The Medicare claims process is not for the faint of heart and can be frustrating even for the most seasoned hospital biller. This guide explains

the ins and outs of the Medicare claims process so you won’t get lost amidst the Medicare claims chaos.

The Medicare Revenue Cycle RoadmapA Hospital’s Guide to Navigating Billing & Claims

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You’ll walk away with insights on...Why Are Medicare Claims Critical? 3

Charting the Course for Your Medicare Claims 4

Where’s My Claim? 5

Common Claim Statuses 6

Rejections, Denials & Other Problem Claims 9

Recovering Underpaid and Uncompensated Care Claims – Your Revenue Integrity Program 13

Calming the Claims Chaos 17

Improving Your Claims Process 18

eSolutions is Your Revenue Integrity Partner 19

About eSolutions 21

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Why Are Medicare Claims Critical?Billing Medicare is one of the most complicated yet critical tasks a hospital will undertake. The process is distinctly different from billing commercial payers, with Medicare-specific requirements and systems. Getting a handle on Medicare claims is important, however, because Medicare is the biggest payer for U.S. hospitals. In fact, the majority of patients treated in U.S. hospitals are covered by Medicare. In 2013, 41% of all patients treated were covered by Medicare. Today, 60 million people are covered by Medicare, and that number is expected to increase to 72 million by 2025. Mastering the art of Medicare claims is a required skill because the process is not going away anytime soon.

So how effective is your Medicare billing and claims process? Keep in mind, your billing and claims process is really only as good as the amount of your denied claims. The average claim denial rate for large U.S. hospitals (250-400 beds) is 8%, according to RelayHealth Financial’s 2017 Revenue Cycle Index. Very large hospitals (more than 400 beds) averaged 8.22% claim denial rate. Medium-sized hospitals (100-250 beds) fared better but still reported a 6.95% denial rate in 2016. To maximize claim reimbursement revenue, providers should aim to keep their claim denial rate around 5%. How does your rate compare?

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For claims to enter Medicare’s special system, FISS/DDE, the provider must key them in manually or submit the claim electronically. If hospitals aren’t submitting Medicare claims manually, they typically have integration with a clearinghouse to pass claims from their Electronic Health Record (EHR) systems to Medicare via Electronic Data Interchange (EDI).

Entering claim information into FISS manually is tedious and requires a lot of fortitude. Not only does the manual process require more time and energy from your staff, but it also increases the opportunity for human error as compared to electronically submitted claims. Whether it’s an incorrect code or misspelling, such errors are expensive for providers and often result in form resubmission and payment delays.

Many CMS Network Service Vendors offer software that automates the process of submitting, tracking and correcting claims, freeing providers from manually working in the FISS/DDE system.

After creating a file, it may be sent to a clearinghouse. This is a third-party central hub that sorts claims from providers and directs them on to private payers and Medicare. Clearinghouses typically scrub claims for errors, format them so they are HIPAA-complaint, send them to Medicare and then provide a report to the provider on the status of their claims. When choosing a clearinghouse, consider whether it can work with the payer that your hospital uses most often.

Charting the Course for Your Medicare Claims

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So you’ve filed your Medicare claims, either manually or electronically. Now what?

In a perfect world, a hospital sends the bill off to the payer and receives reimbursement within a few short weeks. However, just like life, billing in the healthcare industry is not perfect. So when you submit a claim, unless that claim is clean and well, perfect, many things can happen. A Medicare claim has a specific cycle it follows from time of service to adjudication. Once you submit a Medicare claim, you’ll want to keep an eye on its reimbursement cycle status. After submission, Medicare assigns specific statuses to claims to help determine their fate.

Where’s My Claim?

PROVIDER

SOFTWARE

CLAIM FILE

FISS

SUSPENSE CLAIMS ERA

START

FINISH

837

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Here are a few common claim statuses:

s SuspenseMedicare is processing the claim normally through the system and should pay without intervention, although there’s no guarantee. Claims in Suspense cannot actively be worked in FISS. They must be moved to a finalized status of some sort (T, R, D or P) before any action can be taken.

