With increasing frequency dermatologists are learning what it’s like to deal with payers who delay, deny or downcode claims, making it more difficult for practices to collect the reimbursements they’re due. Resubmitting claims that should have been paid promptly and properly the first time is more than just an annoyance. It can place extraordinary resource demands and costs on a practice.
In addition to using questionable means to manipulate payment responsibilities, some payers have also found it easy and convenient to use ERISA (Employee Retirement Income Security Act) as a seemingly impenetrable defense shield against physicians, especially
in those circumstances that would allow payers to avoid paying claims. Although ERISA was enacted with good intentions, the collateral damage of clashes between state and federal law always seems to favor the payers, especially on financial matters.
Here you’ll learn about a little-known, but significant, provision in California law, and a Supreme Court decision based on the law
that, in many states, has shifted the claims dispute/resolution balance ever so slightly in favor of physicians.
“Claim denied: Not submitted in time . . .”
Most payers routinely deny a claim not submitted within some stated time frame, typically 60 to 90 days. But such blanket denials are unfair to physicians, since there can be legitimate reasons why a claim might not be filed in what the payer deems a timely manner.
For example, some patients may be confused about their insurance coverage. By the time primary and secondary responsibilities are sorted out, it may be past the “X” days filing window. But at that point for a payer to deny an otherwise legitimate claim is absurd and unfair. After all, the payer had a financial responsibility to pay the claim, and what real difference is there if that claim is submitted in less than 90 days or, perhaps, is submitted at 113 days? The financial responsibility was there and it should not magically disappear.
When the Payer Creates the Problem
Every practice has felt the frustration of submitting a claim in a timely manner only to be told, “We never received it.” That’s par for the course, and upon resubmission the claim is usually paid.
But sometimes a payer’s administrative processes will totally fail, and then the payer disingenuously tries to shift responsibility for the problem to the practice.
One administrator told me of a nightmarish dispute in which the payer had rejected claims, stating that one of the practice’s physicians was not on the panel.
Communications went back and forth for some time until the payer finally found the paperwork and admitted that in fact the physician was a contracted provider on the dates of service. But despite its admission the payer then declared that the deadline for those claims had passed, and they were no longer valid!
That’s outrageous conduct. But this sort of thing is not unheard of.
A Lifeline
Well, take heart. In most states you might have a lifeline when battling with payers who deny payment for claims they say were filed too late. The lifeline from California, and now mirrored in full or in part by many other states, is called the “notice prejudice rule.”
In essence, it says that an insurer can only deny a late-filed claim if it can prove it would be hurt (in legal terms, “prejudiced”) by the late filing. Absent that, an otherwise valid claim should be honored. The burden of proof to show damage is placed on the insurer.
What makes this notice prejudice rule so interesting is that in some states physicians can use it when payers try to deny payment by hiding behind the ERISA regulations. In some states — your attorney can tell you which ones — the rule trumps ERISA. That’s astounding given how provider-unfriendly ERISA has always been. (The key ruling came from the U.S. Supreme Court and is found in
Unum Life Insurance Co. of America v. Ward, Supreme Court of the United States, No. 97 – 1868).
The Notice Prejudice Rule in Application
A couple of years ago I was contacted by a California practice administrator who was having problems getting paid on some late-filed claims. I advised her to check into this notice prejudice rule. A while later I heard back that she had done as I suggested.
The practice’s attorney was not aware of the notice prejudice rule, but he checked and found that it was for real. He drafted a demand letter (used as a model for the sample letter below to which you can refer), and the practice then presented a copy to the problematic payers — in this case secondary to Medicare. And it worked!
The practice has received payment on several claims that previously had seemed destined for write-off. Dollars that looked to have been lost were suddenly found and added directly to the bottom line.
(Note: apparently some attorneys, including many in health plan legal departments, are not aware of the notice prejudice rule. So don’t be surprised if your attorney or your state society’s legal counsel has not heard of it.)
A Power Tool in Your Armamentarium
The notice prejudice rule is one of those rare, provider-friendly aspects of insurance law that can tip the scales in your favor. However, please understand that the rule can be used successfully in some states but not in all, and within those favorable states, it can be used in some circumstances but not necessarily in all. Thus it’s not a “slam-dunk,” and much depends on state-specific laws that vary greatly.
