Providers are now reaching some level of “new normal” with the pandemic becoming more of an endemic. They can identify challenges to improve their margins as quickly as possible.
Many are seeing a concerning picture.
Before the pandemic literally threw providers into operational survival mode, I wrote about the importance of partnering with patients to reduce pre-certification denials. In that blog, I talked about how payor-denied claims continue to top the list of threats to a healthcare provider’s financial wellbeing and how working with patients to avoid pre-certification and pre-authorization denials can positively impact a provider’s bottom line.
And while this effort is indeed important, it is usually limited to what a provider can do before medically necessary services are billed. Just as critical to protecting a provider’s financial health, and something that data indicate is greatly underutilized, is working with patients to appeal insurance denials after a service has been submitted for reimbursement.
Some hospitals have been reporting an increase in denial rates with over a third reporting rates approaching 10 percent. Given these denial rates, what is quite surprising is that only about 0.2 percent of medical insurance denial claims are appealed by patients. It also is counterintuitive given that, by some estimates, around 50 percent of these appeals are eventually successful. This success rate may even be higher for self-insured employer plans.
If you consider that roughly 95 percent of patients do not pay their hospital bills in full, resulting in provider write-offs and reduced margins, anything that may reduce that percentage is worth considering. These write-offs can easily top $3 million per median-size provider and this amount can make the difference between a healthy margin and one that could threaten the viability of a provider.
Unfortunately, the current situation of patients not being able to pay their medical debt is not about to end any time soon. According to the U.S. Census Bureau, 19 percent of American households could not afford to immediately cover their medical care. Another alarming statistic is that at least 50 percent of all Americans now have some medical debt and almost 60 percent of these owe at least $1,000. More than half of consumers now have “high deductible” insurance plans so the potential exposure for providers could readily increase in the coming years.
The good news is that many patients nationwide have the right to appeal a health insurance claim denial and the process is deliberately simple and straightforward with patients being able to submit the following two types of appeals:
- Internal appeal: A patient may appeal a health plan’s decision through an “internal appeal.” This is the first step and is a process in which the patient asks their insurance company to do a full and fair review of its decision. The appeal should always be submitted in writing (and the patient should retain a copy for their files). When the health plan receives the request, it is required to review and explain its decision. The health plan must also let the patient know how to disagree with its decision. The plan is required to start and complete this process in a timely manner.
- External review: If the health plan still denies payment or coverage, the law usually permits the patient to have an independent third party uphold or overturn the plan’s decision. This final process is often referred to as an “external review.” A health plan must include information on the denial notice about how to request this review. Note that some group plans may require more than one level of internal appeal before a patient can request an external review.
Many states have agencies that will help patients file an appeal or request a review of their health plan’s decision.
So Why Don’t Patients Appeal the Denials?
Given the potential financial benefits of appealing a health insurance claim denial, and the relative ease of doing so, why do most patients just accept the denials at a great financial cost to them and to their providers? One is that many probably simply do not know that they have this right. While claims denial notices are supposed to let them know about this right, not all do and if they do, it may be included in a way that a patient may overlook it. A payor has little incentive to draw attention to this right let alone promote it.
Another reason is that while the process may be straightforward, understanding exactly why the claim was denied and then gathering all the information needed for an internal or external review can be daunting to most patients. A cursory look at a typical explanation of benefits report (EOB) lists no fewer than 12 different codes with some specific to the patient’s individual plan and others used as industry standards. The patient also will need to put together all supporting information as to why they believe the denial was in error and should be reversed. To successfully do this, the patient will invariably need to reach out to their provider(s) to help prove medical necessity, for example. It is also possible that the denial is the result of miscoding on the part of the provider, which they would need to correct.
A patient should also work closely with their physician and/or hospital on a denial as the provider may be submitting its own appeal as well. Very often a dual appeal by both a patient and provider increase the likelihood of having a health plan overturn its initial decision.
How Providers Can Support Patient Appeals of Claim Denials
Since providers have a financial stake in a patient’s winning a claims denial appeal, they should not only take steps to ensure that patients know they can appeal a denial but also be willing to do what they can to facilitate any appeal. Some steps they can take include:
- Have an established patient advocate program with a multi-lingual, multicultural team that is well versed in all areas of claims management, including appealing claim denials, and participating in “peer-to-peer” insurance reviews
- Produce and distribute materials explaining the appeals process as well as the types of denials that may be appealed, for example, pre-existing condition, outside-of-network care, “experimental” treatment, or not “medically necessary” treatment and include them with patient statements
- Produce and provide necessary support documentation in a timely manner to patients at no cost to them (this is a small investment on the part of a provider which can generate an attractive ROI especially given that in one state 80 percent of cases denied as “experimental” or “investigational,” for example, were reversed)
- Offer to serve as the patient’s representative for filing an external review on their behalf and then follow-through with the process and especially keeping an eye on time limits for appeal filings
While supporting patients in their individual claim denial appeals processes – or taking over the processes for them – places an additional burden on a provider’s time and human resources, the odds for success are clearly in the patients’ favor. So, if faced with the choice of leaving millions of unrealized revenues on the table or investing in helping a consumer win a claims denial appeal, the latter is clearly the right path for provider and consumer alike.