Additional Development RequestMedicare needs additional medical documentation to ensure payment is appropriate. ADRs are also known as Medicare Records Requests, Prepay ADRs, or SB6001. Providers must respond within 45 days.

adr

t Return to Provider (RTP)Medicare has returned the claim to a provider because there’s some level of error. RTP claims aren’t physically returned to you. These claims are placed in the “T” file and will remain there until the provider corrects them.

RejectedRejected claims contain errors Medicare refuses to process. Patient eligibility issues are the primary cause of rejected claims. If the errors are fixed, the claim can be resubmitted for processing.

rd Denied

Medicare has determined that the claim is unpayable. Claims are often denied because of common billing errors, missing information or patient coverage. In most cases, a re-bill isn’t allowed, but providers may appeal a denied claim through the formal appeals process. Failure to respond in a timely fashion when Medicare asks for an ADR is the most common reason for claim denials. The only way to fix a denied claim is to appeal within 120 days.

PaidIndicates a claim was fully paid or partially paid. A partially paid claim contains denied line items. If you want to appeal these line items, you’ll need to file a replacement claim within Medicare filing parameters.

p

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When a claim is in “Suspense,” usually no action is needed. However, if Medicare finds something wrong with a claim, the claim can take several paths. A claim may be rejected, denied, returned or paid – it all depends on whether you submitted it clean or with errors.

Here’s what happens with claims after you bill but before adjudication:

You bill a service provided and submit it to Medicare. If you file electronically, an Electronic Claim File (EDI 837) containing claim details is created and sent to a clearinghouse.

The claim is submitted to your designated Medicare Administrative Contractor (MAC), who will process it using the Fiscal Intermediary Standard System (FISS) database. MACs are multi-state, regional contractors tasked with processing and handling Medicare Part A and B claims.

All active claims received by Medicare reside in FISS, which is a shared system used by all providers regardless of provider type.

To help providers understand what’s going on with their claims, Medicare assigns a status and location code to each claim. This code lets providers know exactly what is going on with the claim as it travels through the claim processing and adjudication process, when it will be paid, if a claim will be denied or if something on it needs to be fixed.

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When Medicare receives a claim without errors (a clean claim), it should pay the claim within 14 days. However, if Medicare finds something wrong with the claim, it will assign the claim a new status, indicating what happens to the claim from there. Medicare can return it to the provider, reject it, deny it or request additional development. When a provider submits a claim with administrative errors, Medicare will usually issue an RTP. If a claim contains medically incorrect information, Medicare can give it an ADR, R or D status. The provider can then take the appropriate action. Claims in R, P, T and D statuses can actively be worked, but only R-, P- and T-status claims can be worked directly in FISS/DDE. Denied claims must be appealed.

Once the claim has been processed, or adjudicated, Medicare sends an explanation back to you in the form of an Electronic Remittance Advice (ERA). This document provides details on payments and reasons for denials.

Of course, you can avoid a lot of the stress and anticipation involved in the claims reimbursement cycle if you have a tool that allows you to peek into FISS and check your claims’ status, location and payment floor. That way, you can more accurately forecast the timing of your reimbursement. The payment floor is the waiting period during which time the contractor may or may not pay, issue, mail or otherwise finalize the initial determination on a clean claim. The payment floor for electronic claims is 13 days (payment issued on day 14), and 28 days for paper claims (payment issued on day 29).

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It’s important for billers to file clean claims from the beginning of the billing process. It is so critical, in fact, that it can mean the difference between losing and recovering thousands of dollars in reimbursements for your organization.

Every rejected or denied claim increases your risk of not getting reimbursed. According to MGMA, the average cost to rework a claim is $25. Multiply that by the amount of claims you submit each month and you’ll quickly grasp the significance of submitting clean claims. In addition, 50-65% of denied claims are never worked, industry sources say, because of a lack of time and/or knowledge.

