Survey of Medical Insurance pp ch14

14 Payments (RAs/EOBs), Appeals, and Secondary Claims

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.
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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.
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Key Terms
aging
appeal
appellant
autoposting
claim adjustment group code (CAGC)
claim adjustment reason code (CARC)
claimant
claim status category codes
claim status codes
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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)

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)
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Medicare Secondary Payer (MSP)
overpayments
pending
prompt-pay laws
RA/EOB
reconciliation
redetermination
remittance advice (RA)
remittance advice remark code (RARC)
suspended

14.1 Claim Adjudication
Payers follow five steps in order to adjudicate claims:
Initial processing – payers first perform initial processing checks on claims, rejecting those with missing or clearly incorrect information
Automated review – claims are processed through the payer’s automated medical edits
Manual review – a manual review is done if required
Determination – the payer makes a determination of whether to pay, deny, or reduce the claim
Payment – payment is sent with a remittance advice/explanation of benefits (RA/EOB)
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14.1 Claim Adjudication (Continued)
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
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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
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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
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14.2 Monitoring Claim Status
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
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14.2 Monitoring Claim Status (Continued)
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
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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
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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
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14.3 The Remittance Advice/Explanation of Benefits (RA/EOB)
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
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14.3 The Remittance Advice/Explanation of Benefits (RA/EOB) (Continued)
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
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14.4 Reviewing RAs/EOBs
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
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14.5 Procedures for Posting
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
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14.5 Procedures for Posting (Continued)
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
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14.6 Appeals
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
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14.6 Appeals (Continued)
Medicare participating providers have appeal rights, that involve five steps:
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)
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14.7 Postpayment Audits, Refunds, and Grievances
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
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14.8 Billing Secondary Payers
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
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14.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments
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
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14.9 The Medicare Secondary Payer (MSP) Program, Claims, and Payments (Cont.)
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
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Survey of Medical Insurance pp ch14

by Fallon Brewington

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