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Appealing Denials

Vol. 12 •Issue 9 • Page 11
Appealing Denials

When CMS says 'no' to payment, will you know to appeal a claim?

The Medicare appeals process is complicated. But there's a procedure for negotiating this tricky terrain. This is the first of a two-part series on the issue.

As a private practice owner, you need to be paid for the services you provide. Otherwise, you risk financial solvency. The same holds true in other practice settings, such as hospitals, SNFs, CORFs and home health agencies.

In most cases, the Centers for Medicare and Medicaid Services (CMS) pays claims. But sometimes, CMS denies a claim. If this happens, will you know what to do?

Unfortunately, most therapists don't. In the past, that wasn't a problem because the billing department generally handled denials–sometimes with assistance from the therapy staff, but most often without.

Now, however, directors of therapy departments and the staff are responsible for gathering the documentation and writing the appeal. This requires knowing the intricacies of the appeals process.

To fully understand this process, we must first examine the reasons claims are denied. It begins when your carrier or fiscal intermediary (FI) medical review department sends you an Additional Development Request (ADR) for records of certain claims you've submitted for payment for a specified billing period. To submit the records to your carrier or FI, you have 30 days plus 15 days for mailing (45 days total).

Submit the following documentation to the carrier or FI: physician prescription, initial evaluation, signed plan of care, certification/re-certification, daily treatment notes and any other documentation that supports your services for that specific billing period. The medical review department will then review the documentation to determine whether the claim should be fully paid, partially paid or completely denied.

Claims are denied for several reasons. One of the most common is the failure to submit the patient's medical records within the allotted time frame (45 days from the requested date) when an ADR was sent. This will result in a complete denial of the claim for that billing period, and you'll have to appeal the claim.

A second reason for denials is no physician order for therapy service accompanied the documentation when the records were submitted, or the order didn't cover the dates of service being reviewed. To be valid, a physician's order must contain the physician's signature and date. A stamped physician's signature is valid if you submit written evidence with every claim stating that the physician owns the stamp and is the only one who uses it. In addition, an order should contain the diagnosis, frequency and duration of treatment.

A third reason is insufficient information was submitted when the records were requested. This could mean that the information was incomplete or failed to contain objective and functional data to determine that services rendered met Medicare guidelines.

A fourth reason for denials is that the therapy wasn't reasonable and necessary. Perhaps the documentation failed to show that the patient had a physical condition or functional limitation that required the skills of a therapist. Or maybe the focus of therapy targeted higher-level activities, such as recreational activities or general fitness and, therefore, wasn't considered skilled therapy.

Other reasons for denials include billing errors. Perhaps the claim wasn't itemized, services were provided by a student or a service was billed, but not documented. Maybe the documentation submitted didn't contain proof of services rendered. The latter would include notes that didn't reflect actual dates of service billed and/or services billed.

Types of Denials

Two categories of denials exist. One is called provider-liable denials, in which the provider appeals a medical denial and is held liable for it. These denials occur for several reasons:

·services were not reasonable and necessary

·records weren't sent when the ADR was requested

·documentation didn't support that the billed services were provided

·information was insufficient to determine whether services met Medicare guidelines

·therapy was nonskilled and/or repetitive in nature

·a patient exhibited no improvement or had reached his potential.

With the second category, the provider is appealing on behalf of the beneficiary. This occurs in the following circumstances:

·non-Medical (technical) denial

·medical denial paid under waiver of liability

·medical denial, in which the beneficiary is held liable

Nonmedical denials occur when there's no physician order for therapy services and/or the order contained a stamped signature.

In the other two circumstances, the provider is not held liable; the beneficiary is. An example of this would be the following: The provider had the beneficiary sign an Advanced Beneficiary Notice (ABN) informing him that therapy services may not be covered by Medicare. The provider must list the reasons the services will not be covered and provide an estimated amount for these services.

Appeals Process

The appeals process is similar in both .categories except for one important item. When appealing a technical denial or one on behalf of the beneficiary, you and the beneficiary must complete the Appointment of Representative (AOR)(CMS-1696-U4) form. You also must complete the Waiver of Payment (WOP) form, waiving your right to payment from the beneficiary.

The AOR contains three sections. Section one is to be completed by the beneficiary. This section establishes the appointed representative and should include the name of the person chosen by the beneficiary to act on his behalf, as well as the beneficiary's signature, date, complete address and phone number. When the provider is submitting an appeal on behalf of the beneficiary, the appointed representative must be an employee of the provider.

Section two is completed by the appointed representative and confirms his acceptance of the appointment. The representative must sign, date and list his work address, phone number and employer's name. This person also must complete Section three of the AOR. This verifies that the representative isn't charging the beneficiary a fee in connection with the appointment.

If an AOR is determined to be valid at the review/reconsideration level, it will be valid at all other levels of appeal. The beneficiary doesn't have to sign a second AOR if the provider lost the first level of appeal and was proceeding to the next level.

The WOP is completed by the provider representative, whom the beneficiary authorized to appeal the claim on his behalf. This waives the provider's rights to payment from the beneficiary for noncovered services denied by Medicare. The statement must include the provider's name, beneficiary's name, beneficiary's Medicare number, service dates, signature of the representative who was appointed on the AOR, and date of completion.

Although the process seems complicated, the key to avoiding denials is submitting records when they're requested by your carrier or FI. Supply the information quickly. Another key is to educate your staff about Medicare documentation guidelines and the criteria for reasonable and necessary skilled therapy.

In addition, build a strong working relationship with the director of patient accounting. Therapy departments that work closely with patient accounting have a lower denial rate. They can correct problems with denials more quickly and efficiently than those departments that lack communication with patient accounting.

For more information on how to appeal a denied claim, see next month's article.

Rick Gawenda, PT, is director of physical medicine and rehabilitation at Detroit Receiving Hospital. He lectures nationally on coding and reimbursement, documentation to prevent or support an appeal, and the Medicare appeals process. He can be reached at


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