Most physicians and healthcare administrators believe that healthcare, and particularly the "revenue cycle," are controlled entirely by managed-care companies.
They believe this because these companies are multi-million dollar conglomerates with seemingly endless streams of revenue. In addition, these same companies are the entities that draft the provider-managed care contracts that set reimbursement rates for most practices. Unless a health provider is a huge hospital network, there generally is very little room for negotiation of the terms and rates for such contracts.
While this common belief is understandable, it is simply untrue. The fact is, medical practices and their consumer patients have much more power than the insurance companies when it comes to the claims adjudication process. If the medical practices can learn to harness this power, their claims will be paid quickly and at fair reimbursement rates.
Payers such as managed-care companies, HMOs, PPOs and the like have many state and federal statutory and common-law responsibilities with respect to the adjudication of medical claims. Providers simply do not have these obligations.
Consider that managed-care companies have to comply with the following:
- State Prompt Payment Laws that mandate payment of claims within a set time frame (i.e. Section 3224-a of New York Insurance Law, which requires payment of electronically submitted claims within 30 days of receipt, or 45 days for claims submitted on paper).
- State Prompt Payment Laws that mandate, in writing and with specific reasoning, the denial of claims within a set time frame (i.e. Section 3224-a of New York Insurance Law)
- State Prompt Payment Laws that mandate payment of interest if claims are not paid within statutory time frames (i.e. Section 3224-a of New York Insurance Law, which cites a rate of at least 12 percent interest unless such interest would be less than $2).
- Unfair Claims Settlement Practices acts and statutes that prohibit insurer conduct intended to foster intentional and systematic avoidance of payment of clean claims (i.e. Section 2601 of New York Insurance Law).
- Unfair and Deceptive Trade Practices acts and statutes that prohibit deceptive and unfair advertising and marketing of insurers(i.e. New York Deceptive Trade Practices Laws - General Business Laws Section 349 - 350).
- Federal ERISA laws that are applicable when insurance companies administer self-funded plans (Federal Statute 29 CFR 2560.503-1 sets forth claim and appeal adjudication requirements for self-funded plans).
- The Patient Protection and Affordable Care Act, or PPACA, a new piece of federal legislationregulating, among other things, time limits for insurers responding to appeals.
- Common-Law Responsibilities inherent in every contract, such as the implied duty of good faith and fair dealings.
- Common-Law Responsibilities relating to construction of managed-care agreements, prohibiting vague or ambiguous provisions being interpreted to the benefit of the non-drafter policyholder and healthcare provider and to the detriment of the insurer (see Matter of United Community Ins. Co. v. Mucatel, 69 NY2d 777, 779, aff'd at 127 Misc.2d 1045; Hartol Products Corp. v. Prudential Ins. Co., 290 NY 44, 49).
- Bad Faith, in other words insurer conduct so reckless that it results in severe civil and criminal sanctions against the insurer.
In light of the many obligations of the insurer in the claims adjudication process, it is incumbent upon the healthcare provider and medical practice to understand the law. Once this understanding is achieved, those providers and practices can use it to hold the insurance companies accountable. Knowledge of the law is the power necessary to ensure that claims are paid promptly, with interest if required by state law, and at fair reimbursement rates.
The following are some tips providers and practices can utilize to ensure that medical claims are paid quickly and fairly:
(1) Obtain proof of submission and receipt of claim. If your claims are submitted electronically, your clearinghouse can provide validation reports that will prove delivery and receipt by the payor. If the claims are submitted on paper via a CMS-1500 claim form, there are ways in which proof of submission and receipt can be established. For one thing, in law there is a presumption that a properly addressed document placed in the mail (in the custody of the United States Postal Service or any other recognized mail carrier) is received by the intended recipient. The intended recipient has the burden to prove that the mail was not received. Medical practices should establish a written procedure for the mailing of paper claims and follow that procedure precisely. Use of one staffer or a mail room to accomplish this is the preferred method. Paper claims also can be mailed in bulk via certified mail, return receipt requested, and documented on a mail ledger to prove mailing of claims to an insurer. The returned receipt is the required proof of delivery to the insurer.
