1. CHAPTER © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14 Payments (RAs/EOBs), Appeals, and Secondary Claims

2. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. Learning Outcomes When you finish this chapter, you will be able to: 14.1 Describe the steps payers follow to adjudicate claims. 14.2 Describe the procedures for following up on claims after they are sent to payers. 14.3 Identify the types of codes and other information contained on an RA/EOB. 14.4 List the points that are reviewed on an RA/EOB. 14.5 Explain the process for posting payments and managing denials. 14.6 Describe the purpose and general steps of the appeal process. 14-2

3. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. Learning Outcomes (Continued) When you finish this chapter, you will be able to: 14.7 Discuss how appeals, postpayment audits, and overpayments may affect claim payments. 14.8 Describe the procedures for filing secondary claims. 14.9 Discuss procedures for complying with the Medicare Secondary Payer (MSP) program. 14-3

4. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms aging appeal appellant autoposting claim adjustment group code (CAGC) claim adjustment reason code (CARC) claimant claim status category codes claim status codes 14-4 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)

5. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms (Continued) HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (HIPAA 276/277) insurance aging report medical necessity denial Medicare Outpatient Adjudication (MOA) remark codes Medicare Redetermination Notice (MRN) 14-5 Medicare Secondary Payer (MSP) overpayments pending prompt-pay laws RA/EOB reconciliation redetermination remittance advice (RA) remittance advice remark code (RARC) suspended

6. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.1 Claim Adjudication 14-6 Payers follow five steps in order to adjudicate claims: 1.Initial processing – payers first perform initial processing checks on claims, rejecting those with missing or clearly incorrect information 2.Automated review – claims are processed through the payer’s automated medical edits 3.Manual review – a manual review is done if required 4.Determination – the payer makes a determination of whether to pay, deny, or reduce the claim 5.Payment – payment is sent with a remittance advice/explanation of benefits (RA/EOB)

7. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.1 Claim Adjudication (Continued) 14-7 Concurrent care—situation in which a patient 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

8. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.1 Claim Adjudication (Continued) 14-8 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 how the amount of a benefit was determined

9. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.1 Claim Adjudication (Continued) 14-9 RA/EOB—document detailing the results of claim adjudication and payment HIPAA X12 835 Health Care Payment and Remittance Advice (HIPAA 835)—electronic transaction for payment explanation

10. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.2 Monitoring Claim Status 14-10 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 –Prompt-pay laws—states’ laws obligating carriers to pay clean claims within a certain time period

11. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.2 Monitoring Claim Status (Continued) 14-11 Monitoring claims (continued): –Aging—classification of accounts receivable by length of time –Claim turnaround time—time period in which a health plan must process a claim

12. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.2 Monitoring Claim Status (Continued) 14-12 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—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. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.2 Monitoring Claim Status (Continued) 14-13 The HIPAA X12 276/277 Health Care Claim Status Inquiry/Response (276/277) (continued) –Claim status category codes—used on a HIPAA 277 to report the status group for a claim –Pending—claim status when the payer is waiting for information –Claim status codes—Used on a HIPAA 277 to provide a detailed answer to a claim status inquiry

14. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.3 The Remittance Advice/Explanation of Benefits (RA/EOB) 14-14 Electronic and paper RAs/EOBs contain the same essential data: –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

15. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.3 The Remittance Advice/Explanation of Benefits (RA/EOB) (Continued) 14-15 To explain the determination to the provider, payers use a combination of codes: –Claim adjustment group codes (CAGC)—used on an RA/EOB to indicate the general type of reason code for an adjustment –Claim adjustment reason codes (CARC)—used on an RA/EOB to explain why a payment does not match the amount billed –Remittance advice remark codes (RARC)—explain payers’ payment decisions –Medicare Outpatient Adjudication remark codes (MOA)—explain Medicare payment decisions

16. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.4 Reviewing RAs/EOBs 14-16 The unique claim control number reported on the RA/EOB 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

17. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.5 Procedures for Posting 14-17 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

18. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.5 Procedures for Posting (Continued) 14-18 Electronic funds transfer (EFT)—electronic routing of funds between banks Autoposting—software feature enabling automatic entry of payments on a remittance advice Reconciliation—process of verifying that the totals on the RA/EOB check out mathematically

19. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.6 Appeals 14-19 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

20. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.6 Appeals (Continued) 14-20 Medicare participating providers have appeal rights, that involve five steps: 1.Redetermination—first level of Medicare appeal processing –Medicare Redetermination Notice (MRN)— resolution of a first appeal for Medicare fee-for- service claims 2.Reconsideration 3.Administrative law judge 4.Medicare appeals council 5.Federal court (judicial review)

21. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.7 Postpayment Audits, Refunds, and Grievances 14-21 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 –Overpayments—improper or excessive payments 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

22. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.8 Billing Secondary Payers 14-22 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/EOB is received, the CMS-1500 is used to bill the secondary health plan

23. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments 14-23 Medicare Secondary Payer (MSP)—federal law requiring private payers to be the primary payers for Medicare beneficiaries’ claims The medical insurance specialist is responsible for identifying the situations in which Medicare is the secondary payer and for preparing appropriate primary and secondary claims

24. © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 14.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments (Cont.) 14-24 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 is covered through an employed spouse’s plan –Patient is disabled, under age sixty-five, and covered by an employee group health plan –Services are covered by workers’ compensation insurance –Services are for injuries in an automobile accident –Patient is a veteran who chooses to receive services through the Department of Veterans Affairs