Clean claims reduce turnaround time for the reimbursement process and lower the need for time-consuming appeals processes. Even a few problematic claims can wreak havoc on your time and bottom line. What makes a claim less than perfect? Here are some common reasons why claims are denied:

Rejections, Denials & Other Problem Claims

• Incorrect, incomplete or missing information• Not filing on time• Invalid diagnosis or procedure codes• Duplicate billing• Pre-certification or authorization is not present or is not valid• Patient not eligible on date of service• Services not covered/coverage terminated• Further documentation needed to support medical necessity

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So what should you do when a claim is returned, denied or rejected? Don’t panic. Here are the options for problematic claims:

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RTP ClaimWhen a claim is missing information that’s critical for processing, Medicare places the claim into RTP status. You can manually correct the original claim in FISS.

Rejected ClaimYou are able to create and submit a new corrected claim.

Denied ClaimIn this case, you can submit a redetermination request.

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When you receive an RTP claim, you can choose to suppress, correct, adjust or cancel the claim. You must perform these actions directly in the Direct Data Entry (DDE) system. If you fail to correct the claim via DDE or hard copy, the claim will not process. RTP claims typically purge from Medicare’s system after 60 days.

Most providers submit claims directly from their practice management or electronic health record systems. Because these systems cannot retrieve and digest data directly from FISS, there is little visibility into Medicare claims once they’re submitted. In order to learn which claims are stuck in RTP status, a biller must manually check FISS or rely on another solution outside of their PM or EHR systems.

Medicare offers specific reason codes and descriptions in FISS that give billers detailed information about what they need to correct to process the claim. Working RTP claims in the DDE is a highly manual process requiring knowledge of DDE claims correction. Oftentimes, providers miss RTP claims and are forced to rebill them or write them off. Rebilling a claim is costly and adds significant time to A/R days.

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In general, Medicare’s rules dictate that a corrected claim must be filed 12 months from the date of the service. But be aware that for different types of claims, hospitals face different resubmission timelines. In some cases, Medicare rules say that you can only correct a claim within 60 days from the first payment of that claim. In other cases, you have a year to re-bill, but state-specific rules can also apply. Keep in mind, claims that are never addressed correctly and continue to be re-billed but are never paid can result in thousands of dollars in lost revenue for your organization.

Avoiding the need to correct or re-bill claims should be your number one goal, as having to do so costs your organization valuable time and expense. An American Hospital Association (AHA) report revealed that 26% of all claim denials appeals got stuck in the Medicare appeals backlog during the third quarter of 2016 alone.

Providers who don’t have access to review or analyze FISS data lose an opportunity to identify inefficiencies in their billing processes that are creating unnecessary labor costs as well as avoidable claim errors.

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A solid revenue integrity program is critical for strengthening your hospital’s revenue cycle. For most hospitals, according to the National Association of Healthcare Revenue Integrity, the point of revenue integrity is to prevent the recurrence of issues that cause revenue leakage and/or compliance risks.

Technology can play a vital role in helping organizations maintain processes that align with their revenue integrity goals. Comprehensive, automated Medicare reporting and analytics provide greater insight into your billing process so you can spot any issues that may negatively impact your Medicare claims and follow-up efforts. In addition to analytics and reporting during claims processing, having additional services in place to manage Medicare underpayments and uncompensated care can complete your revenue integrity program.

For hospitals, the largest source of Medicare underpayments occurs with Transfer DRGs.

Recovering Underpaid and Uncompensated Care Claims – Your Revenue Integrity Program

Source: HFMA

reported an increase in net collection&2/3 of hospitals reported a reduction in compliance risk

when they implemented a revenue integrity program

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Medicare underpayments can occur when a patient is discharged as a “transfer,” but there is no post-acute-care billing. This often happens when a patient decides to forgo the recommended post-acute discharge. When a patient decides not to transfer to a post-acute facility in accordance with CMS rules, the discharging hospital is entitled to the full DRG payment but only receives partial payment.

