Physiatry Practice Management Resources

The media tells one story after another of patients who were either denied insurance for a life-saving treatment or received the approval too late. While these stories may be true, they represent only a small portion of insurance-claim outcomes, industry experts say.

In reality, they point out, when faced with a claim denial, a physician can usually facilitate a fair and timely appeals process by following the rules, having a cooperative attitude, taking the time to document everything and utilizing regulatory information.

The first step is "selective contracting," says William J. DeMarco, president of DeMarco and Associates, a healthcare consulting firm in Rockford, Ill. Before signing a contract, he advises physicians to investigate the plan fully. "How many complaints, on an ongoing basis, does this plan have against it, and how many of those complaints have been ruled in favor of the plan as opposed to the patient?" he asks. You can find this information through the state insurance commissioner, he adds.

Responding to a Denial

Once a claim is denied, the appeals process for most physicians begins with a phone call-usually made by a member of the physician's staff-to the health plan responsible for the denial. The purpose of the call is possibly to clear up any simple misunderstandings or errors, sometimes avoiding a formal appeal, or simply to gain a better understanding of the reason that the claim has been denied.

Because this initial phone call may preclude a lengthy appeal process, a staff member should not only be familiar with the plan's claims procedure, but also have a good rapport with the person who handles claims at that plan. "If you can build a good working relationship with that person, it's probably going to benefit you and you might want to go directly to that person every time," says Tammy Tipton, president of Appeals Solutions in Lewisville, Tex., a company that assists physicians in processing appeals.

Having experienced little difficulty with claims, Dr. Bruce Bagley, a family physician in Albany, N.Y., and president-elect of the American Academy of Family Physicians, is satisfied that his staff maintains a good working relationship with health plans, and files claims correctly and on time. "I have an army of people doing things like looking at claims and referrals," says Dr. Bagley, who deals with only three or four health plans. "We have very little trouble getting things done for patients."

In fact, when experiencing a significant denial rate, the first thing a physician should look at is his or her staff, according to Barry S. Scheur, president of the Scheur Managing Group in Newton, Mass. Many physicians and their staffs fail to follow the rules of each particular plan, he says, adding, "That means the staff needs better training." For example, physicians can send their office manager to meet with the claims department of the health plan where they're having trouble, he suggests.

If a denial stands after the initial phone call, a physician or staff member should have a clear understanding of the reason for the denial, then decide whether or not to file an appeal. One of the greatest mistakes physicians make, says Ms. Tipton, is not pursuing more appeals.

"Generally, they do not realize that almost every claim can be appealed," she explains. "Typically, physicians understand that they might want to appeal medical-necessity denials because they've got a very definite opinion on that and can readily write a letter citing the medical reasons for the continuing need for the level of care. But they might want to consider other types of denial."

Stressing the financial consequences of appealing only some types of claim denials, she says: "Physicians are now beginning to understand how important it is to really take a close look at their accounts receivable to see what effect denials are having on their bottom line." She urges physicians to pursue less clinically oriented claims, such as those denied for pre-existing conditions or not filing within the appropriate time period. Although they do not individually represent the same financial loss, they can add up.

Once a physician or a staff member decides to challenge the denied claim, a letter of appeal must be written. It is important to review and include all relevant documentation. Physicians and their staff need to pay close attention what they did, how they received authorization, whether the number of visits was authorized, whether the number of hospital days was authorized and any other questions they can answer through documentation, says Mr. Scheur.

Documentation is especially important in situations where there is a suspected diagnosis of a potentially life-threatening disease, says Mr. DeMarco. "The physician should document this everywhere they can-in the medical chart as well as in a letter to the medical director and a letter to an appeals board, saying, 'This person needs to have this approval as soon as possible. We need to know yes or no.'"

Persistence Pays Off

In conjunction with documentation, the most important tool a physician can utilize when preparing an appeal letter is regulatory information, says Ms. Tipton, including state and Federal insurance laws and regulations. "That's really the key to writing an effective appeal letter-citing some regulatory information to support your argument for payment," she explains.

In preparing an appeal letter for a client, Appeal Solutions, Ms. Tipton's company, investigates and provides the relevant regulatory information. But this information is available to everyone. You can find a reference for regulatory information, or the information itself, at your state's department of insurance, Ms. Tipton says.

The appeals process does not usually end when you mail your first letter of appeal. "Often we find that unless your case is really solid, it takes a number of appeal letters to get something overturned," Ms. Tipton says. "You will find that you have a more successful appeals program the more persistent you are." She suggests following up with a phone call a few weeks after sending any and all letters to make sure the process is still in motion.

The medical director, or assistant medical director, typically does not get involved in the first round of appeals. However, says Ms. Tipton, "if you aren't able to successfully overturn the denial with the initial appeal letter, you can certainly call up the carrier and find out the name of the medical director and direct your next appeal to that person."

Especially when a claim involves more complex clinical information, says Dr. Bagley, "it behooves a doctor to talk to the medical director so it's physician-to-physician." In that situation, he adds, "I've had very little trouble getting something done."

External Reviews

Some states have mandated that health plans add an external-review process to their appeals procedure, and physicians should be aware of whether or not this is the case in their state. If you have not been able to get a denial overturned with the carrier, and you have the option, says Ms. Tipton, "you may want to specifically request an external appeal on it."

Because it is likely external reviews will eventually be mandatory everywhere, some plans, such as UnitedHealth Group, have created an external review program even though they are not yet required to do so. Again, each plan's external appeals process differs slightly, but UnitedHealth provides a good example.

The goal of UnitedHealth's external review procedure is to gain an additional, expert and objective judgment on an appeal that has already been rejected by the plan's internal review board. Independent review organizations are used, and independent physician reviewers with expertise appropriate for the area in question conduct the external appeal.

"In 99 percent of the cases, the internal-review process works well for both parties," says Dr. Lee N. Newcomer, senior vice president of UnitedHealth Group. Hopefully, the external review will settle any additional concerns over coverage decisions, thereby avoiding the unnecessary cost and lengthy delays involved in litigation, he explains.

Beyond an external review, a physician can file a complaint with the state department of insurance. And there have been certain situations where providers have successfully brought suit against health plans for denying claims, says Ms. Tipton, but that has to be decided on a case-by-case basis, and involves retaining a lawyer.

Ultimately, having a cooperative attitude is paramount in dealing with health-plan claim denials, says Dr. Bagley. "Not only the individual physicians, but also medical societies and large groups have had an adversarial approach to insurance companies," he explains. "Some of it is warranted, of course, but I think the only way we're going to get anywhere is to have a cooperative relationship or partnership."

Written by: Megan J. Rieder