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Payments, Appeals, and Secondary Claims - Chapter 13

This chapter discusses the payment process, claim adjudication, remittance advice interpretation, appeal process, and filing secondary claims. Learn how to manage denials and comply with payer requirements.

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Payments, Appeals, and Secondary Claims - Chapter 13

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  1. Payments (RAs), Appeals, and Secondary Claims CHAPTER 13

  2. See the ten-step Revenue Cycle figure (at the beginning of the chapter). • This chapter focuses on the following steps: • Preregister patients • Establish financial responsibility • Check in patients • Review coding compliance • Review billing compliance • Check out patients • Prepare and transmit claims • Monitor payer adjudication • Generate patient statements • Follow up payments and collections Chapter 13: Payments (RAs), Appeals, and Secondary Claims

  3. When you finish this chapter, you should be able to: 13.1 Explain the claim adjudication process. 13.2 Describe the procedures for following up on claims after they are sent to payers. 13.3 Interpret a remittance advice (RA). 13.4 Identify the points that are reviewed on an RA. 13.5 Explain the process for posting payments and managing denials. 13.6 Describe the purpose and general steps of the appeal process. Learning Outcomes (1)

  4. When you finish this chapter, you should be able to: 13.7 Assess how appeals, postpayment audits, and overpayments may affect claim payments. 13.8 Describe the procedures for filing secondary claims. 13.9 Discuss procedures for complying with the Medicare Secondary Payer (MSP) program. Learning Outcomes (2)

  5. Key Terms (1) • aging • appeal • appellant • autoposting • claim adjustment group code • claim adjustment reason code (CARC) • claimant • claim status category code • claim status code • claim turnaround time • concurrent care • determination • development • electronic funds transfer (EFT) • explanation of benefits (EOB) • grievance • HIPAA X12 835 Health Care Payment and Remittance Advice (HIPAA 835)

  6. Key Terms (2) • HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (HIPAA 276/277) • insurance aging report • medical necessity denial • Medicare Outpatient Adjudication (MOA) remark code • Medicare Redetermination Notice (MRN) • Medicare Secondary Payer (MSP) • overpayment • pending • prompt-pay law • reassociation trace number (TRN) • reconciliation • redetermination • remittance advice (RA) • remittance advice remark code (RARC) • suspended

  7. Payers follow five steps in order to adjudicate claims: • Initial processing – payers first perform initial processing checks on claims, rejecting those with missing or clearly incorrect information • Automated review – claims are processed through the payer’s automated medical edits • Manual review – a manual review is done if required (if the automated review system finds errors) • Determination – the payer makes a determination of whether to pay, deny, or reduce the claim • Payment – payment is sent with a remittance advice/explanation of benefits (RA/EOB) 13.1 Claim Adjudication (1)

  8. Concurrent care—medical assistance given to a patient who receives independent care from two or more physicians on the same date Suspended—claim status when the payer is developing the claim Development—process of gathering information to adjudicate a claim Determination—payer’s decision about the benefits due for a claim 13.1 Claim Adjudication (2)

  9. Medical necessity denial—refusal by a plan to pay for a procedure that does not meet its medical necessity criteria Remittance advice (RA)—document describing a payment resulting from a claim adjudication Explanation of benefits (EOB)—document showing a beneficiary how the amount of a benefit was determined HIPAA X12 835 Health Care Payment and Remittance Advice (HIPAA 835)—electronic transaction for payment explanation 13.1 Claim Adjudication (3)

  10. Practices track accounts receivable (A/R)—money owed for services rendered—using a practice management program (PMP) • Medical insurance specialists monitor claims by reviewing the insurance aging report and following up at properly timed intervals based on the payer’s promised turnaround time • Insurance aging report—report grouping unpaid claims transmitted to payers by the length of time they remain due (See Figure 13.1) 13.2 Monitoring Claim Status (1)

  11. Monitoring claims (continued): • Aging—classifying A/R by length of time • How long a payer has had the unpaid claim • Claim turnaround time—time period in which a health plan must process a claim • Prompt-pay law—state law obligating carriers to pay clean claims within a certain time period 13.2 Monitoring Claim Status (2)

  12. The HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (276/277) is used to track the claim progress through the adjudication process • HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (HIPAA 276/277)—standard electronic transaction to obtain information on the status of a claim • The inquiry is the HIPAA 276 • The payer’s response is the HIPAA 277 13.2 Monitoring Claim Status (3)

  13. The HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (276/277) (continued) • Claim status category code—used on a HIPAA 277 to report the status group for a claim • A codes indicate an acknowledgment that the claim has been received • P codes indicate that a claim is pending—claim status when the payer is waiting for information • F codes—indicate that a claim has been finalized • R codes—indicate that a request for more information has been sent • E codes indicate that an error has occurred in transmission; usually these claims need to be resent • Claim status code—Used on a HIPAA 277 to provide a detailed answer to a claim status inquiry (See Table 13.1) 13.2 Monitoring Claim Status (4)