For example, Texas has a notice prejudice rule covering late-filed claims, but it also has a prompt payment law that mandates claims must be submitted within 95 days or a payer can reject them. So there is conflict, and when it comes to pass that these regulations are tested against each other it will be interesting to see which prevails.
Your success using the notice prejudice rule may also depend, in part, on how specifically your Provider Agreement is worded. For example, in some states a specified filing deadline, such as 90 days, may be tougher to challenge than a less specific limit, and may or may not take precedence over the more general intent of the notice prejudice rule. So it’s essential that you check with an experienced attorney in your state to see if the notice prejudice rule can help you collect even after a payer says the time has passed on a claim and you’re out of luck.
Note of Caution: Do not use the sample letter on page 46 by simply inserting your practice’s name and that of a problematic payer. Instead, show the sample verbiage to your attorney, and ask whether the notice prejudice rule applies favorably in your state. If your attorney says that it does then this sample letter can be used by counsel as a starting point to craft a letter customized to your specific circumstances and the rule’s applicability in your state.
Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry.
He can be reached at (954) 915-6771 or by e-mail at gil@gilweber.com. Also, visit his Web site at www.gilweber.com.
Disclosure: These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.
The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice.
Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any actions that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.
With increasing frequency dermatologists are learning what it’s like to deal with payers who delay, deny or downcode claims, making it more difficult for practices to collect the reimbursements they’re due. Resubmitting claims that should have been paid promptly and properly the first time is more than just an annoyance. It can place extraordinary resource demands and costs on a practice.
In addition to using questionable means to manipulate payment responsibilities, some payers have also found it easy and convenient to use ERISA (Employee Retirement Income Security Act) as a seemingly impenetrable defense shield against physicians, especially
in those circumstances that would allow payers to avoid paying claims. Although ERISA was enacted with good intentions, the collateral damage of clashes between state and federal law always seems to favor the payers, especially on financial matters.
Here you’ll learn about a little-known, but significant, provision in California law, and a Supreme Court decision based on the law
that, in many states, has shifted the claims dispute/resolution balance ever so slightly in favor of physicians.
“Claim denied: Not submitted in time . . .”
Most payers routinely deny a claim not submitted within some stated time frame, typically 60 to 90 days. But such blanket denials are unfair to physicians, since there can be legitimate reasons why a claim might not be filed in what the payer deems a timely manner.
For example, some patients may be confused about their insurance coverage. By the time primary and secondary responsibilities are sorted out, it may be past the “X” days filing window. But at that point for a payer to deny an otherwise legitimate claim is absurd and unfair. After all, the payer had a financial responsibility to pay the claim, and what real difference is there if that claim is submitted in less than 90 days or, perhaps, is submitted at 113 days? The financial responsibility was there and it should not magically disappear.
When the Payer Creates the Problem
Every practice has felt the frustration of submitting a claim in a timely manner only to be told, “We never received it.” That’s par for the course, and upon resubmission the claim is usually paid.
But sometimes a payer’s administrative processes will totally fail, and then the payer disingenuously tries to shift responsibility for the problem to the practice.
One administrator told me of a nightmarish dispute in which the payer had rejected claims, stating that one of the practice’s physicians was not on the panel.
Communications went back and forth for some time until the payer finally found the paperwork and admitted that in fact the physician was a contracted provider on the dates of service. But despite its admission the payer then declared that the deadline for those claims had passed, and they were no longer valid!
That’s outrageous conduct. But this sort of thing is not unheard of.
A Lifeline
Well, take heart. In most states you might have a lifeline when battling with payers who deny payment for claims they say were filed too late. The lifeline from California, and now mirrored in full or in part by many other states, is called the “notice prejudice rule.”
In essence, it says that an insurer can only deny a late-filed claim if it can prove it would be hurt (in legal terms, “prejudiced”) by the late filing. Absent that, an otherwise valid claim should be honored. The burden of proof to show damage is placed on the insurer.
