Payers first perform initial processing checks on claims, rejecting those with missing or clearly incorrect information. During the adjudication process that follows, claims are processed through the payer’s automated medical edits; a manual review is done if required; the payer makes a determination of whether to pay, deny, or reduce the claim; and payment is sent with a remittance advice/explanation of benefits (RA/EOB).
Automated edits check for (a) patient eligibility for benefits, (b) time limits for filing claims, (c) preauthorization and referral requirements, (d) duplicate dates of service, (e) noncovered services, (f) code linkage, (g) correct bundling, (h) medical review to confirm that services were appropriate and necessary, (i) utilization review, and (j) concurrent care.
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. The HIPAA X12 276/277 Heath Care Claim Status Inquiry/ Response (276/277) is used to track claim progress through the adjudication process.
The HIPAA X12 835 Health Care Payment and Remittance Advice (HIPAA 835) is the standard transaction payers use to transmit adjudication details and payments to providers. Electronic and paper RAs/EOBs contain the same essential data: (a) a heading with payer and provider information, (b) payment information for each claim, including adjustment codes, (c) total amounts paid for all claims, and (d) a glossary that defines the adjustment codes that appear on the document. These administrative code sets are claim adjustment group codes, claim adjustment reason codes, and remittance advice remark codes.
The unique claim control number reported on the RA/EOB is first used to match up claims sent and payments received. 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; and items are identified for follow up.
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.
An appeal process is used to challenge a payer’s decision to deny, reduce, or otherwise downcode a claim. Each payer has a graduated level of appeals, deadlines for requesting them, and medical review programs to answer them. In some cases, appeals may be taken beyond the payer to an outside authority, such as a state insurance commission.
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. Refunds to patients may also be required.
Claims are sent to patients’ 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.
Under the Medicare Secondary Payer program, Medicare is the secondary payer when (a) the patient is covered by an employer group health insurance plan or is covered through an employed spouse’s plan; (b) the patient is disabled, under age sixty-five, and covered by an employee group health plan; (c) the patient is diagnosed with ESRD but is covered by an employer-sponsored group health plan; (d) the services are covered by workers’ compensation insurance; (e) the services are for injuries in an automobile accident; or (f) the patient is a veteran who chooses to receive services through the Department of Veterans Affairs.
