Part 3: Billing, Collecting, Appeals, and Related Tasks

Chris Madden, MD; James G. Macintyre, MD, MPE; Elizabeth Joy, MD

THE PHYSICIAN AND SPORTSMEDICINE - VOL 33 - NO. 7 - JULY 2005

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In Brief: Knowledge about proper coding in sports medicine will not benefit a physician or his or her practice if bills submitted to insurance companies are not regularly monitored and analyzed for trends. Physicians can help ensure successful collections by understanding the dynamics of reimbursement, enlisting the efforts of office colleagues, and facilitating patient involvement when appropriate.

This is the third article in a three-part series about economics issues encountered in a sports medicine practice. The authors are not certified coding experts, and the articles are not meant to serve as a definitive guide to billing and coding in sports medicine, but rather to provide insight into this poorly understood and complex area of medicine that can make or break a practice. The first article, on coding basics, appeared in May, and the second, on advanced sports medicine coding, appeared in June.

A physician who has mastered coding will still lose money without an efficient billing and collection system in place. An analogy for this situation is that of a medical student who studies hard, passes all tests with flying colors, and then skips graduation or never formally applies for medical licensure. If you go to the trouble of learning how to code accurately, make sure you pay attention to what happens once the numbers leave your hand and become lost behind the paper curtain of the insurance companies. Billing and successfully collecting are clearly two different entities.

About 70% of claims are processed and paid on the first submission, while 30% are unprocessed or returned unpaid.¹ These estimates do not include bundling, in which an insurance company inappropriately combines two or more current procedural terminology evaluation and management (CPT E/M) codes and substitutes one overarching code.² Of course, data vary among insurance companies and geographic regions. When physicians and professional nonphysician coders identify bundling, denials, and omission of appropriate modifiers, they should aggressively pursue the appeals process.

Insurance companies follow two main sets of rules: reimbursement rules and coding rules (ie, CPT). Reimbursement rules are individually determined by each insurance company and may vary. To muddy the waters further, each insurance company seems to interpret CPT codes in its own way and chooses which CPT rules to follow.³

Billing and Collections

Billing and collections are complex and sensitive. Billing correctly for physician services and timely collection of patient and insurance balances is challenging, even for intelligent and dedicated office staff. Furthermore, these difficult tasks need to be carried out without violating office policies and practice philosophy. It is important to have clearly defined policies and procedures for reimbursement management, and physicians should stay proactively involved.^1,4

Successful billing starts at the front desk.⁴ It is imperative that employees verify current demographic and insurance information at each patient visit. Office staff cannot successfully charge patients if they do not know where or to whom to send the bill. Staffers need to be aware of deductibles and co-payments to collect successfully. Co-payments and outstanding balances for each patient should be reviewed the day prior to his or her appointment. Collect co-payments before office visits, if possible, and accept various modes of payment. Attempt to avoid the expense of rebilling, especially for small fees (eg, $10 to $15). Take-home statements will save postage costs.

Every office should appoint a billing and collections expert or managed care specialist who is knowledgeable about coding fundamentals such as CPT, CPT modifiers, resource-based relative value scale (RBRVS), and the global surgical package.⁴ A team approach involving the office's front-desk staff, billing and coding expert(s), and physicians will likely be the most effective.³ Physicians in larger practices or academic settings tend to be less involved. A proactive approach may be facilitated by practice software that tracks accounts receivable, adjustments, and outstanding accounts.

A good billing and collections expert has a sound knowledge of individual insurance contracts (especially the explanation of benefits [EOB] component), is aware of and stays on top of problematic payers, performs or oversees daily claims filing, uses electronic billing when possible, performs monthly claims checks, monitors filing deadlines, and follows unpaid and incorrectly paid claims. The expert also drives and monitors the appeals and collections process.

Patient collections begin after an insurance company has paid its portion or when the patient does not have coverage.⁴ Patient billing requires clear policies and communications between patients, staff, and physicians. A written financial policy that defines collection practices and expectations is recommended.⁴ Submitting unpaid claims to a collections agency should occur only after all reasonable attempts at collection have been exhausted. Physicians may want to review bills before they are submitted for collections to help avoid inappropriate oversights.

