August 01, 2014



Every claim submitted undergoes a process made up of procedures designed to judge how it should be paid - or not - known as adjudication. Health insurance appeals haven't yet entered the picture, but they may now because this is the place where things can really go awry if the claim isn't accurate down to the smallest detail. The insurance company's computer system looks for any reason not to pay the claim. If none is found, they pay up. Consider the sheer number of steps below and you can see why health insurance appeals are so common.

Processing Each claim’s data elements are checked by the payer’s front-end claims processing system. Paper claims and any paper attachments are date-stamped and entered into the payer’s computer system, either by data-entry personnel or by the use of a scanning system. Initial processing might find such problems as the following:
• The patient’s name, plan identification number, or place of service code is wrong.
• The diagnosis code is missing or is not valid for the date of service.
• The patient is not the correct sex for a reported gender-specific procedure code.
Claims with errors or simple mistakes are rejected, and the payer transmits instructions to the provider to correct errors and/or omissions and to re-bill theservice. The medical insurance specialist should respond to such a request as quickly as possible by supplying the correct information and, if necessary, submitting a clean claim that is accepted by the payer for processing.
Automated Review Payers’ computer systems then apply edits that reflect their payment policies. For example, a Medicare claim is subject to the Correct Coding Initiative (CCI) edits. The automated review checks for the following:
1. Patient eligibility: Is the patient eligible for the services that are billed?
2. Time limits for filing claims: Has the claim been sent within the payer’s time limits for filing claims? The time limit is generally between 90 and 180 days from the date of service.
3. Preauthorization and referral: Are valid preauthorization or referral numbers present as required under the payer’s policies? Some authorizations are for specific dates or number of service, so these data will be checked, too.
4. Duplicate dates of service: Is the claim billing for a service on the same date that has already been adjudicated?
5. Noncovered services: Are the billed services covered under the patient’s policy?
6. Valid code linkages: Are the diagnosis and procedure codes properly linked for medical necessity?
7. Bundled codes: Have surgical code bundling rules and global periods been followed?
8. Medical review: Are the charges for services that are not medically necessary or that are over the frequency limits of the plan? The payer’s medical director and other professional medical staff have a medical review program to ensure that providers give patients the most appropriate care in the most cost-effective manner. The basic medical review edits that are done at this stage are based on its guidelines.
9. Utilization review: Are the hospital-based health care services appropriate? Are days and services authorized consistent with services and dates billed?
10. Concurrent care: If concurrent care is being billed, was it medically necessary? Concurrent care refers to medical situations in which a patient receives extensive care from two or more providers on the same date of service. For example, both a nephrologist and a cardiologist would attend a hospitalized patient with kidney failure who has had a myocardial infarction. Instead of one provider’s working under the direction of another, such as the relationship between a supervising surgeon and an anesthesiologist, in concurrent care each provider has an independent role in treating the patient. When two providers report services as attending physicians, rather than as one attending and one consulting provider, a review is done to determine whether the concurrent care makes sense given the diagnoses and the providers’ specialties.
Manual Review If problems result from the automated review, the claim is suspended and set aside for "development"—the term used by payers to indicate that more information is needed for claim processing. These claims are sent to the medical review department, where a claims examiner reviews the claim. The examiner may ask the provider for clinical documentation to check:
• Where the service took place
• Whether the treatments were appropriate and a logical outcome of the facts and conditions shown in the medical record
• That services provided were accurately reported
Claims examiners are trained in the payer’s payment policies, but they usually have little or no clinical medical background. When there is insufficient guidance on the point in question, examiners may have it reviewed by staff medical professionals—nurses or physicians—in the medical review department. This step is usually followed, for example, to review the medical necessity of an unlisted procedure.
Determination  For each service line on a claim, the payer makes a payment determination— a decision whether to (1) pay it, (2) deny it, or (3) pay it at a reduced level. If the service falls within normal guidelines, it will be paid. If it is not reimbursable, the item on the claim is denied. If the examiner determines that the service was at too high a level for the diagnosis, a lower-level code is assigned. When the level of service is reduced, the examiner has downcoded the service. A medical necessity denial may result from a lack of clear, correct linkage between the diagnosis and procedure. A medical necessity denial can also happen when a higher level of service was provided without first trying a lower, less invasive procedure. Some payers or polices require a patient to fail less invasive or more conservative treatment before more intense services are covered.
Payment If payment is due, the payer sends it to the provider along with a remittance advice (RA) or electronic remittance advice (ERA), a transaction that explains the payment decisions to the provider. In most cases, if the claim has been sent electronically, this transaction is also electronic; but it may sometimes be paper. An older term that now usually refer
s to the paper document is explanation of benefits (EOB). When the general term RA/EOB is used in this text, it means both formats.



