LEVEL II HCPCS CODES (ALPHA-‐NUMERIC)
CORE DOMAIN 2G: DENIALS AND MANAGEMENT
2G-‐1 TRACK AND REVIEW DENIED CLAIMS
One of the most salient tasks of any hospital auditor is to track and maintains a database of claims that either requires a corrective action of a denial. With the advent of contingency-‐based audits by the
Federal Government, facilities depend upon a prompt, efficient and accurate response. Many facilities and external auditors have created databases using Microsoft Office ™ products such as Excel and Access. Additionally, there are more formalized tracking systems such as those offered by Craneware Insights or the American Hospital Association RacTrack™ system. In any case, the volume of denials has become a daunting management concern for external, internal and third party auditors.
Tracking should ensure that each stage of the denial and appeal process is well documented and
“ticklers” created to ensure that all timely filing deadlines are met. One of the most difficult tasks for all types of auditors is processing the required information in a timely fashion. The internal auditor must work with HIM, Business Office / Patient Financial Services as well as clinical staff to assemble the requested information in order to appeal a denied claim. The external or third party auditor must ensure that all required information has been assembled, documented as received and date stamped as the claim in question is in dispute and records of receipt must be maintained. Whether you are internal, external, third party or governmental auditor the record maintenance is paramount and some sort of tracking software will be necessary to ensure successful review of the claim from any angle.
INTERNAL AUDIT PERSPECTIVE:
From a hospital perspective, denied claims represent a true disruption of cash flow and resources. Therefore, when the facility receives a denial letter they must respond in a deliberate and efficient fashion. Some suggested steps in tracking the denial could include:
1. Date and time stamp receipt of denial letter
2. Scan denial letter into an electronic database or begin a numbered file folder system 3. Determine what records will be required and if clinical input / coding input will be required 4. Notify HIM/ Medical Records to copy (or scan) the documents into an electronic database or
place hardcopy records into folder
5. Obtain any necessary input such as physician query, HIM recoding of documents, copies of submitted claims and ensure that the electronic database or file folder is complete
6. Have physician / clinician and HIM / Medical records review the case and make necessary coding changes / physician notes
7. Have second person review all the records prior to submission to ensure completeness of response
8. Include any medical community standards and research you wish to provide
9. Include a very succinct appeal letter that will be capable of surviving and contributing to a successful appeal at any appeal level
10. Submit the records either electronically (CD, DVD) or in hardcopy ensuring that a complete copy of the submitted records are maintained on site
11. Submit records using a “certified” system such as certified mail, UPS, FedEx or other tracking mechanism documenting receipt by the receiving party.
12. Maintain a “tickler” within the record to designate important dates. a. Date of expected decision on appeal
b. Date of resubmission for a higher level of appeal c. Final outcome
The facility can use either an internally created database or proprietary database for tracking. The result should be the same – accurate tracking of the denial status and outcome and any feedback from the payer or government authority (ALJ) as to why the claim had an adverse or successful outcome. Outcomes can be improved based on this type of feedback therefore outcome data mining should be one of the mandatory requirements of any software or internal “home grown” product that is utilized. EXTERNAL / THIRD PARTY AUDIT PERSPECTIVE:
The external / third party audit approach will be quite similar to the internal auditors approach. They will need to log and collate records and review these records based on criteria and timelines. A defined database will need to be created demonstrating key milestones and deliverables. A potential scheme might resemble the following:
1. Review records
2. Obtain copies or pertinent ancillary information 3. Utilise an systematic review process
4. Ensure deadlines are met
5. Maintain copies of all records, findings and responses 6. Utilise appropriate clinical review to ensure accuracy
7. Maintain records as required by either IRS retention regulations or internal corporate regulations whichever is longer.
No matter what the approach (internal, external, governmental or third party) the audit’s success will be dependent upon a flexible yet articulate software tracking system. This system must serve as a resource to manage and data mine the audits and ensure timely submission / receipts of paperwork. The
outcome data mining will be essential to overall improving the appeal process if used by an internal auditor.