Bundling and Denial

Physicians' top three insurance-related complaints are denial of a modifier (especially -25), bundling of services, and late payments.⁵ Bundling often involves ignored and omitted modifiers. Bundling and denial red flags are listed in table 1.² Class action lawsuits alleging that insurance companies have improperly reduced or denied reimbursements to physicians are starting to emerge. Some large insurance companies are currently offering financial settlements or have already settled with physicians.^1,6,7

TABLE 1. Red Flags for Bundling and Denials* Payment for this service is included in the fee for the procedure Submitted charges were redistributed for a more accurate benefit The procedure submitted on your claim has been changed to one that better represents the service performed by your physician The service is a component of a primary procedure Payment for the primary procedure includes reimbursement for the related procedure Payment for one or more billed procedure codes has been denied because it is considered a component of this billed procedure code Medical visit not allowed for separate reimbursement Related changes rolled up into primary procedure per HIPAA regulations *These statements are often used by insurers to explain an unpaid or reduced claim.2 HIPAA = Health Insurance Portability and Accountability Act

Some insurance companies have software programs with coding pattern-recognition capabilities, and it seems that, at least with certain insurers, the programs speak the language "deny and bundle."^2,8 Although it can be frustrating, physicians and office staff should try to approach problematic situations in a firm, positive, and objective manner.

Appeals

One of the most overlooked areas in billing and collections is appeals. Timely follow-up of unpaid claims and the appeal of incorrectly paid claims lead to more profitable insurance collections.⁴ Make sure your practice has an efficient plan to address claim denials, because delays cost money. Focus appeals efforts by tracking and reviewing problematic billing patterns and past appeals that have led to repeated denials.⁹ Figure out what works and what does not, and fight only battles that are worth fighting (eg, high-dollar disputes, practice-volume–driven problems). If you are not tracking, you cannot appeal, and if you cannot appeal, you will not detect reimbursement problems. Physicians will likely win most appeals if they are appropriate (eg, the appeal does not violate the EOB), but many physicians do not appeal inappropriate reimbursement.

A suggested appeals log is shown in figure 1. A log allows a systematic and comprehensive approach to appeals and tracks important information, such as the date a claim was refused or unpaid for 60 to 90 days, the reason a claim was refused or altered, and when initial calls were placed to review the EOB and establish contact with a claims manager. Other important dates to include are when a claim correction form or escalation letter is submitted (ideally, 30 days into the appeals process), and the final reporting to appropriate authorities, such as the American Medical Association (AMA), county or state medical societies, and appropriate legal authorities if the insurance company is involved in a class action or other lawsuit.^2,6,7 The AMA's health plan complaint form is available online at http://www.ama-assn.org/ama/noindex/category/11149.htm.

1. Date claim refused:
2. Reason claim refused (red flags):
Check(s)	Reason (often bundled, downcoded, or denied inappropriately by claims software)
	Payment for this service is included in the fee for the procedure
	Submitted charges were redistributed for a more accurate benefit
	The procedure submitted on your claim has been changed to one that better represents the service performed by your physician
	The service is a component of a primary procedure; payment for the primary procedure includes reimbursement for the related procedure
	Payment for one or more billed procedure codes has been denied because it is considered a component of this billed procedure code
	Medical visit not allowed for separate reimbursement
	Related changes rolled up into primary procedure for HIPAA regulations
	Other:
3. Call insurance company or local IPA if available and review EOB. 4. Complete AAFP's claim correction form if claim is inaccurate. 5. Call insurance company and speak with its claims manager. State: "Physician performed service in good faith, and claim should be paid in 30-45 days, will track and call if not appropriately addressed." (Second communication could state: "Will escalate, contact employer, and report or register with appropriate agency.") Document name of case manager, title, phone and fax numbers, and details of conversation. 6. Tickler and track: recontact claims manager at 30 days; implement further measures (escalate, report, contact IPA or patient's employee benefits representative) at 60 days. Report case to AMA, AAFP, county or state medical societies, and appropriate legal authorities.
HIPAA = Health Insurance Portability and Accountability Act; IPA = Independent Physicians Association; EOB = explanation of benefits; AAFP = American Academy of Family Physicians; AMA = American Medical Association

FIGURE 1. Claim appeals log.