With multiple locations and thousands of Medicare patients discharged to a post-acute care facility annually, it’s incumbent upon hospitals to identify claims that failed to transfer under Medicare’s Post-Acute Care Transfer (PACT) rules. Identifying and recovering payment on these claims generally falls under a hospital’s revenue integrity program.

While most hospitals work to recover transfer DRG underpayments, they likely aren’t capturing 100%, resulting in significant unrecovered dollars. Medicare transfer DRGs account for 41.6% of all Medicare discharges, according to CMS. Underpayments can add up quickly and cost hospitals significant amounts of revenue that Medicare rightfully owes.

Transfer DRG

The burden of finding and recovering transfer DRG underpayments falls squarely on hospitals. Hospitals must identify and correct the claims in order to be properly reimbursed. Generally, hospitals can review up to four years’ worth of Medicare claims, known as a retrospective lookback.

However, identifying and recovering transfer DRG underpayments is costly and challenging. A hospital generally has three options:

1. An internal team dedicated to manually identifying transfer DRG underpayments and following up with a proper final determination. Oftentimes internal staff lack the time and/or experience for an in-depth review of transfer DRG claims impacted by the Transfer Rule. This often leads to missed opportunities or tedious follow-up efforts.

2. An outsourced solutions partner who manages the recovery effort for a fee. This option typically results in greater revenue recovery because reviewers that specialize in transfer DRG recovery have more knowledge and familiarity with the process.

3. A secondary or tertiary service to validate current process(es). This ensures hospitals maximize recoveries, giving them peace of mind that valuable revenue isn’t slipping through the cracks.

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Another critical component of every revenue integrity program should be a process to find and recover uncompensated care, meaning accounts written off as self-pay, charity or bad debt. Most hospitals are trying to do more with less. In today’s reimbursement environment, recovering uncompensated care can be the difference between turning a profit or being in the red.

According to the American Hospital Association, the cost of uncompensated care was $38.4 billion in 2017 (AHA 2019 Annual Survey Data). Uncompensated care often arises when patients don’t have insurance and cannot afford the cost of care. Medical issues are the number one reason for bankruptcy in the United States. For your hospital’s profitability, discovering patient coverage and recovering reimbursement is more important than ever.

Many hospitals turn to a vendor partner that specializes in insurance discovery to help locate patient accounts that have previously unknown coverage. Without an insurance discovery solution, hospitals often lose revenue and are forced to write off substantial dollars. © eSolutions, Inc.

16Insurance Discovery™

Keeping track of claims in the FISS system is quite a task. FISS allows you to enter, correct, adjust or cancel your Medicare billing transactions. But managing and editing rejected and RTP claims through FISS drains valuable staff time and can reduce your reimbursement potential.

Denied and rejected claims are a major cause of lost revenue for medical practices, but 90% of denials are preventable, according to the Advisory Board. Maintaining a high clean claims rate requires attention to detail at every step of the patient journey. Having proven Medicare revenue cycle management software in place to help analyze, manage and track claims can prevent time and money spent on problem claims, as well as improve your success rate in appealing denied claims. In addition, it would allow your staff to focus less on claims and more on patients, which in the end, should be everyone’s goal.

The best way to protect your hospital’s bottom line and retain calm amidst the chaos is to work with a thorough, experienced partner like eSolutions who can help you detect and analyze any underpayments. Our revenue integrity solutions – including Transfer DRG, Insurance Discovery and Pharmacy Insurance Discovery – are designed to identify and recover missed reimbursement opportunities on behalf of healthcare providers. Over the past 10 years, we’ve identified and recovered more than $1 billion for provider customers.

With the right tools, you can clean up your organization’s finances and, therefore, boost your revenue integrity.