2G-‐2 WRITE APPEAL LETTERS
Writing appeal letters is becoming a more demanding responsibility of the internal auditor. Appeal letters must be succinct and provide all the necessary information to the payer or government payor (including MAC, MIC, RAC etc…) to ensure the best possible chance of overturning the denial. Appeals must be constructed from the first response to include all information needed to overturn the denial. Write to win!. Nationally, most facilities are not being as aggressive as they should be to confront denials and appeal those capable of appealing. There are many reasons for this lack of appeal such as resource constraint; appeal will be less reimbursement than the monies required to mount an appeal or sheer volume of denials.
There are a couple differences between a government appeal and a commercial appeal. For example, the Medicare Fee-‐For-‐Service model has five distinct levels of appeal whereas the state Medicaid may differ based on state laws. Additionally if the appeal is to a commercial payor or third party
administrator different steps may be required. Therefore, the very first step in any appeal letter is to know whom you are appealing to and what the requirements of that payer are. Make sure that filing deadlines are met, as the most complete appeal will be rejected if the filing deadlines are not met. In writing appeals, it would benefit the auditor to create “scorecards” which are index cards or excel spreadsheets of the payor, the filing requirements, submission address and any other component of the payors required scheme. This will ensure that all requirements are easily accessible and met by the auditor writing the appeal.
The five levels of appeals for Medicare would be:
• First Level of Appeal: Redetermination by a Medicare carrier, fiscal intermediary (FI), or Medicare Administrative Contractor (MAC).
• Second Level of Appeal: Reconsideration by a Qualified Independent Contractor (QIC)
• Third Level of Appeal: Hearing by an Administrative Law Judge (ALJ) in the Office of Medicare Hearings and Appeals
• Fourth Level of Appeal: Review by the Medicare Appeals Council • Fifth Level of Appeal: Judicial Review in Federal District Court
In writing an appeal letter, Ms. Karen Bowden of Craneware Insights provides guidance. 105 In her article on writing a Medicare RAC appeal she states several characteristics that should be included in a
successful appeal letter. Some of these are:
• Recap the denial. Include pertinent information such as the date of the letter, the patient identifying criteria, the stated cause of the denial. Any element that would assist the RAC in identifying the denial and applying this response to it.
• “State clearly your disagreement with the findings”. Provide any argument and research that would support your stance that the claim should not have been denied
• Make sure you reference the relevant sections of the medical record that might have been overlooked or misinterpreted leading to the original denial. Discuss these sections and their pertinence to ensure that the denial is overturned.
• Provide any guidelines utilised in creating the original claims such as community standards and Interqual / Milliman or other criteria.
• If the “appeal relates to a coding concern provide all necessary coding documentation.”106
105 http://www.cranewareinsight.com/RAC/How%20to%20Write%20a%20RAC%20Audit%20Appeal%20Letter.pdf 106 http://www.cranewareinsight.com/RAC/How%20to%20Write%20a%20RAC%20Audit%20Appeal%20Letter.pdf
While the above mentioned article is proprietary the Office of Insurance Commission for Washington has an section of their website dedicated to appeals and appeal letters.
• http://www.insurance.wa.gov/consumers/health/appeal/4-‐4-‐Tips-‐Good-‐Appeal-‐Letter.shtml The Insurance Commission has the following recommendations in creating an appeal letter.
• “Identifying information about you, your plan, and the claim (or treatment) that the plan denied. If possible, include a photocopy of your insurance card with your appeal.
• If you’re writing on behalf of someone else as his or her authorized representative, be sure to include your contact information and establish your legal right to act as a representative. • A clear statement to identify the decision(s) you’re appealing.
• A description of where you are in the appeals process.
• A clear statement of what you hope to achieve with the appeal.
• A sincere statement of why you’re appealing the decision. Customize this part of the letter to your situation. Be sure to include all relevant facts, and any persuasive details.
• A description of any supporting information you’ve included for the review board to take into consideration
• A table of contents, if you have included more than a couple documents, to tell the reader where he or she can find specific items.
• A courteous, closing statement after stating your case, and indicate that you look forward to
hearing their decision.”107
As the above examples have provided the actual recipient of the letter will dictate the format and content. Some governmental payors, such as Medicare, require a submission form to accompany the appeal letter others such as the commercial payors require that the denial be identified utilising their criteria. No matter the recipient a key component will be the articulate identification of the claim and denial reason in question. The remainder of the letter should provide concrete evidence (based on authoritative guidance or contract requirements) as to why the appeal should be successful. Including research, identifying portions of the medical record speaking to your point and physician documentation is key. Finally, if an appeal is successful or unsuccessful keep fastidious record of why the outcome occurred. Reviewing outcomes can lead to improved success in future appeals.
