Documentation is key to appealing denied claims
What happens when a service that was thought to not need authorization, or was in fact preauthorized, is then denied? Depending on the reason for denial, there are options for providers seeking reimbursement for services. It is my experience that providers who systematically document their communications with payers stand the greatest chance of success.
The procedure was preauthorized. Why was the claim denied?
The premise of managed care is that the health plan reimburses covered services rendered to its members that are medically necessary, and that sometimes pre-authorization may be required. To be eligible for payment, a claim must meet all of the applicable conditions outlined in the Summary Plan Description of the health plan policy. If it turns out that the health plan does not cover a service, then indeed the patient may be liable for the charges.
Still, if the provider and patient reasonably relied on the assertions of coverage prior to rendering the disputed treatment, then the health plan may be held responsible for payment of the claim. For example, a surgeon who has received authorization for a procedure (say, a gastric bypass surgery) then discovers mid-surgery that an additional or alternate procedure is needed to treat the patient (such as a hiatal hernia repair). The CPT codes will either be added, or could change if there is a deviation from the previously anticipated surgery.
In another scenario, the payer may come back and state after the fact that a service or procedure is actually a “non-covered service.” I have seen this happen when a patient is covered by a self-insured, commercial HMO sponsored by the private employer, such as a corporation. The insurance company, in this case, acting as a Third Party Administrator (or Administrative Service Organization), processed the claim consistent with the Summary Plan Description documents approved by patient’s sponsoring employer.
Can the patient be billed for the denied claim?
Can the provider simply bill the patient? In theory, yes, since the claim is for a non-covered service, then the patient may be responsible. But it may still be possible to hold the health plan responsible if the provider has the proper documentation.
Filing a claim with the health plan is an event with contractual consequences. In revenue cycle management, this triggering event is billing: The provider has asserted that it is seeking payment from the health plan under the plan’s coverage terms with the patient-member. The act of billing the payer often precludes “balance billing” the patient for the entire amount under the terms of his provider services agreement. Normally, this provision applies to claims for a service that was not preauthorized or else deemed by the plan as being not medically necessary.
In other cases, such as certain denials for non-covered services, billing the patient is not only appropriate, but may ultimately yield the most effective results. The patient is put into the role of an aggrieved party, and thus has much more leverage and authority against the health plan than does the provider. The patient should be advised to notify her employer’s human resources department, which request that they investigate the matter and query why the health plan issued an authorization number for a service that is ultimately excluded from coverage.
If the patient is still deemed responsible for payment, she (but not the provider) also has the right to appeal the finding to the U.S. Department of Labor. The patient may also complain directly to the health plan, and likewise request that the state regulatory agency open an investigation. (In some cases, the provider may also appeal directly to the state administrative agency to help with the appeal.)
Be proactive. Document. Document. Document.
Regardless of the scenario that led to the denial, documentation is critical to pursuing an appeal. If the plan misrepresented benefits or incorrectly authorized a service, then it falls upon the provider to provide written details. For that reason, in each and every instance, communications between providers and payers must be documented. Essential details include the date and time of the call, the name and phone number of the representative and, importantly, the health plan’s reference number for that call. The provider should not only have every query documented by the health plan’s representative, but retain the same information for his own records. That way, should an investigation be made, the data between provider and health plan will match.
As in all cases of unpaid claims, providers stand a stronger chance to prevail when they keep detailed records documenting conversations, emails, letters, faxes (with transmittal confirmation sheets!), and other communications with the health plan. As a best practice, documentation may be burdensome but is key to fighting these denials.
Gustavo Matheus is a member of Anderson & Quinn, LLC, in Rockville, Maryland, representing hospitals, medical practices, nursing homes, and outpatient centers with exceptional legal and denials management services. www.andersonquinn.com.