(2) Check applicable prompt-payment laws and managed-care agreements. It is important to know with certainty the time frames in which the insurer must pay claims, deny claims and/or request additional information to adjudicate a claim.
(3) Attack time frames before the merits of a denial. Before appealing a claim on the merits, determine if the statutory and contractual time frame requirements were satisfied by the insurer. For example, was the claim denied within 30 days of receipt? Was the payment made within 45 days? If not, was interest included in the payment? Was the denial set forth in writing and in plain language? Was the specific reason for the denial detailed? Were the insured and provider offered an opportunity to appeal and given appeal submission instruction?
(4) Appeal on the merits. Make sure you provide a written explanation in the form of a first-level appeal or grievance indicating the reasons the denial is believed to be unfair and wrongful. Remind the insurer of its good-faith obligations under the Unfair Claims Settlement Practices Act, your state's prompt-payment law and managed-care agreements. Attach supporting documentation, including factual affidavits, medical records, photographs and CPT Code explanations as needed. Make sure the appeal is sent to the appeals and grievances department, which may have a different address than where claims submissions are sent. And always ensure that appeals are made prior to submission deadlines set forth in the managed-care agreement.
(5) Consider second-level appeals. Don't worry if your first-level appeal is denied. Instead, first determine whether the appeal was sent within time frames set by applicable state and federal laws or the managed-care agreement. Many claims denied at the first level of appeal are paid after a second-level appeal is filed, so make sure to consider this as an option. Be mindful that states have different laws for medical necessity and cosmetic denials. For example, New York affords an immediate right to an appeal review by an external appeals agent after denial of a first-level appeal for medical necessity or experiment reasons (see Title I & II of Article 49 of the New York Insurance Law and Title I & II of Article 49 of the New York Public Health Law).
(6) Utilize state insurance department complaint procedures. Violations of state insurance laws are investigated by the commissioner of insurance for the applicable state. Self-funded plans administered by insurance companies are governed by ERISA under the oversight of the U.S. Department of Labor. A consumer or a healthcare provider may file a complaint with the regulatory authority when it is believed that an insurer (or an administrator of a self-funded plan) violated a law relating to claims adjudication, such as a prompt-payment law. These regulators usually are very helpful in resolving issues with insurers, and most complaint forms are readily available for filing online.
(7) Utilize small-claims lawsuits (less than $5,000). Most states have courts that permit lawsuits against commercial entities like insurance companies. Most of these courts permit lawsuits brought by non-lawyers in which alleged damages are less than $5,000. The cost for filing these lawsuits is usually nominal, often less than $35, and the complaints are usually simplified.
(8) Ensure assignment of benefits forms. Make sure your AOBs include authorization from the patient, permitting the medical practice or its representatives to file appeals against their health insurers for denied claims.
(9) Collect patient e-mail addresses. Patients often respond to text messages and e-mails better than traditionally mailed letters and phone calls. Obtaining patient e-mail addresses and cell phone numbers for text messages is an easy and cost-effective way to communicate with patients, and it's especially useful when collecting on deductibles, coinsurance or non-covered services. The patient will have to sign a short consent form to receive communications by e-mail and text. In doing this you could save a significant amount of money on postage, and self-pay responsibility should be easier to ensure.
In summary, it is imperative that medical practices, healthcare providers and revenue recycle administrators familiarize themselves with the various laws and other responsibilities of managed-care organizations. Then hold these payers accountable to the law.
Remember, the power is with you....
About the Author
Thomas J. Force, Esq. is a nationally recognized expert in revenue collection techniques, managed-care contracting and appeal strategies. He is the founder, president and chairman of the board of The Patriot Group in New York. As a state- and federally licensed attorney in both New Jersey and New York, Mr. Force has more than 21 years of experience in the healthcare and insurance industries. His success as a Wall Street insurance litigator and his tenure as general counsel for a New York-based accident and health insurance company where he served as chief compliance officer propelled the founding of The Patriot Group. He is co-founder of the Healthcare Reimbursement Attorneys Network, a national association of attorneys who represent physicians and hospital clients. Mr. Force also works closely with the American Medical Association and various state medical associations.
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