Physicians face many challenges in the day-to-day business of keeping a medical practice afloat, and one of the biggest is securing claims payments from health insurers. A new free resource (log in) helps physicians navigate the process of identifying and appealing claims.

The first step physicians should take is identifying any issues with claims payments. Use the Claims Workflow Assistant, an online tool, to understand your paper explanations of payment or electronic remittance advice (ERA) transactions and determine whether your claim has been properly processed by insurers. If you determine that there is an issue with a claim, you should consider submitting an appeal letter. AMA members can use these sample appeal letters to get started.

Here are some common payment issues facing physicians:

  • Bundling. Health plans often bundle procedures and services performed on the same day into a single, reduced payment. But in certain situations, multiple services performed on the same day are separate and distinct, making each deserving of payment. In this case, physicians should review the insurer’s medical policies to determine if they are consistent with CPT® codes and guidelines. If the insurer does follow these codes and guidelines, submit an appeal letter citing lack of recognition of a particular CPT modifier applicable to the improperly bundled claim.
  • Underpayment or downcoding. This occurs when insurers reduce the level of service on a claim to a lower-complexity CPT code. In this case, review medical record documentation to ensure you’ve met all components of the coded service, then consider submitting an appeal letter supporting a higher service level for any improperly reduced claims.
  • Contract issues. Insurers can sometimes apply preferred provider organization (PPO) discounts to a provider claim when either the PPO discount reported isn’t appropriate or when the physician doesn’t have a PPO contract. In such cases, practices should determine the justification for the reduction in payment and see if a valid PPO contract exists and applies to the claim. If the discount is invalid, notify the insurer that your practice will not honor the improper PPO discount, and then notify the patient of the issue, as the patient’s out-of-pocket expenses may have been incorrectly calculated.
  • Medical necessity. Insurers may deny a claim because they deem the service as unnecessary, based on the plan’s definition of “medical necessity.” Ideally, your practice knows the health insurer’s medical necessity requirements in advance of patient treatment. To rectify a medical necessity denial, submit an appeal letter outlining why the procedure was performed, with supporting documentation. Additionally, consider requesting external review, as addressed in the Affordable Care Act.
  • Prompt pay. Sometimes, insurers may fail to adjudicate and pay a claim within the statutory limit of the state in which the service was provided. To mitigate against this, reference any prompt-pay regulations in your state using the AMA’s National Managed Care Contract database. If a health plan fails to adhere to the regulation timeline, send a letter to the plan seeking immediate payment and any additional penalty or interest payments that may be applicable. You may also contact your state’s insurance commissioner, especially when the same plan has failed to promptly pay on multiple separate claims.

The AMA’s resource can help physicians uncover these issues, then implement an effective appeal process. Additionally, the resource offers physicians information on the options available for appeals that are denied.

Get more assistance navigating the claims adjudication process with the AMA’s administrative simplification initiatives resources, including:

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