The American Academy of Family Physicians' claim correction form (available online at http://www.aafp.org/fpm/20030700/19best.htm) is intended to make the process of filing corrected claims more efficient, whereas the AMA's complaint form allows physicians to report problems in the managed care environment. The data also help the AMA identify and combat unfair business practices by health insurers and third-party payers. Physicians can help their cause by establishing a working relationship with a claims manager and getting the patient involved by sending him or her a copy of the appeal. (This also provides a good way to communicate with the patient before the insurance company does.) Contacting the employee benefits representative at the patient's employer may also provide leverage.^4,9 Even if an appeal is unsuccessful, documented and detailed feedback will serve as a roadmap for legal considerations in the future. A sample escalation letter is shown in figure 2.

Date: Re: Unpaid claim To Whom It May Concern: You have not appropriately addressed the attached claim. We expect to receive an appropriate settlement within 30 days. This is your last chance to address this claim. We have kept a careful log of this claim up to this point, and we will accurately track this final request. If no settlement has been received in 30 days, we will submit complaints in writing to the American Medical Association, the state or county medical society, and appropriate legal authorities (eg, attorneys involved in class action lawsuits against insurance companies). We may also file a complaint and establish a case with the employee benefits representative at the patient's employer, who will likely contact you. Finally, we will log the unsettled or inappropriately settled claim, and if a pattern of inappropriate denials or bundling is noted, we may pursue legal action. We are aware of various class action lawsuits against major payers regarding inappropriate reimbursement and bundling. Sincerely,

FIGURE 2. Appeal escalation letter.

Miscellaneous Practice Economics

Practices may lose money in ways other than unsuccessful billing (table 2).¹⁰ Assess these areas closely in your practice. An analysis by a high-quality outside consultant can be costly, but if a practice has a lot to improve and change, the consultation may quickly pay for itself.

TABLE 2. 11 Common Ways a Practice May Lose Money Bad billing practices Excessive overtime and overstaffing Inadequate and inaccurate coding Infrequently and improperly updated fee schedules Insufficient supply purchasing Lack of a budget Lack of a mid-level provider Lost productivity Petty theft and embezzlement Poorly reimbursing insurance plans Unmanaged risk Adapted from: Borglum K: 10 ways family practices lose money. Fam Pract Manag 2003;10(6):51-56.

Scheduling. The appointment schedule is the barometer of physician revenue. It is challenging to attain a full schedule yet not allow it to overfill to the point that patients cannot get needed acute appointments or that the quality of care is sacrificed. Successful schedule management requires regular staff meetings to assess changing patient patterns and needs. Reminder calls 24 hours prior to patient appointments, clearly stated cancellation policies, consequences for unkept appointments, and waiting lists can all help keep schedules full. Some practices use open-access scheduling, which is a system that relies less on future-booked appointments and offers every patient an appointment on the same day that he or she calls the office. One unfilled 15-minute appointment each day of a four-and-a-half-day workweek may result in $10,000 to $15,000 in lost annual income.

Fee structure. Practices should regularly review and update fee schedules and adjust them to bill the highest RBRVS dollar amount allowable by the highest-reimbursing insurance company (some argue higher because it builds in a mechanism to benefit from increased reimbursement if implemented by other insurance companies). For example, if an insurance company pays 155% of RBRVS but a practice bills at 140%, because most insurance companies reimburse at that rate, the practice will lose 10% of reimbursement each time it does not work with the higher-reimbursing insurer. The higher rate does not affect your reimbursement from lower-reimbursing insurers. However, higher rates will have a financial impact on uninsured patients or patients with high-deductible or catastrophic insurance contracts. It is wise to review patient coverage patterns before adjusting the practice's rates significantly.