2G-‐3 PARTICIPATE IN DENIAL AND APPEAL DISCUSSION AND FOLLOW-‐UPS
In order to be effective in denial and appeals, data and data mining is a growing requirement. Effective denial management involves business decisions. For example, a potential case would cost $1500.00 to appeal but its total worth is $10,000. The actual business decision is to set forth a policy as to when to pursue appeals / denials and when to close out. Therefore, prior to beginning discussions and follow-‐ ups the denials must be separated into those that will be pursued and those that will not due to
business decision. In much the same fashion, business policies must be set forth as to when to contact and retain legal counsel to assist with the appeals process.
With the advent of RAC’s participating in denials and appeal process is becoming a specialty within the hospital setting. RACs continually increase the number of claims they pull every 45 days and it takes concerted efforts by all parties to track, manage and successfully appeal any denials. Auditors, case managers, physician advisors are just a few of the personnel required to adequately manage and successfully appeal a denial.
The following is a rudimentary listing of steps the auditor should be involved with to successfully create and manage and appeal.
• Log receipt of denial
o Include date of denial o Reason for Denial o Patient demographics o Claim demographics o Date appeal required
o Physician involved in original case
• Review the medical record for any information relevant to the appeal
• Research the community medical standard as the evidence based medicine response to the denial
• Develop the appeal letter with a very precise opening statement then attach details to support your response
• Copy appeal including all supporting documentation
• Send to payor by certified mail, log the date sent, address and certified mail tracking number • Follow up to see status of appeal.
The auditor’s participation in appeals and denials is essential. According to FierceHealthcare, the appeal success rate is greater than 75%.
“Hospitals reported $355 million in denied claims between the first quarter of 2010 and the third quarter of 2011, according to the quarterly RACTrac survey from the American Hospital
Association (AHA). However, hospitals appealed nearly one-‐third of those Medicare Recovery Audit Contractors (RAC) denials and saw 77 percent overturned. The value of the successful appeals totalled $27.2 million nationwide, the survey notes.”108
Appeals will be come a growing requirement of the auditor and the revenue cycle / revenue integrity team within hospitals and providers. Auditors should be aware of both how to defend a claim through appeal or if a government auditor how to defend the original denial.
2G-‐4 CONDUCT ADJUSTMENTS AND PAYMENTS
Adjustments and payments are the end result of the audit, the appeal, the negotiated settlement, or payer policy. In order to conduct an adjustment there is usually a reference to a contractual position that allows the payor or the provider to gain an adjustment. The auditor should maintain the whole record including the audit, the agreed upon adjustments and the final payments along with any supporting documentation. This step is rather perfunctory step for the auditor.
Part of the adjustment process however, may include calculations such as “stoploss” calculations or simple accounting of the debits / credits of the particular claim. The adjusted claim would be the “net amount” reimbursement that after audit has been corrected for under / overpayments.
2G-‐5 RECOMMEND BUSINESS PROCESS RULES
According to Wikipedia business process is dependent upon rules. “A business rule is a statement that defines or constrains some aspect of the business and always resolves to either true or false. Business rules are intended to assert business structure or to control or influence the behaviour of the business.[1] Business rules describe the operations, definitions and constraints that apply to an organization.
Business rules can apply to people, processes, corporate behaviour and computing systems in an organization, and are put in place to help the organization achieve its goals.”109
As auditors, we identify flaws within a process that result in an adverse outcome to the business or we confirm that the process is working as designed. To begin, the auditor must diagram or be educated in the actual process in place at the time. Key steps are then audited to “test” whether they meet the criteria as designed or there are flaws. The auditor will document the results of the “test” and then provide specific recommendations to either alter the process or actions to be taken to bring the process back into alignment with design.
This part of the auditing process is also known as a “feedback loop”. This part of the auditing process allows the auditor to draw upon their expertise to provide objective actions that will impact the business process in either a new or corrective fashion. In other words, assert control or influence the behaviour of the process.