Getting medical claims approved by payers is one of the most daunting tasks faced by healthcare practices. Submitting clean, accurate claims to payers requires practices to ensure clinical documentation with the correct diagnosis and procedure codes and documentation proving medical necessity. Importantly, medical practices also need to have comprehensive preauthorization and insurance verification services in place to determine patient coverage and benefits under their insurance plan.
What Payers Look for in Claims
The two main things payers look for in claims are compliance with payer eligibility requirements and good clinical documentation.
- Compliance with Payer Eligibility Requirements
Eligibility problems are one of the main reasons for claims denial. Millions of claims are denied because eligibility has expired or the patient or service was not covered by the plan in question. According to a Kaiser Family Foundation (KFF) study, in 2019 18% of plan-reported denied claims were denied because the service was not a covered service and 9% of plan-reported denials were because the claim lacked a required referral or preauthorization.
Certain conditions have to be met in order for an individual or group to be considered eligible for insurance coverage. When they adjudicate claims, payers look for documentation that provides evidence of the patient’s eligibility for benefits.
Payers will also check if prior authorization requirements have been met. Payers require prior authorization certain drugs, treatments, tests, and other medical services on the grounds that it promotes patient safety and guideline adherence, and helps controls healthcare expenditure. When they authorize a service before the patient encounter, payers assign an authorization number that the medical billing service provider should include on the claim submitted for payment.
In addition to checking whether the service is authorized, the insurance company will also assess claims to find answers to questions relating to the patient’s coverage, such as:
- Is the patient a member of a plan?
- Is the coverage valid – what is the effective date of the policy
- Is the particular service covered by the benefits of that plan
- Is the provider a member of the plan network?
- Has the patient met his or her deductible?
How Insurance Verification Services Help
Practices need to have a robust patient eligibility verification process in place. Insurance verification involves checking the patient’s insurance coverage and benefits prior to date of service to ensure payment for services. Outsourcing this task is the best option to free front office staff of this cumbersome but necessary process.
- Insurance verification and authorization companies are dedicated to preventing denials that can occur due to eligibility problems. With proper verification, providers can check whether the patient’s insurance is active, premiums are paid, services are covered and deductibles are met, well before providing treatments.
- Insurance verification specialists will verify details such as: demographic data, name and date of birth of the primary insured, social security number, ID number, group number, claims mailing address, plan exclusion, DME reimbursement, primary and secondary coverage, policy limitations, insurance carrier and their contact information, co-payments, co-insurance, and deductibles. After verifying these details the insurance verification service provider will inform the payer that the patient is eligible for the services. This information will provide the foundation for a successful claim
- Insurance authorization service will involve obtaining authorization for certain medical treatments that need to be approved or pre-certified prior to being provided.
- The company will also follow up with the patient as needed to obtain any additional information required to process the claim. Patients will be informed about their financial responsibility or out-of-pocket costs.
- After the medical record and billing system are updated with all the necessary information, the insurance verification company will send the claim to payer.
- Good Clinical Documentation Inadequate or missing documentation is a major reason for many claims denials. Claims and associated medical records are reviewed for compliance with payer coverage, coding, and billing rules. The documentation should include:
- A definitive diagnosis and support severity with the correct ICD-10 codes.
- The plan of care based on the reported diagnosis as well as the goal of the plan and when the patient can expect to reach the goal
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The documentation should be adequate to support the claims as billed. It should provide evidence that the allowed services were medically necessary and actually provided at the level billed. Documentation is examined see whether they meet payer guidelines relating to medical necessity, preadmission rules, requirements for therapy, formulary and nonformulary medicines, and other payer specific requirements.
When the medical documentation submitted along with the claim is inadequate to support payment for the services billed, the claim is considered as having “insufficient documentation” errors. Other examples of clinical documentation errors include: missing physician signature on an order, incomplete forms and progress notes, unauthenticated medical records, and no documentation of intent to order services and procedures. It is the responsibility of the physician to ensure good documentation and report medical services using the right ICD-10 and CPT codes.
Medicare’s national and local coverage determinations lay down the standards that must be followed to attain a benefit category and reimbursement. Likewise all commercial insurance companies have their own guidelines based on the contract. Insurance verification and authorization companies are knowledgeable about these rules and can help practices ensure accurate claims submission and prevent denials.
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