The cost of healthcare is escalating and to maintain financial stability, key players ( i.e.  insurance companies and third parties) have positioned themselves to ensure they remain financially solvent by establishing strict guidelines. Providers may continue to experience increasing denials because of these established guidelines. So, it’s essential that providers should protect themselves by filing appeals on every level, versus writing-off these accounts.

The cost of healthcare continues to rise at an enormous rate.  On April 26, 2018, Kimberly Amadeo published an article in US Economy under Hot Topic. She reported that in the year 2016, the cost of healthcare in the United States was $3.3 trillion.  In response to the continual escalation of healthcare, payor sources such as insurance companies and third party payers find it necessary to establish a primary goal, which is to remainprofitable and financially solvent. In addition to establishing this goal, they set forth guidelines. These guidelines outline the services that are reimbursable versus those that are non-reimbursable based on medical necessity and the appropriate level of care. Thus, hospitals, doctors’ offices and consumers are challenged in getting claims paid. For instance, hospitals file claims and expect to be reimbursed for services rendered, however, a number of claims are denied or reimbursed at a lower amount than what is expected.

Doctors’ offices may encounter denials for non-medical necessities or not being in the network. Because of these denials imposed by physicians, consumers may actually be billed. Regardless of the reason for the denials, it is necessary to appeal.

There are two types of denials that are commonly seen in the hospital setting: non-medically necessities and inappropriate levels of care. Denials are categorized as the following:

Clinical Denials:

• Non-medical necessity denials: These types of denials are declining versus denial in a hospital setting because the payor source realizes the risk of liability.
• Inappropriate level of care: These types of denials are often imposed in the hospital setting and increasing because they serve as a safeguard in the event of litigation.

Administrative Denials:

• Out-of-network: These types of denials may occur in the hospital-setting and physicians’ offices.
• Non-authorization: These types of denials may be imposed in the hospital-setting and physician offices.

How to appeal Clinical denials:

1. Non-medical necessity denials: Review the medical record from the continuum of care. In other words, review the medical record from the beginning of services until a patient’s discharge. For instance, look at the emergency department (ED) to determine what events transpired that caused the physician to admit the patient. It is crucial to review the medical decision-making of the emergency department records. Also, it is important to read critical lab results, radiological results, EKG results etc. Finally, once data has been gathered re-exam to ensure that the compilation of data substantiates the medical necessity for the admission versus discharging the patient.
2. Inappropriate level of care denials: Payers may deny claims because services were deemed inappropriate and could have been rendered at a lower level of care, such as observation. In preparation to appeal, again review the medical record from the continuum of care. Review the emergency department (ED) records. Focus specifically on the section of the ED record under reassessment. This section generally documents the instability of the patient’s condition. Observe the doctor’s orders to identify the intensity of services that required more than periodic monitoring. And, study each discipline’s data such as s nurse’s notes, physician’s progress notes, consultants, and respiratory therapy records. For instance, the doctor may order oxygen with continuous pulse oximetry and respiratory therapy.  The goal is to substantiate the medical necessity for admitting in the acute level of care.

Levels of Appeal:

• First Level Appeal: If the denial is upheld, a second level of appeal should be filed.
• Second Level Appeal: This appeal level should be filed based on the payer ‘s reason (s) of the denial. This level of appeal requires researching the payer’s policy, which usually can be found on the web. Payers are required to provide the source of their determinations.
• Third Level Appeal: This level of appeal could involve a state insurance commissioner or an administrative law judge. Prior to filing an appeal on this level, the total cost of the claim and overall financial impact should be considered. For instance, providers should assess the cost of hiring legal services compared to the expected reimbursement.