If you increase billing rates, be aware that higher charges, more procedures, and more modifiers will result in a lower collection rate. But don't let the numbers fool you—the lower collection rate is a mirage. Although collection percentages are lower, higher fees are used in the calculation. Because only a few insurance companies reimburse at those higher rates, there will be a greater discrepancy between what is billed and what is collected from insurance companies that reimburse at lower rates, but overall revenue will be higher. Finally, reconsider whether you should continue working with poorly reimbursing insurance companies.¹⁰

Putting It All Together

Successful coding, billing, and collection operations are an absolute prerequisite to any well-run practice. Coding accuracy ranges between 50% and 60% among physicians. Visits with established patients are often undercoded, while new patient visits are often overcoded.^11-14 Accuracy among professional nonphysician coders is also variable.¹² Many physicians code 99213 when visits meet criteria for 99214, but physicians knowledgeable about coding usually code at higher levels with more confidence.¹⁵ Physicians who code inaccurately face financial and legal ramifications.¹⁶

Physicians should code for consultations when appropriate, because they reimburse at much higher rates than comparable, nonconsultation visits for new or established patients, and use modifiers when additional services or procedures are provided and billed. It is important to track billing and reimbursement and appeal when needed. Physicians who stay involved in coding, billing, and collection operations and maintain a positive, proactive approach will enjoy security and success in their practice.

Disclaimer: This review is for educational uses only. The authors are not coding and billing experts and are not responsible for any consequences resulting from the misuse of this review. THE PHYSICIAN AND SPORTSMEDICINE is not liable for any information found in this material.

References

1. The Medical Management Institute: Professional ICD-9-CM Volumes 1 & 2. Alpharetta, Georgia, Medical Management Institute, 2003
2. Scichilone RA: Clarifying selected CPT modifiers. J AHIMA 2000;71(4):69-73
3. Lamothe HL: Clinical insights for office practice management. Orthop Nurs 1998;17(1):23-26
4. Rheinisch DE: Improving office operations and maximizing reimbursement for the orthopedic practice. Clin Sports Med 2002;21(2):223-229
5. Submit your complaints: FPs report third-party payer woes. Available at http://www.aafp.org/fpr/20030100/all.htm. Accessed June 14, 2005
6. Physicians challenge insurers over payment issues (Monitor). Fam Pract Manag 2002;9(6):24
7. American Academy of Family Physicians News and Publications: Physicians can consider options in Aetna settlement. Available at http://www.aafp.org/x22239.xml 2003. Accessed February 14, 2004
8. Walker AM: Pattern recognition in health insurance claims databases. Pharmacoepidemiol Drug Safety 2001;10(5):393-397
9. Moore KJ: Coding and documentation: answers to your questions. Fam Pract Manag 2002;9(9):23
10. Borglum K: 10 ways family practices lose money. Fam Pract Manag 2003;10(6):51-56
11. King MS, Lipsky MS, Sharp L: E/M coding problems plague physicians, coders. J AHIMA 2002;73(7):62-66
12. King MS, Lipsky MS, Sharp L: Expert agreement in Current Procedural Terminology evaluation and management coding. Arch Intern Med 2002;162(3):316-320
13. King MS, Sharp L, Lipsky MS: Accuracy of CPT evaluation and management coding by family physicians. J Am Board Fam Pract 2001;14(3):184-192
14. Chao J, Gillanders WG, Flocke SA, et al: Billing for physician services: a comparison of actual billing with CPT codes assigned by direct observation. J Fam Pract 1998;47(1):28-32
15. Hill E: How to get all the 99214s you deserve. Fam Pract Manag 2003;10(9):31-36
16. Pennachio DL: Code with care: you're being watched. Med Econ 2004;81(9):26-30, 33

Dr Madden is a sports and family medicine physician at Longs Peak Family Practice in Longmont, Colorado. Dr Macintyre is a family practice physician at Advanced Orthopedics and Sports Medicine in Murray, Utah. Dr Joy is a clinical associate professor and the primary care sports medicine fellowship director at the University of Utah in Salt Lake City. Dr Joy is chair and Drs Madden and Macintyre are members of the American Medical Society for Sports Medicine Economics Committee. Address correspondence to Chris Madden, MD, Longs Peak Family Practice, 1309 Sunset St, Longmont, CO 80501; e-mail correspondence to christophermadden@usa.net.

Disclosure information: Drs Madden, Macintyre, and Joy disclose no significant relationship with any manufacturer of any commercial product mentioned in this article. No drug is mentioned in this article for an unlabeled use.