when your practice does not appeal?
When your practice does not audit and appeal inappropriately paid or denied health plan claims, you may lose revenue.
You also may lose the opportunity to recover overhead expenses by not implementing a claims management process. This process is your practice’s internal designated workflow for accurately preparing, submitting and collecting on claims. When you challenge inappropriate claim payments, you demonstrate that your practice has made an effort to correct the plan’s inaccuracy. This could lead to a positive change in the health plan’s business practices.