What makes this notice prejudice rule so interesting is that in some states physicians can use it when payers try to deny payment by hiding behind the ERISA regulations. In some states — your attorney can tell you which ones — the rule trumps ERISA. That’s astounding given how provider-unfriendly ERISA has always been. (The key ruling came from the U.S. Supreme Court and is found in
Unum Life Insurance Co. of America v. Ward, Supreme Court of the United States, No. 97 – 1868).
The Notice Prejudice Rule in Application
A couple of years ago I was contacted by a California practice administrator who was having problems getting paid on some late-filed claims. I advised her to check into this notice prejudice rule. A while later I heard back that she had done as I suggested.
The practice’s attorney was not aware of the notice prejudice rule, but he checked and found that it was for real. He drafted a demand letter (used as a model for the sample letter below to which you can refer), and the practice then presented a copy to the problematic payers — in this case secondary to Medicare. And it worked!
The practice has received payment on several claims that previously had seemed destined for write-off. Dollars that looked to have been lost were suddenly found and added directly to the bottom line.
(Note: apparently some attorneys, including many in health plan legal departments, are not aware of the notice prejudice rule. So don’t be surprised if your attorney or your state society’s legal counsel has not heard of it.)
A Power Tool in Your Armamentarium
The notice prejudice rule is one of those rare, provider-friendly aspects of insurance law that can tip the scales in your favor. However, please understand that the rule can be used successfully in some states but not in all, and within those favorable states, it can be used in some circumstances but not necessarily in all. Thus it’s not a “slam-dunk,” and much depends on state-specific laws that vary greatly.
For example, Texas has a notice prejudice rule covering late-filed claims, but it also has a prompt payment law that mandates claims must be submitted within 95 days or a payer can reject them. So there is conflict, and when it comes to pass that these regulations are tested against each other it will be interesting to see which prevails.
Your success using the notice prejudice rule may also depend, in part, on how specifically your Provider Agreement is worded. For example, in some states a specified filing deadline, such as 90 days, may be tougher to challenge than a less specific limit, and may or may not take precedence over the more general intent of the notice prejudice rule. So it’s essential that you check with an experienced attorney in your state to see if the notice prejudice rule can help you collect even after a payer says the time has passed on a claim and you’re out of luck.
Note of Caution: Do not use the sample letter on page 46 by simply inserting your practice’s name and that of a problematic payer. Instead, show the sample verbiage to your attorney, and ask whether the notice prejudice rule applies favorably in your state. If your attorney says that it does then this sample letter can be used by counsel as a starting point to craft a letter customized to your specific circumstances and the rule’s applicability in your state.
Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry.
He can be reached at (954) 915-6771 or by e-mail at gil@gilweber.com. Also, visit his Web site at www.gilweber.com.
Disclosure: These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.
The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice.
Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any actions that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.
With increasing frequency dermatologists are learning what it’s like to deal with payers who delay, deny or downcode claims, making it more difficult for practices to collect the reimbursements they’re due. Resubmitting claims that should have been paid promptly and properly the first time is more than just an annoyance. It can place extraordinary resource demands and costs on a practice.
In addition to using questionable means to manipulate payment responsibilities, some payers have also found it easy and convenient to use ERISA (Employee Retirement Income Security Act) as a seemingly impenetrable defense shield against physicians, especially
in those circumstances that would allow payers to avoid paying claims. Although ERISA was enacted with good intentions, the collateral damage of clashes between state and federal law always seems to favor the payers, especially on financial matters.
Here you’ll learn about a little-known, but significant, provision in California law, and a Supreme Court decision based on the law
that, in many states, has shifted the claims dispute/resolution balance ever so slightly in favor of physicians.
“Claim denied: Not submitted in time . . .”
Most payers routinely deny a claim not submitted within some stated time frame, typically 60 to 90 days. But such blanket denials are unfair to physicians, since there can be legitimate reasons why a claim might not be filed in what the payer deems a timely manner.
For example, some patients may be confused about their insurance coverage. By the time primary and secondary responsibilities are sorted out, it may be past the “X” days filing window. But at that point for a payer to deny an otherwise legitimate claim is absurd and unfair. After all, the payer had a financial responsibility to pay the claim, and what real difference is there if that claim is submitted in less than 90 days or, perhaps, is submitted at 113 days? The financial responsibility was there and it should not magically disappear.
