Investigate Claim Denials

In order to recover the appropriate payment for services provided by hospitalists, the following must occur:

  • The billing provider renders service fully, or jointly with a resident under the teaching physician guidelines or nonphysician provider under the shared/split billing rules;
  • The service is completely and accurately documented in the medical record;
  • The correct information is entered on the claim form that is submitted to the payor; and
  • The service is determined to be a covered benefit and eligible for payment.

Claims frequently are rejected or denied. Even more frequently, the physician or billing staff does not understand the reason for the denial. The typical reaction to claim denial is twofold: “appeal with paper” and “write off.” In other words, send a copy of the physician notes to the payor and consider the claim unsuccessful and payment unable to be obtained.

Examining and understanding the payor’s initial claim determination might prompt a more successful response. Presuming the patient demographics are entered without error, the insurance information is correct, the patient is eligible for coverage, and all precertifications and authorizations were obtained, check for these other common errors.

Denials for “medical necessity” are not always what they seem. Individuals often assume that the physician reported an incorrect diagnosis code. Consider the service/procedure code when trying to formulate a response to the denial.

Medical Necessity

Denials for “medical necessity” are not always what they seem. Individuals often assume that the physician reported an incorrect diagnosis code. Consider the service/procedure code when trying to formulate a response to the denial. When dealing with procedure codes, it is likely the denial is received for a mismatched diagnosis.

For example, a payor might deny a claim for cardiopulmonary resuscitation (92950) that is associated with a diagnosis code of congestive heart failure (428.0), despite this being the underlying condition that prompted the decline in the patient’s condition. The payor might only accept “cardiac arrest” (427.5) as the diagnosis for cardiopulmonary resuscitation because it was the direct reason for the procedure. After you ensure that the documentation supports the diagnosis, the claim should be resubmitted with the corrected diagnosis code.

If the “medical necessity” denial involves a covered evaluation and management (E/M) visit, it is less likely that the diagnosis code is the issue. When dealing with Medicare in particular, this type of denial likely is the result of a failure to respond to a prepayment request for documentation. Medicare issues prepayment requests for documentation for the following inpatient CPT codes: 99255, 99254, 99233, 99232, 99223, 99239, and 99292. If the documentation isn’t provided to the Medicare review department within the designated time frame, the claim is automatically denied. The reason for denial is cited as “not deemed a medical necessity.” Some providers misunderstand this remittance remark and assume that the physician assigned an incorrect diagnosis code. Although that might be true, it probably is due to a failure to respond to the prepayment documentation request. Appealing these claims requires the submission of documentation to the Medicare appeals department. Once the supporting documentation is reviewed, reimbursement is granted.

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