AMA Report Finds Inaccurate Claims Reach Crisis Level —
Here’s What You Can Do
A recent article in American Medical News confirms what physicians have known for years: claims processing errors and inaccuracies have reached near catastrophic proportions.
The American Medical Association’s Fourth Annual National Health Insurer Report Card reports such errors waste billions of dollars each year. Those dollars translate into lost income for the practice as well as lost opportunities for reinvestment, professional growth and a focus on better patient care.
To minimize the impact of inaccurate claims, physicians need to understand the factors contributing to the situation, but more importantly, what they can do to combat the problem and ensure more accurate and timely reimbursement.
The Startling Statistics
Commercial health insurers have an average claims-processing error rate of 19.3%, an increase of 2% compared to last year. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year. Errors add an estimated $1.5 billion in unnecessary administrative costs to the health system. The AMA estimates that eliminating health insurer claim payment errors would save the industry $17 billion.
American Medical News – 4th Annual Health Insurer Report Card, June 2011
You Don’t Know What You Don’t Know
One of the more startling statistics reported in the AMA survey was that, “physicians received no payment at all from commercial health insurers on nearly 23% of claims they submitted.” The reasons for lack of payment of claims stem from a wide range of factors including:
- Patient has not met deductible. This is often cited as one of the most common reasons for claims denials. It’s a simple matter, and happens almost daily, yet costs practice additional dollars to fix.
- Patient not covered by insurer. Another common error is when a patient presents the wrong insurance card. Often, it’s for a common oversight, perhaps the patient’s employer may have simply switched insurers or the patient is using an older card. Occasionally, fraud is involved.
- Lack of pre-authorization. More insurers are requiring pre-auth for certain services. The AMA survey notes that requests for first-time pre-auth have increased by 20% over the past few years. Again, it’s a simple fix, but adds to administrative costs and delays in reimbursement.
- Claims associated with bundled services denied. When a patient presents for one illness such as cold or flu, but during the course of the examination that patient or physician identifies another need resulting in a separate service at the same visit insurers will often automatically deny the claim.
- Physicians note that often they are not at fault for the kickback on claims. Even when a coder uses the applicable modifier on the primary procedure to ensure the secondary procedure is paid; insurers are still denying the claim.
- Denials of claims within global service period. Most insurers have a 90-day global period for high-dollar claims, such as those associated with surgeries. As an example, if a patient has rotator cuff surgery, but then comes to visit the physician for a knee injury, often the insurers will deny the claim. And again, practices report that denials frequently occur even when the proper codes and modifiers are used.
Since the onset of initiatives to ensure more prompt payment of claims, it appears that some insurers are finding other ways to delay reimbursements, adding further to administrative costs for providers and creating additional challenges for revenue cycle management. As another example of delays and administrative hurdles physicians must over come, over the past few years, physicians are reporting a marked increase in insurers’ requests for medical records. As a result, often claims that should have been paid in 30 days takes 60 to 90 with manual intervention.
The ripple effects of inaccuracies, coupled with inconsistent adjudication rules often forces medical providers to write off unnecessary lost revenue. One key area to consider is the inability to develop predictive forecasting. Without this data, a practice has no way of accurately predicting claims payment and no way to develop accurate financial plans. In short, if you don’t know what claims are owed the practice, how do you know how to budget? How can you plan for new staff, investments, expansion, etc.?
The Game of Cat and Mouse
At times physician efforts to ensure prompt and accurate claims payment may seem like a game of cat and mouse. However, physicians can take several steps to minimize the problem. They should:
- Get it right the first time. Minimize material risk and develop a sound set of policies and procedures to ensure staff meticulously codes, checks insurer guidelines for pre-authorization and takes other steps to ensure a clean claim submission. Know each insurer’s policies backward and forward. Practice management technology combined with consulting can help develop effective procedures and ensure accurate submissions.
- Conduct pre-appointment or pre-service analysis. Determining a patient’s insurance eligibility and copays prior to the appointment allows for fees to be collected at the point of service, provides time to check on required pre-auth and allows the practice to alert patients of their liability (so no surprises for them).
- Train staff, including physicians, and give them the tools, technology and education to code properly. Noting the complicated processes for submitting claims, many practices are simply opting to hire trained coders or outsource coding entirely. If that’s not an option, learn what programs and seminars are available for your staff. That, combined with top practice management systems, can further ensure accurate claims submissions.
- Conduct a claims audit to ensure contract compliance. Most practices assume that insurers are reimbursing within contract guidelines. A claims audit could indicate problems and can better ensure contract compliance. In addition, practice management software provides the ability to delineate reimbursement detail from the system and compare the flat billed allowable rate against contract and actual payment to identify and correct any discrepancies.
- Create and implement sound tracking procedures for payment integrity. Remember that you can’t manage what you don’t measure. Develop plans to track and trend revenue to gauge your performance based on measurable financial targets. The Medical Group Management Association and American Medical Association provide research to help establish target baselines. This data can help identify inaccuracies as compared to similar practices.
- Chase down those dollars. The AMA notes that it costs $25 to resubmit a single claim, multiplied by the hundreds of claims that require resubmission and that adds more to the revenue practices loss each year. That may lead some practices to simply not resubmit on smaller balances. However, practice management consultants recommend practices chase down every dollar they are entitled to receive. It’s the fair thing to do and could also become a deterrent for some insurers. Staffing and time can be an issue for such tracking, so look for practice management systems that provide the features and functions to support your efforts or enlist the help of a business partner.
The take away advice for any practice today is simple: be proactive, not reactive when it comes to your practice’s financial health.
The challenge to ensure accurate reimbursement will continue. Some insurers are making inroads to reducing claims inaccuracies and should be recognized for their efforts, but physicians will need to remain vigilant.
For more information about the the 2011 National Health Insurer Report Card visit the AMA website at:www.ama-assn.org/go/psa-webinars or check out their white paper for administrative simplification at: http://www.ama-assn.org/go/simplify.
The findings from the 2011 National Health Insurer Report Card are based on a random sampling of approximately 2.4 million electronic claims, representing about 4 million medical services submitted in February and March of 2011 to leading health insurers.
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