  14. Requests for information • should be answered as quickly as possible • answers should be courteous and complete • Medical insurance specialists use correct terms to show that they understand what the payer is asking 13.2 Monitoring Claim Status (5)

  15. Electronic and paper RA contain the same essential data: • Information about the group of claims in that batch • A heading with payer and provider information • Payment information for each claim, including adjustment codes • Total amounts paid for all claims • A glossary that defines the adjustment codes that appear on the document 13.3 The Remittance Advice (RA) (1)

  16. To explain the determination to the provider, payers use a combination of codes: • Claim adjustment group code (CAGC)—code used on an RA to indicate the general type of reason code for an adjustment • Claim adjustment reason code (CARC)—code used on an RA to explain why a payment does not match the amount billed (see Table 13.2) • Remittance advice remark code (RARC)—code that explains payers’ payment decisions (see Table 13.3) • Medicare Outpatient Adjudication (MOA) remark code—code that explains Medicare payment decisions 13.3 The Remittance Advice (RA) (2)

  17. The unique claim control number reported on the RA is first used to match up claims sent and payments received, and then: • Basic data are checked against the claim • Billed procedures are verified • The payment for each CPT is checked against the expected amount • Adjustment codes are reviewed to locate all unpaid, downcoded, or denied claims • Items are identified for follow-up 13.4 Reviewing RAs

  18. The process for posting payments and managing denials: • Payments are deposited in the practice’s bank account, posted in the practice management program, and applied to patients’ accounts • Rejected claims must be corrected and re-sent • Missed procedures are billed again • Partially paid, denied, or downcoded claims are analyzed and appealed, billed to the patient, or written off 13.5 Procedures for Posting (1)

  19. Types of data entry that are included when payment and adjustment transactions are entered in the PMP • date of deposit • payer name and type • check or EFT number • total payment amount • amount to be applied to each patient’s account, including type of payment 13.5 Procedures for Posting (2)

  20. Electronic funds transfer (EFT)—electronic routing of funds between banks • Autoposting—software feature enabling automatic entry of payments on a remittance advice • Reconciliation—comparison of two numbers • process of verifying that the totals on the RA check out mathematically • Reassociation trace number (TRN)—identifier that is passed from the payer to the payer’s bank, then to the practice’s bank, and finally to the practice 13.5 Procedures for Posting (3)

  21. An appeal process is used to challenge a payer’s decision to deny, reduce, or otherwise downcode a claim • Appeal—request for reconsideration of a claim adjudication • Claimant—person/entity exercising the right to receive benefits • Appellant—one who appeals a claim decision • Each payer has a graduated level of appeals, deadlines for requesting them, and medical review programs to answer them 13.6 Appeals (1)

  22. Medicare participating providers have appeal rights that involve five steps: • Redetermination—first level of Medicare appeal processing • Medicare Redetermination Notice (MRN)—communication of the resolution of a first appeal for Medicare fee-for-service claims (see Figure 13.6) • Reconsideration--claim is reviewed by qualified independent contractors 3. Administrative law judge 4. Medicare appeals council 5. Federal court (judicial) review 13.6 Appeals (2)

  23. Filing an appeal may result in payment of a denied or reduced claim • Postpayment audits are usually used to gather information about treatment outcomes, but they may also be used to find overpayments, which must be refunded to payers • Overpayment—improper or excessive payment resulting from billing errors • Refunds to patients may also be requested • Grievance—complaint against a payer filed with the state insurance commission by a practice 13.7 Postpayment Audits, Refunds, and Grievances

  24. Claims are sent to patient’s additional insurance plans after the primary payer has adjudicated claims • Sometimes, the medical office prepares and sends the claims • In other cases, the primary payer has a coordination of benefits (COB) program that automatically sends the necessary data to secondary payers • If a paper RA is received, CMS-1500 is used to bill the secondary health plan 13.8 Billing Secondary Payers

  25. Medicare Secondary Payer (MSP)—federally mandated program requiring private payers to be primary payers for Medicare beneficiaries’ claims The medical insurance specialist is responsible for identifying situations in which Medicare is the secondary payer and for preparing appropriate primary and secondary claims 13.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments (1)

  26. Under the MSP program, Medicare is the secondary payer in any of these instances: • Patient is covered by an employer group health insurance plan or covered through an employed spouse’s plan • Patient is disabled, under age 65, and covered by an employee group health plan • Services are covered by workers’ compensation insurance • Services are for injuries of an automobile accident • Patient is a veteran choosing to receive services through the Department of Veterans Affairs *end of presentation* 13.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments (2)

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