7 Reasons for Claim Denials in Surgery Centers — and How to Fix the Problem

Denied claims slow reimbursements endanger profitability and are a window into the integrity of the processes and workflow of surgery centers. Here, Bill Gilbert and Brice Voithofer of AdvantEdge Healthcare Solutions discuss seven reasons for claim denials in surgery centers, as well as proven strategies to address and hopefully reduce the  frequency of problems caused by denied claims.

1. Missing information on the claim. Mr. Gilbert and Mr. Voithofer say missing information on the claim is one of the biggest reasons for denied claims, according to published reports by the health insurance industry. For the most part, these denials are completely avoidable. Payors that receive claims with incomplete information will generally reject them automatically, they say, which is why surgery center staff must be trained to catch omissions. The sophisticated claims adjudication systems deployed by payors are much more advanced than they were five years ago, and in many cases, the software deployed by centers has not caught up.

"Studies show that if you had that information on the claim upfront, the vast majority of those claims would not be denied," Mr. Voithofer says. Missing information could include the group tax ID number and the group address and constitutes the most common cause of "administrative denials," they say. Administrative denials, for the most part, are self-inflicted issues which should be avoided.

2. Inaccurate information on the patient. Mr. Voithofer says claims are commonly denied due to inaccurate patient information, such as subscriber ID number, date of birth or date of injury. He recommends a staff member call the patient ahead of time and confirm all personal information. He says this can help avoid errors that occur when a patient unexpectedly switches their insurance plan. "I scheduled a surgery six months down the road once, and when it went over into the new year, I had a new insurance plan," he says. "They never thought of calling me to ask if I had new insurance."  In this case, an ounce of prevention is worth a pound of cure. A simple call that takes up three minutes of staff time can help avoid costly denial management on the back end.

He says this phone call is also a good time to talk to patients about their financial responsibility. Many patients do not understand how their insurance works, and they may need to be reminded that they owe a co-pay or deductible. "The more you make the patient aware of their financial obligations on the front end, the easier it'll be to collect on the back end," he says.

3. Untrained front desk staff. Mr. Gilbert and Mr. Voithofer say they frequently see centers where front desk and phone staff don't understand the importance of collecting accurate patient information. "They may not have an appreciation for how important it really is," Mr. Gilbert says. "At some level, everyone knows it has some importance downstream, but they're never involved in the billing process or in the work of resolving a preventable denial."

He says the surgery center administrator should educate the front desk personnel about the life cycle of a claim, perhaps giving them a chance to shadow the back office. Once they understand how their actions affect the day-to-day work of the back office manager, they may be more conscientious about tracking down patient information. He says in some cases, the front desk manager may not even know he or she has to collect this information. If your surgery center staffs different desk staff on different days of the week, he recommends looking at denial rates by day to determine where the problem areas lie.

4. Inexperienced coding staff. Your surgery center should be using a certified coder to code your claims, Mr. Voithofer says. "Inexperienced coders often default to codes they use a lot without digging down to find the right code," he says. "This can not only be a denial risk costing the center time and money, but also a compliance risk, which could cost the center substantial fines and licensure exposure." If a physician provides poor documentation, the coder may decide to "fill in the blanks" without consulting the physician, which can lead to problems if they guess incorrectly. Mr. Voithofer recommends hiring an experienced certified coder and performing audits on a semi-regular basis to determine whether procedures are being coded correctly. Filling in the blanks or assuming what the surgeons "intend" should never be part of your coders daily process. The record needs to stand on its own, and the coders action's should not be additive to the medical record.

5. Poor physician documentation. Coders will find it difficult to code a procedure if the physician provides inaccurate or sloppy documentation, Mr. Gilbert says. While you shouldn't accuse your physicians of providing poor documentation, you should sit down with them and go over 10 recent case studies to point out any problems. "Education with doctors should focus on 10 real cases they've done and where they're deficient," he says. "You might say, 'We had to downcode this because you missed a level, or we couldn't code the procedure at all because this information was missing.'"

He says his company keeps a document that they share with each physician group on a regular basis. The document tracks incomplete claims by patient, by location and by surgeon and lists the documentation needed to file the claim. Over time, this document helps to keep track of which physicians need additional education.  Physicians generally want to do the right thing when it comes to documentation and are receptive to information that helps them document more accurately, increases revenue and decreases costs.

6. Problem with the payor's system.
If your surgery center is receiving a lot of denials from the same payor and you can't identify the cause, there may be a problem with the payor's system. "If we have enough data to support a trend, we speak with the payor to say, 'Hey, there's something wrong with your system,'" Mr. Voithofer says. "Their system is the same as any other, where the edits are electronic and humans touch fewer than 5 percent of claims. We need to isolate the error, because they're not going to spend the time and effort to correct an error they are not aware of." For example, he says the payor may have an incorrect ICD-9 CPT code crosswalk or may be using the wrong error rates to kick claims to medical review.

7. Missing documentation attached to the claim. Payors may require additional documentation, such as the operative note or implant invoice, attached to the claim. Mr. Gilbert and Mr. Voithofer say this can be a stalling tactic by payors to avoid paying the claim.

To avoid receiving continual requests for additional documentation, they recommend sitting down with the payor and laying out which documents are needed to get the claim paid. "Otherwise the payor will request medical records for one claim, and then an op note for another, and then something else for another," Mr. Voithofer says. "It's essential to sit down with them and say, 'What do you really need to process this claim in a timely manner?"

Learn more about AdvantEdge Healthcare Solutions.

Related Articles on Coding, Billing and Collections:
HHS Issues $100,000 Fine to Small Phoenix Practice, Warning to Physicians
California Surgery Center Lawsuit Highlights Conflicting Viewpoints on Out-of-Network Care
Massachusetts Rate Increases Stay Below 2% for Second Consecutive Quarter

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