The Art of Appeals: Don't Give Up Too quickly When a Payer Denies Your Claim

In the first part of this two-part series, we told you how to reduce the chances that payers would deny your claims. This month, you'll learn what you can do when, despite your best efforts, they refuse them anyway.

When claims come back denied, many people just sigh and write it off, or drop it in a desk drawer intending to deal with it later. "Don't do this," says Elizabeth Woodcock, president of the consulting firm Woodcock and Associates. "With a little effort you can get many refusals reversed, but payers do have timelines. You have to act promptly." Initial filing and appeals deadlines vary considerably from payer to payer, so be sure you know the deadlines of the payers you work with.

"The first round in the denials game is not that big a deal," explains Debbie Parrish, of Parrish Law Offices, a firm specializing in obtaining and protecting reimbursement for health care systems, physicians, and laboratories. "It's just computers talking to computers. The claim comes back denied and you resubmit." If the denial was due to incorrect coding, or some other mistake—such as inaccurate insurance information for the patient—you fix that and send it back through. But if the coding was accurate and the documentation supports the claim, you still have options. You can file an appeal. "The process varies from payer to payer, but if you feel they should have paid, with most private payers you can ask for a peer review, which means that other providers in the same specialty will review the claim," explains Tammie Olson of Management Resource Group, a firm offering financial management and support services for the health care community.

At this stage, it is important to gather all your documentation to support your claim, including, if necessary, a written statement from the physician who ordered the tests. You want to make as strong a case as you can, because for private payers, this is the last level of appeal, your last chance to get the decision reversed. With Medicare, it gets a lot more complicated, and you have several more levels of appeal, but, Parrish warns, you won't be able to use any evidence later if you don't submit it at the first level of appeals. For Medicare that first level involves having the claim evaluated by different people than those who made the initial determination.

The Medicare Ladder
If you are appealing a Medicare claim, then at the second level of appeal your claim will be reviewed by a Qualified Independent Contractor. Sometimes, says Parrish, the QIC will deny a claim on a totally different basis than the original denial. In that case, you get to submit new support. Eventually in the Medicare appeals process (it has five stages), you'll get a hearing in federal district court, but your goal, says Parrish is to "win on paper."

Winning, of course, whether the claim is to Medicare or a private payer, on paper or in court, is a matter of having a good case and making it well. In order to do this, you have to understand exactly why your claim was refused in the first place. This is easier than it used to be. "Lots of people don't know this, but there is a standard code set for denials," says Woodcock. "It used to be that each payer had a different coding system for denials, but HIPAA requires everyone to use the same code set now. It's called CARC (Claims Adjustment Reason Codes) and is published by Washington Publishing Company. CARC codes are available online." This will help when you're trying to figure out why your claim was returned and what you need to do to get it through next time.

It may not seem like it's worth the time or expense to appeal denied claims, and only you can decide when it is and is not a good strategy for your lab. However, if you understand the process and have a routine for dealing with appeals, the money you make may well make up for the time spent going for it.

Takeaway: Denied claims are not a dead end. Understanding the appeal process and gathering all relevant documentation and information to support your claim can yield positive results.