REIMBURSEMENTREIMBURSEMENT FOLLOW-UPFOLLOW-UP AND AND COLLECTIONSCOLLECTIONS

Chapter 7

Chapter 7 2

Reimbursement Follow-up Follow-up and Collectionsand Collections

Learning Objectives DescribeDescribe the claim determination processclaim determination process used by

health plans. FollowFollow five steps five steps to process reimbursementto process reimbursement advices

(RAs) from health plans. DiscussDiscuss common reasons reasons for and appeals of reduced for and appeals of reduced

or denied paymentsor denied payments. Describe Describe the patient billingpatient billing and collections process.collections process. HandleHandle patients’ inquiriespatients’ inquiries about insurance and

billing problems.

Chapter 7 3

Key Terms Accounts receivable Adjustments Appeal Determination Downcoding Electronic funds

transfer (EFT) Insurance aging report

Patient aging report Patient ledger Patient statement Preexisting condition Uncollectible account

Chapter 7 4

Health Plan Claim Processing

Medical Insurance Specialist Prepare & Transmit clean claims clean claims that will be

paid in full and on time Claims that payer pay late, decide not to paydecide not to pay, or

pay at a reduced level pay at a reduced level have a negative effect on “account receivable”, “account receivable”, (the practice’s cash flow)

The Medical Insurance Specialist must understand the process that payerpayer follow to examine claims and determine paymentsexamine claims and determine payments

Chapter 16 5

Chapter 7 6

ClaimProcessing

Payer receives complete claim Claims department determines:

1. Whether benefits benefits are due as per patient’s policy

2. Whether services services provided were medically necessary

Occasionally, additional clinical clinical informationinformation is requested

Chapter 7 7

PaymentDetermination Payer decides to

1. PayPay the claim

2. DenyDeny the claim

3. ReduceReduce the payment for the claim

Chapter 7 8

Reduced Payments

Carriers will reduce payment when: The procedure procedure does not link correctly to the

diagnosis DocumentationDocumentation fails to support the level of

service claimed

Chapter 7 9

Denied Payments Carriers will deny payment when:

The claim is not for a covered benefitcovered benefit Patient’s preexisting conditionpreexisting condition is not covered Patient’s coveragecoverage has been cancelled

In these instances, patient is billed

Chapter 7 10

Overdue Claims Claims must be monitored until payments are

received. Follow-up period for most offices is 7-14 days 7-14 days after claims

are transmitted. To avoid late payment late payment the medical Insurance Specialist

regularly review the insurance the “Aging Report”. “Aging Report”. Aging Report – A report that shows the time span

between issuing an invoice issuing an invoice and receiving payment; receiving payment; used in medical office to determine late payments and collect them.

Chapter 7 11

Overdue Claims Insurance aging reportaging report

Shows the ages of unpaid claims HIPAA Transaction

Claim status inquiry is used to follow up with payers electronically

Most offices follow up 7-14 days7-14 days after claim is transmitted

Chapter 7 12

Processing theRemittance Advice (RA)(RA)

RARA is usually received electronically. Sent by the payerpayer to the medical officemedical office summarizes the determinations for a number of claims. RA RA lists the following:

Claim control numberPatient’s nameDates of ServiceChargesHow payment amount is determined

Chapter 7 13

Five Steps Five Steps forProcessing RAs

Step 1Step 1 Match Match claim control number, patient’s namepatient’s name, date of servicedate of service with payer’s paymentspayer’s payments

Step 2Step 2 CheckCheck patient data, plan,patient data, plan, proceduresprocedures against claim

Step 3Step 3 CompareCompare each payment payment with expected amountStep 4Step 4 ReadRead carrier’s explanations for unpaid, reduced,

or denied claims; decide if resubmission or decide if resubmission or appeal is warrantedappeal is warranted

Step 5Step 5 DetermineDetermine any write-offswrite-offs (adjustments) and note balance due from patient

Chapter 7 14

Appeals

Written request asking carrier to review asking carrier to review reimbursement on a claimreimbursement on a claim

Usually filed when: Physician did not filedid not file for preauthorizationpreauthorization in a timely

manner Physician thinks payment receivedpayment received is inadequate Physician disagrees with the carrier’s preexisting disagrees with the carrier’s preexisting

condition decisioncondition decision Patient has unusual circumstancesunusual circumstances affecting treatment

Chapter 7 15

Other Options

If appeal is denied Physician may request peer review

Objective, unbiased group of physicians determines what payment is adequate for services provided.

State Insurance Commissioners Regulatory agency; serves as liaison Physician, patient or carrier may appeal

Chapter 7 16

Patient Billing Patient usually pays at time of pays at time of

serviceservice if physician has not accepted assignment

Medical billing program used to create walkout receiptwalkout receipt for patient Summarizes patient’s services,services, charges,charges,

payments for that visit Patient pays copaymentpays copayment only if

physician has accepted assignment

Chapter 7 17

Patient Billing (cont’d)

Patient Statements Usually created and mailed monthly Medical billing software used to create bills

Billing Statements Show: Dates of serviceDates of service and services providedservices provided PaymentsPayments from patient and insurance carrierinsurance carrier Balance dueBalance due

Chapter 7 18

Collections The collection process begins with effective

communication with patients about their responsibility to pay for services

Patient aging reportaging report shows which patients have overdue balances A reminder is usually sent at 30 days30 days More stringent collection letters sent subsequently Small claims courtSmall claims court or collection agenciescollection agencies

Chapter 7 19

Uncollectible Accounts No payment has been made after the

collection process has been exhausted It would be more costly to continue the

collection process Amount owed is written offwritten off

Chapter 7 20

Complaints and Problems

Medical insurance specialist acts as go-between with patients and health plans To help answer patient inquiries, ask if patient

has: Contacted the health plan Spoken with the service representative Reviewed the policy

Chapter 7 21

Complaints and Problems (cont’d)

If the patient has already contacted the health plan: Medical insurance specialist may contact the health

plan again to get a detailed explanation Volunteer to explain to patient

Speak slowly and calmly; use simple language Explain more than once, if necessary Ask questions to be sure patient understands explanation Use respect and care

Chapter 7 22

Quiz

False, collections are begun after the bill is more than 30 days overdue.

False, RAs are usually received electronically.

RAs are usually received on paper. (T/F)

An appeal is a formal method of asking for reconsideration of a denied claim. (T/F)

Collections are done on current bills. (T/F)

True, the appeal is done in writing.

Chapter 7 23

Critical Thinking What is the importance of prompt

collection?

Collection directly affects cash flow. Slow payments by health plans or patients may cause delays in the practice’s ability to meet the financial responsibilities of running a business.