Keeping the Power On: Tracing Problems that Can Trigger Coverage Denials

Coverage Denials

Nov 26, 2018

Dan Low
Vice President of Operations
Healthcare Financial Resources, LLC

Insurance coverage issues that result in denials are a bit like electrical problems: If there is a faulty link or bad connection between the patient and payer, the circuit is broken, a denial is sparked and power — in this case, cashflow — is interrupted.

That’s why it is important to trace the provider-payer “wiring” early on to ensure a clean claim and proper reimbursement for services rendered. Let’s troubleshoot several common types of coverage denials:

Registration issues

Providers depend on front-end registration staff for patient scheduling, check-in and payment. In many instances, registration personnel have access to real-time insurance eligibility software that uses the patient’s insurance number to confirm whether coverage is in place. Although these systems provide direct connections to insurance company databases and generally are from 75-90% accurate, staff too often fail to use the applications properly or even use them at all. Reasons vary:

  • They may not trust the system’s results
  • They may be under pressure due to productivity quotas and simply scan the insurance card without checking eligibility
  • They may assume verification will be done later

It’s true that registration personnel are frequently overworked and underpaid, and the daily flow of patients can be relentless. But that’s all the more reason for hospitals and physician offices to develop processes that systematically flag rejections and provide staff with an opportunity to resolve them, either before the patient arrives or before service is provided.

Simply put, hospitals need to focus on accuracy, slow the process down if necessary, and create an environment that allows front-end personnel to be as effective as possible in achieving coverage verification. This may require an increased outlay of time and resources, but it’s an investment that will more than pay off in reduced registration-related denials.

Coverage discrepancies and overlap

A frequent problem for many hospitals involves denials triggered by confusion over which payer is responsible for reimbursement. This often happens with patients covered through Medicare Advantage policies or similar Medicaid managed care products. The provider may be unaware of the replacement policy and bill original Medicare or Medicaid directly, only to be informed days later that another policy should have been billed first.

Similarly, a patient may have Medicare Part A coverage for inpatient services but lack Part B benefits for outpatient services. Yet the hospital assumes Part B coverage is in place and bills an outpatient claim, which inevitably is denied.

A third common coverage discrepancy problem involves billing a secondary insurance company, such as an AARP supplemental policy, without including an explanation of benefits (EOB) from the primary carrier. This will usually result in a delay or denial, since the secondary will want to see the primary EOB to make sure the secondary is contractually obligated to pay.

Coordination of benefit issues also can arise due to uncertainty surrounding worker’s compensation, auto or personal injury coverage. In these instances, resolution typically involves carefully tracing the policy guidelines as well as the nature of the illness or injury to determine which coverage is most appropriate.

Coordinating benefits between primary and secondary insurers likewise can be complex when a dependent is covered under both parents and the birthday rule applies.

Comprehensive denial identification and resolution

As with all insurance coverage issues, the cost of denials and potential write-offs is high. It’s therefore essential that hospitals take the time to ensure procedures are in place to help staff quickly and consistently sort out primary and secondary payer responsibilities.

Healthcare Financial Resources (HFRI), a leader in accounts receivable recovery and resolution, has focused on the challenge of hospital denials for nearly 20 years. From this effort, we’ve developed a powerful approach that relies on a combination of robotic process automation (RPA), intelligent automation and staff specialization to streamline and accelerate the resolution process.

Equally important, our root cause analysis enables us to identify core issues like those examined here and recommend process improvements to help prevent denied claims on the front end of the revenue cycle. For more information about how HFRI can help you, contact us today.

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