Calming the Claims Chaos

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Turn to a Medicare revenue cycle specialist like eSolutions, which provides the most powerful Medicare revenue cycle products on the market, featuring:

The following steps can help you steer your Medicare billing and claims processes in the right direction and reduce your denials:

Improving Your Claims Process

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Examine your ability to effectively see and manage your suspense claims: To the best of your abilities, determine how many of your suspense claims are sitting idle in FISS. Providers must wait for their MAC to process the claims to a finalized location (R, P, T or D) before taking any action. If a claim stays in Suspense longer than 14 days, a biller may call their MAC to request the claim be moved to a finalized status so it can be worked.

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Calculate the financial impact of problematic and unworked claims on your organization: Final denials, when payment is never received, result in a 2% decrease in an average hospital’s annual net revenue, according to a recent Crowe RCA report.

• Enhanced Medicare eligibility verification that returns the most robust patient data available

• Never cancel and re-bill a claim again: Edit problematic claims and submit them back to Medicare using our special Claims Editor

• Full visibility into your Medicare claims, no matter where they are in their life cycle

• Proprietary technology that uses special algorithms to find Medicare transfer DRG underpayments and missed claims eligible for payment

• Actionable data that shows you where and how to handle problematic claims

• Less days in A/R, faster access to cash, accurate reimbursement and better workflows© eSolutions, Inc.

Focus on finding and recovering underpaid and uncompensated care claims, which account for billions in lost revenue each year for hospitals. An outsourced solutions partner will help you manage the recovery effort, and a secondary or tertiary review service validates your current processes and ensures you’re maximizing recoveries and valuable revenue.

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When it comes to revenue integrity, eSolutions can find dollars your hospital may have missed.

eSolutions’ Transfer DRG intelligent technology allows us to conduct underpayment audits for your organization to ensure you are reimbursed for those claims. Our automated processes require only a minimal dataset to identify eligible claims, resulting in a fast turnaround.

Medicare relies on the Common Working File (CWF) to identify patients who failed to transfer, rather than patient medical records. The CWF is known as the source of truth because unlike medical records, it contains a patient’s entire Medicare history of claims. eSolutions’ primary approach to claim reviews is the CWF combined with our MBI Lookup tool, which quickly converts HICNs to their corresponding Medicare Beneficiary Identification number to update your patient record and quickly converts your HICNs to their corresponding MBIs to help you update your patient records and prevent costly denials.

With Transfer DRG, eSolutions has recovered $100 million for healthcare providers with a $3,500 average recovery per underpaid claim.

eSolutions is Your Revenue Integrity Partner

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eSolutions Insurance Discovery™ allows hospitals to take charge of uncompensated care, recover accounts written off as self-pay, charity of bad debt, and find previously unbilled Medicare, Medicaid and commercial claims eligibility. Insurance Discovery employs proprietary algorithms to automate the categorization of data received from your organization and Medicare. Our technology ensures scalability and reliability of service, resulting in a fast, automated and highly accurate solution. With Insurance Discovery, we’ve found $750 million in billable charges and helped providers recover 5-12% of accounts.

To maximize your revenue integrity program, eSolutions recommends using multiple vendors for transfer DRG and insurance discovery. These vendors each use different processes and technology, so it makes financial sense for a hospital to use multiple vendors for a primary, secondary and, in some cases, a tertiary review. This ensures a hospital covers all its bases to recover as many underpayments and as much uncompensated care as possible.

eSolutions strengthens providers’ revenue health so they can focus on what really matters - their patients. Since 1999, we’ve delivered the best revenue cycle management tools and improved billing outcomes for providers in nearly every market. Healthcare organizations improve efficiencies, minimize denials and shorten time to revenue using our powerful, easy-to-use RCM solutions paired with actionable data analysis and insights. Smartly managing revenue is more important than ever. Thousands of clients trust our proven solutions, expertise and world-class client service to simplify healthcare payments, freeing up time for providers to focus on operational excellence and enhanced patient care.

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