When the Payer Creates the Problem
Every practice has felt the frustration of submitting a claim in a timely manner only to be told, “We never received it.” That’s par for the course, and upon resubmission the claim is usually paid.
But sometimes a payer’s administrative processes will totally fail, and then the payer disingenuously tries to shift responsibility for the problem to the practice.
One administrator told me of a nightmarish dispute in which the payer had rejected claims, stating that one of the practice’s physicians was not on the panel.
Communications went back and forth for some time until the payer finally found the paperwork and admitted that in fact the physician was a contracted provider on the dates of service. But despite its admission the payer then declared that the deadline for those claims had passed, and they were no longer valid!
That’s outrageous conduct. But this sort of thing is not unheard of.
A Lifeline
Well, take heart. In most states you might have a lifeline when battling with payers who deny payment for claims they say were filed too late. The lifeline from California, and now mirrored in full or in part by many other states, is called the “notice prejudice rule.”
In essence, it says that an insurer can only deny a late-filed claim if it can prove it would be hurt (in legal terms, “prejudiced”) by the late filing. Absent that, an otherwise valid claim should be honored. The burden of proof to show damage is placed on the insurer.
What makes this notice prejudice rule so interesting is that in some states physicians can use it when payers try to deny payment by hiding behind the ERISA regulations. In some states — your attorney can tell you which ones — the rule trumps ERISA. That’s astounding given how provider-unfriendly ERISA has always been. (The key ruling came from the U.S. Supreme Court and is found in
Unum Life Insurance Co. of America v. Ward, Supreme Court of the United States, No. 97 – 1868).
The Notice Prejudice Rule in Application
A couple of years ago I was contacted by a California practice administrator who was having problems getting paid on some late-filed claims. I advised her to check into this notice prejudice rule. A while later I heard back that she had done as I suggested.
The practice’s attorney was not aware of the notice prejudice rule, but he checked and found that it was for real. He drafted a demand letter (used as a model for the sample letter below to which you can refer), and the practice then presented a copy to the problematic payers — in this case secondary to Medicare. And it worked!
The practice has received payment on several claims that previously had seemed destined for write-off. Dollars that looked to have been lost were suddenly found and added directly to the bottom line.
(Note: apparently some attorneys, including many in health plan legal departments, are not aware of the notice prejudice rule. So don’t be surprised if your attorney or your state society’s legal counsel has not heard of it.)
A Power Tool in Your Armamentarium
The notice prejudice rule is one of those rare, provider-friendly aspects of insurance law that can tip the scales in your favor. However, please understand that the rule can be used successfully in some states but not in all, and within those favorable states, it can be used in some circumstances but not necessarily in all. Thus it’s not a “slam-dunk,” and much depends on state-specific laws that vary greatly.
For example, Texas has a notice prejudice rule covering late-filed claims, but it also has a prompt payment law that mandates claims must be submitted within 95 days or a payer can reject them. So there is conflict, and when it comes to pass that these regulations are tested against each other it will be interesting to see which prevails.
Your success using the notice prejudice rule may also depend, in part, on how specifically your Provider Agreement is worded. For example, in some states a specified filing deadline, such as 90 days, may be tougher to challenge than a less specific limit, and may or may not take precedence over the more general intent of the notice prejudice rule. So it’s essential that you check with an experienced attorney in your state to see if the notice prejudice rule can help you collect even after a payer says the time has passed on a claim and you’re out of luck.
Note of Caution: Do not use the sample letter on page 46 by simply inserting your practice’s name and that of a problematic payer. Instead, show the sample verbiage to your attorney, and ask whether the notice prejudice rule applies favorably in your state. If your attorney says that it does then this sample letter can be used by counsel as a starting point to craft a letter customized to your specific circumstances and the rule’s applicability in your state.
Gil Weber is a nationally recognized author, lecturer and practice management/managed care consultant to physicians and industry.
He can be reached at (954) 915-6771 or by e-mail at gil@gilweber.com. Also, visit his Web site at www.gilweber.com.
Disclosure: These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.
The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice.
Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any actions that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.
