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Claims adjustments—not the contractual adjustments when billed fees are over the payer’s allowable, but claim adjustments when an entire service is disallowed—are a primary concern for all providers. Just because you receive a payer denial for a service, don’t take this as the final word on your medical claim.

Physicians provide services to their patients expecting in good faith to receive compensation. If a payer processes a claim and advises the services to be adjusted, the provider will not receive payment as expected. These types of adjustments pose a special challenge to the billing staff. Usually the challenge can be met by providing the payer additional information to overturn their denial decision.

The most commonly seen denials are discussed here, as well as tactics for dealing with them.

• Claim included in the allowable of another service – In other words, the service was bundled. These denials should be handed over to the coders of the practice. Was the service bundled with another procedure billed during the same operative session? Or, was it bundled in a previous surgery that was performed 89 days ago? Were necessary modifiers omitted? If so, append appropriately, and resubmit as a “corrected” claim to the payer. It is essential to know and understand global periods and National Correct Coding Initiative (NCCI) edits when working bundling denials.

• Not medically necessary - The physician orders tests that he feels are necessary to diagnose the patient’s condition. Rarely, will he order something that is not medically necessary! CO50 (not medically necessary) denials usually occur because we failed to include all of the necessary diagnoses on the claim. Before this charge is adjusted off, be sure to completely research the documentation to see if a diagnosis mentioned was omitted from the claim.

For example, a Medicare patient is given an injection of Botox in his vocal cords by an otolaryngologist for a diagnosis of dysphagia. Medicare denies the Botox as not medically necessary. Botox is very expensive, so an extensive research was begun in the patient record. It was found that the patient had cancer of the laryngx, and that Medicare covers the Botox injection for this diagnosis. The physician was notified that the patient’s cancer condition must be mentioned in the chart documentation when the Botox is administered.

• Service not covered - Cosmetic procedures are never covered. Weight loss plans are never covered. If we bill these services to the insurance company, and receive the denial that the service is not covered, don’t adjust them off. These services must be billed to the patient.

Medicare also has some services that are never covered. These are denied on the EOB with ANSI code PR-49. “PR” means patient responsible. Medicare is telling us to bill the patient. We don’t have to write these off. When we adjust, the services that were provided are basically given “free of charge” to the patient!

• No prior authorization - Confer with your local hospital business office where the test/procedure was performed. They should be your #1 resource. They may have obtained a prior authorization number. The claim can be re-filed with this number in the appropriate field on the CMS 1500 form.

Some payers do approve retro-authorizations. Always call and ask. Don’t assume that they will not consider a retro-authorization. There may be extenuating circumstances that, when fully explained to the payer, may result in the claim being paid. For example, patients may be visiting friends ninety miles away from home and become ill, and are not able to drive back home to see their network provider. Payers will make exceptions, but they need to see the whole picture.

• Timely filing – Know the timely filing periods of your most common payers. The filing period could be as short as 90 days or up to 365 days. Timely filing denials are commonly seen when corrected claims are filed. For example, a denial is received and it is placed in a “Denials To Work” pile. A month later, this denial is now being touched, and research shows that a code needs correction. The account is updated and claim is resubmitted; however, the claim submission date is now 95 days from the actual date of service. A payer with a 90-day timely filing period will deny this claim for timely filing. When filing a corrected claim, always include the payer’s previous claim number that was issued on the denial. This previously issued claim number tells the payer immediately that this corrected claim was initially filed timely.

The month of January can wreak havoc on timely filing denials. As happens with all creatures of habit, having to change from 2010 to 2011 takes a while. This not only happens with our checkbook, but also for billers who forget to enter the new year when keying charges. Consequently, January 2011 charges may be entered as January 2010. This means that the payer will be receiving our initial claim submission as being one year old. This claim will be denied as timely! Appropriate research should uncover the problem.

Very rarely should there ever be a denial for timely filing. Nearly all provider offices file claims electronically. Electronic clearinghouses provide daily reports called “Claims Acknowledgements.” These are reports that list each and every claim that came through their portal. This report should be stored chronologically and kept where it is easily accessible. These reports can provide proof to payers that a claim was submitted to them in a timely fashion.

• Duplicate – These denials are seen quite often. They could be a result of an actual duplicate—a charge entered twice—but it could be something such as a bilateral procedure billed on two lines where the payer incorrectly processed the second line as a duplicate.

Was it a date of service issue? Sometimes subsequent hospital visits are keyed using the same date instead of consecutive dates. Always check to see if a keying error caused the duplicate denial.

Lastly, if after researching the patient account and not finding any evidence that payment was received or deductible applied, call the payer. Find out when the payment was issued. Did it clear the bank? Who was the check made out to, and to what address did they send the check? It could very well be a processing error by the payer that one phone call from the provider’s office can clear up.

These types of denials are all typically communication issues. By communicating the right information to the payer, claim denials can be overturned. If you find during your research that nothing further can be done, and that you must adjust the service, turn it into a learning experience. Everyone involved should be made aware—the physician, nurse, and the coder or biller—so that this never happens again. Remember, taking the adjustment should always be the last resort.

About the Author: Wendy Grant, CPC, is the Accounts Receivable Manager for a large hospital/physician system with 34 years of experience in the physician side of health care.