It’s a punitive healthcare environment these days.
One where the Centers for Medicare & Medicaid Services (CMS) holds the purse strings until it has had a chance to review and decide which claims pass the litmus test of being “medically necessary.”
If the claim passes all automated edits, this process takes days. If it is a more complex review, it can take months.
That makes for tricky math for health care providers. All that time while CMS is evaluating the claim is time that the hospital (including everyone who provided care to that patient) waits to get paid.
Sometimes, that waiting period ends in the form of a Medicare claim reimbursement check.
Other times? The waiting period ends in the form of what no hospital wants to receive, but what many often find themselves facing – a denied Medicare claim.
A denied Medicare claim is CMS formally saying to health care providers, “We do not believe this procedure was medically necessary and we are not going to pay it.”
What recourse does this leave hospitals? According to Ingram Haley, Chief Financial Officer for the Alabama Hospital Association, the choices, while clear-cut, can be costly and time consuming.
“As a health care provider, you have a choice,” Haley said. “You can either spend the money to adjudicate the claim yourself or you can walk away and know you just gave free care to somebody.”
Haley said the first option requires significant capital reserves and promises no swift resolution.
“You start by initiating an appeal process with the Medicare Administrative Contractor (MAC),” he said. “At best, you are looking at resolution within a month, but more often than not, it can take anywhere from six months to a year.”
If not resolved at the MAC level, the appeal is elevated to reconsideration with a Qualified Independent Contractor (QIC). If not resolved there, the appeal is elevated to the third level, where it is presented to an administrative law judge located within CMS.
“Right now the average wait to add your appeal to the queue and receive a case number is about two years,” said Haley. “You then enter another queue to receive a court date.”
From initial appeal to case resolution, health care providers can expect to spend up to three years adjudicating a single denied claim.
“It’s one thing if you are talking about one $2,000 claim, but over time, these can really add up,” Haley said.
In addition to the burden this places on the hospital’s financial system, there is another punitive issue with which the hospital must contend.
“The other impact is that each time a claim is denied, CMS uses that information to establish error rates for the hospital that submitted the denied claim,” said Haley. “Once a hospital is flagged as having a higher error rate, that hospital is subject to more frequent and more intense audits.”
While it’s a valid argument that much is lost in interpretation between the health care providers, the MACs and CMS – the party that ultimately controls the flow of reimbursement dollars – Haley cautions against calling out flaws in the process.
“It’s an exercise in futility,” he said. “Advocacy types can scream and shout, providing criticism through numerous avenues. But even if it’s legitimate, you reach the point where you are just making noise and those in a position to change the situation become numb to it.”
For Haley, who worked with the Virginia Hospital Association for three-and-a-half years before moving to the Alabama Hospital Association, the most effective strategy is a one-two punch. And it starts well before a Medicare claim even has a chance to be denied – before it even exists.
“The higher up you move into the federal court system, the more fact based the appeals process becomes,” he said. “If you don’t have the necessary information in your medical records to defend your billing decision and your claim, you’ve got no case.”
Health care providers that are serious about defending their audited claims should be prepared to do this from the start. “It begins when physicians are making rounds and checking on patients,” said Haley. “That is the time to make sure everything is properly recorded and documented. You don’t do it in reverse after you’ve been audited.”
For its part, the Alabama Hospital Association has helped ease this burden for many of its members.
For hospitals with totally separate departments for the respective areas of billing/coding and appeals/claims adjudication, taking steps as simple as putting these staff members in the same unit led to a reduction in denied claims.
“They are all dealing with the same pieces of paper,” said Haley. “It’s a relatively painless transition for the hospital to make, and a move that has yielded measurable improvement for several of our members.”
When denied claims result despite these internal procedures, the Association can become an additional tool in the hospital’s defense arsenal.
“We are right there with our other hospital association peers across the country, working to help our members transition smoothly and profitably to healthcare post-ACA,” said Haley. “But it’s like most other things. Our effectiveness is greatly enhanced if we have a strong relationship with the MAC over our region. When there is trust and they know we are coming to them with a legitimate problem, they are more likely to help us than if we’re complaining about something that will waste their time or not be fruitful.”