Did you know that most doctors have no idea of just how many of their claims get rejected each week? If they did, they might fire someone. A whopping 30 to 35% of all paper claims are rejected or denied by insurance carriers due to error.
Claims are denied for various reasons but most frequently, for lack of information, or incorrect information. The facts say that fewer than 2% to 3% of insured’s who experience a denied claim even bother to exercise their appeal rights, mainly because the insured is required to request a review in writing, which takes time and understanding, which many people don't have. Most people never read their own insurance policy, let alone understand it. Imagine if every insurance carrier denied every 10th claim, period. The carriers would stand to gain millions of dollars just by playing the odds. I'll give you an example: If a carrier denied 100 claims that totaled $1,000 and only 2% to 3% of the claims were paid after appeal, the insurance carrier would gain more than $950 just by denying the claims. With Claims editing, carriers can turn up or down denials very easily. The AMA recently said that carriers use more than 12 million edits to deny claims.
Please note we're not suggesting that any carrier we are aware of is using this method, we merely wanted you to see that carriers definitely stand to gain money by denying claims. However, insurance carriers won't deny that they do save millions of dollars each year because insured's don't appeal claims. It has been said that 50% of all claims that have been previously denied are paid after appeal. Research and reworking denied claims accounts for about 20 to 40% of provider revenue cycle cost, so getting it right the first time is important, but not appealing is even more costly.
The AMA recently said in a RAC conference we attended in Jan. 2011 that it costs $20-$25 to submit an appeal and it costs carriers about $60 to address appeals. She also said that providers should spend as much time as possible in November each year working on appeals so that you have money coming in during January when patients are meeting their deductibles.
When a provider or a patient appeals, the carrier's own claims office personnel handles the appeal. If the patient or provider is not satisfied with the outcome, they can appeal it again to the medical director for that claim office. Note, though, that the medical director is not anxious to overturn an appeal because the claim dollars paid out will reflect on him, and medical directors are not quick to admit that mistakes have been made.
