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.
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 DDE/FISS 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.
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.
Here are a few common claim statuses:
Medicare 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.
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.
Rejected 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.
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.
Indicates 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.
Medicare 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.
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.
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.
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 Medicare 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).
It’s important for billers to file clean claims from the beginning of the hospital reimbursement 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 hospital claim denial reasons:
So what should you do when a claim is returned, denied or rejected? Don’t panic. Here are the options for problematic claims:
When a claim is missing information that’s critical for processing, Medicare will send it back. You can correct the original claim in FISS.
You are able to create and submit a new corrected claim.
In this case, you can submit a redetermination request.
When you receive an RTP claim, you can submit claim corrections online via the Direct Data Entry (DDE) system. RTPs are available for correction for 180 days. FISS provides specific reason codes and descriptions that give billers detailed information about what needs to be corrected on a T status (RTP) claim. Each reason code has a Remittance Advice Remark Code (RARC) associated with it. The RARC provides additional information about how each claim was processed and whether it can be appealed. These remark codes are available in the DDE system and on your RA.
The claim adjustment process is used to make corrections to processed or rejected claims. Adjustment claims may be submitted via DDE or your electronic software. Processed and rejected claims are finalized claims and appear on the Remittance Advice (RA). If a new claim is submitted, it will be rejected as a duplicate of the original claim.
Having to correct and resubmit claims is time-consuming and delays reimbursement. To submit a corrected claim to Medicare, you must make the correction and submit it as a new claim so that Medicare will process it.
If you are billing claims, waiting for ERAs and then running an aged balance report from your Electronic Health Records (EHR) solution, your revenue cycle management and reimbursement process is likely suffering. Even a day or two in aging can mean missing or delaying hundreds of thousands of dollars for a hospital system.
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.
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 will save time and money potentially lost to problem claims that aren’t corrected, 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.
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