Virtually all medical practices use a claims follow-up system so that claims can be tracked and delinquent claims resolved before it is too late to resubmit (as in the case of a lost claim). A claims follow-up system can be set up manually or electronically. It is a helpful tool for the health insurance professional and the provider because it ultimately leads to an increase in payments to the practice. Insurance claims can be overlooked if a tracking system is not in place, which can lead to lost revenue. Below are some common tracking system components and practices.

Initiate Follow Up  A prime component of any claims follow-up system is the insurance log or insurance register. The insurance log or register should include various entries, such as the patient’s name, insurance company’s name, date claim filed, status of the claim (e.g., paid, pending, denied), date of explanation of benefits (EOB) or payment receipt, and resubmitted date    
Just as providers have to file claims within a certain number of days after the date of service, payers also have to process clean claims within the claim turnaround time. The participation contract often specifies a time period of thirty to sixty days from claim submission. States have prompt-pay laws that obligate state-licensed carriers to pay clean claims for both participating and nonparticipating providers within a certain time period, or incur interest penalties, ERISA (self-funded) plans’ claims are under federal prompt-pay rules.
The other factor in claim follow-up is aging—how long a payer has had the claim. The practice management program is used to generate an insurance aging report that lists the claims transmitted on each day and shows how long they have been in process with the payer. 
HIPAA Health Care Claim Status Inquiry  The medical insurance specialist examines the insurance claims tracking log and selects claims for follow-up. Most practices follow up on claims that are aged less than thirty days - normally in seven to fourteen days. The HIPAA X12 276/277 Health Care Claim Status Inquiry/Response is the standard electronic transaction to obtain information on the current status of a claim during the adjudication process. The inquiry is the HIPAA 276, and the response returned by the payer is the HIPAA 277. The HIPAA 277 transaction from the payer uses these claim status category codes for the main types of responses:
• A codes indicate an acknowledgment that the claim has been received.
• P codes indicate that a claim is pending; that is, the payer is waiting for information
before making a payment decision.
• F codes indicate that a claim has been finalized.
• R codes indicate that a request for more information has been sent.
• E codes indicate that an error has occurred in transmission; usually these
claims need to be re-sent.
Working With Payers  In order to have claims processed as quickly as possible, medical insurance specialists must be familiar with the payers’ claim-processing procedures, including:
• The timetables for submitting corrected claims and for filing secondary
claims. The latter is usually a period of time from the date of payment by the
primary payer.
• How to resubmit corrected claims that are denied for missing or incorrect
data. Some payers have online or automated telephone procedures that can
be used to resubmit claims after missing information has been supplied.
• How to handle requests for additional documentation if required by the
Requests for information are answered as quickly as possible. Medical insurance specialists use correct terms to show that they understand what the payer is asking. For example, a payer often questions an office visit (E/M) service that is reported on the same date of service as a procedure or a preventive physical examination on the grounds that the E/M should not be reimbursed separately. For example, saying “Well, the doctor did do both” is less persuasive than saying, “The patient’s presenting problems required both the level of E/M as indicated as well as the reported procedure; note that we attached the modifier–25 to indicate the necessity for this separate service.”

 Related Resources:
 2. "Insurance & Billing Workbook" , MD/Win Corporation, (2003).

This provider describes just the first five of the forty-two steps that she has to go through to get her claims paid. She can barely hide how pissed off she is, and I don't blame her. She's at the point that many providers reach in which they feel that "these health insurance companies have jacked us around long enough." The rest of the steps can be viewed here.
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