When is it time to enlist your patient's help
in getting claims paid?

By Susan Frager, LCSW

If you’re a participating provider with any managed care panels, your contract most likely states that you must accept assignment, i.e. accept payment directly from the insurance company for your services. You cannot bill the patient except for any applicable deductibles, co-payments, or coinsurance. If there are claims problems, you are expected to resolve them with the insurance company; you cannot simply tell the patient to “pay up and handle it yourself.”

Managed care companies, of course, put this provision in their contract for a reason. They want to make sure their patients get care without having to pay more than is their responsibility under their policy. At the same time, although it is never formally acknowledged, insurance companies hope that by putting a number of obstacles in the way of claims payment, a certain percentage of providers will simply write off the charges and not pursue the claims; thus saving the company money and earning them more in interest.

So, is it ever appropriate for you to expect your patients to take care of their own claims issues if you’re a contracted provider? Actually, there are times when the answer is yes. (Please note this only applies to private, commercial insurance - government payers have their own rules). Certain situations cannot be handled by a practitioner’s office; by definition, therefore, they are a patient’s responsibility:

1. Eligibility/COBRA
2. Coordination of Benefits (COB)
3. Full-time student status
4. Pre-existing conditions

Eligibility may seem obvious. If the patient’s policy has terminated or was never eligible to begin with, your contract with the insurance company does not apply. But there’s sometimes more to the story. What if the policy is supposed to be active, but there’s a computer glitch? It happens frequently, especially at the start of the year. Apparently, even in the age of real-time computer communication, benefits have to be “loaded” the old-fashioned way, from eligibility tapes received from the patient’s Human Resource department. HR sends the info to the insurer, who then must send it on to the mental health carrier, if the mental health benefits are “carved out” (i.e. administered separately from the medical plan). During this delay, a patient may show as not eligible. COBRA policies work similarly. When patients elect to continue coverage through COBRA after leaving a job, getting divorced, or some other circumstance, they have until the end of the following month to pay the premium for the preceding month. In other words, patients have until October 31 st to pay September’s premium. Then, when the COBRA premium is received, the insurer has to process it and notify the mental health vendor. This could take up to an additional two weeks. Thus, claims for September dates of service could be processed long before the second week in November - and denied as “not eligible”

Why is this the patient’s responsibility? Because providers certainly are not able to influence when or how Human Resources communicates with insurance companies, or when insurers communicate with mental health vendors, or the processing of patients’ COBRA premiums.

Good management of accounts receivable means staying on top of what patients owe, why insurers are not paying, and intervening promptly before the amount of money owed gets to be too large. At the first hint of any eligibility snafus, it’s best to get the patient involved. Often problems can be determined by a phone call to verify benefits prior to or just after the first appointment. If there’s an eligibility problem, a phone call from a patient – particularly one with a bill in hand! – might resolve the issue. When clients elect COBRA coverage, it’s a good idea to explain how COBRA works. While you should not bill the patient if they have stated their intent to pay their COBRA premiums, it is important to follow through with the patient with regard to when payments are sent. If after 2-3 weeks that COBRA premium is not processed and claim(s) continue to deny as “not eligible,” the patient needs to get involved.

“ Coordination of Benefits” is the process used by insurers to determine, in the event a person has more than one policy, which policy should pay first. There are formalized rules the industry has agreed on; patients cannot simply choose which policy they prefer. Here are a few of the most common guidelines/situations, although keep in mind this is certainly not an exhaustive list and there will always be special situations that occur:

Medicaid is ALWAYS the payer of last resort (bill Medicaid last in all situations);

Following from #1, if a patient has both Medicare and Medicaid, then that is the order you file the claims.

Medicare can be either primary or secondary if the other insurance is commercial; it depends on the situation and must be determined by the Medicare Part B carrier’s Secondary Payer Unit.

If a retired member of the military has Medicare and Tricare, that is the order to file the claims (the Tricare claims go to a special unit called Tricare For Life).

When a patient has Medicare but has a spouse that is still working, the commercial insurance policy of the working spouse is primary to Medicare.

When two spouses each carry their own insurance and each policy also covers the other spouse: If you are treating the husband, you would first bill his policy, then bill his wife’s. If you are treating the wife, you would first bill her policy, then bill her husband’s.

When a child is covered under both parents’ policies (non-divorced parents): The “Birthday Rule” applies: the policy of whichever parent is born first in the calendar year is the one that is primary. Not whichever parent is older; whichever birthday comes first. In other words, dad might have a birthday of 9/1/56 while mom was born 3/12/60. Dad is older, but mom’s policy would be primary because March comes before September.

When a child is covered under both parents’ policies (divorced parents): In the absence of a court order specifying which policy is primary, the Birthday Rule applies. However, frequently the divorce decree spells out whose insurance is to be primarily responsible, and it is not uncommon for parents to have to present copies of the court order to their insurances in order to establish who is to pay first. It gets trickier still when the parents have re-married and children are covered by step-parents; always ask if there is a court order.

Given these and the myriad of other situations, it is clearly not always easy to determine which is the primary payer. When in doubt, do not try to figure it out yourself and do not depend on the patient either. How can anyone possibly know all the arcane rules? When you guess, you have a 50% chance of being wrong – and having to re-file all the claims, sometimes years later, can not only be a headache but could cost you money in takebacks. Instead, tell the patient that s/he needs to fill out a “Coordination of Benefits” (COB) questionnaire with both insurers. Most insurers will have a copy of their questionnaire available online, or the patient can call to get one mailed out. This process will determine the correct filing order.

Often, the first claim of the year or the first claim to an insurer that indicates the existence of another policy will trigger a COB questionnaire being mailed out to the patient. Keep in mind…if there is even the remotest possibility that another carrier is responsible, naturally an insurance company is going to try not to have to pay! If the COB process occurs after claims are filed, it is the patient’s responsibility to comply. Many times patients aren’t sure what the COB letter means when they get it, so they throw it away. When that happens, you won’t get paid. Insurers are required by law to notify you, either through a letter or on a remittance advice/explanation of benefits (EOB) form, that there will be a delay in processing the claim. The notification will state they are waiting for information from the member about other insurance. That should be your cue to contact the patient immediately to make sure they are cooperating with the COB request. Ignoring COB could be costly for you; patients tend not to pay your bill because they believe (and rightly so) that it is the insurance company that should pay, and the insurance company won’t pay until it is determined which carrier is primary.

Verifying full-time student status is a frequent cause for delays for anyone treating young adults. Between ages 18 and 25, policies often specify that a young adult must be a full-time student in order to qualify for benefits under a parent’s policy. So, insurers demand proof of student status, usually in the form of a letter from the school’s registrar’s office. If they don’t get it, they won’t pay! Here too, the law requires that insurers notify providers who have submitted a claim that the claim is delayed pending submission of student status proof. And once again, it is the provider that is frequently the financial loser‑unless the issue is dealt with while the young adult is still in treatment. Often sending a bill provides the impetus necessary for the young adult patient to take responsibility to prove student status to their insurer. Don’t wait until the unpaid bill gets too large!

Denials of benefits due to pre-existing conditions, contrary to popular belief, are not illegal. HIPAA severely curtailed this practice, but did not eliminate it entirely. The law states that for patients transitioning from one group policy to another (including COBRA), pre-existing restrictions are illegal if there was no gap in coverage greater than 63 days. However, patients often have to prove there was no gap by sending a certificate of coverage from the old insurer to the new one. It is a matter of routine that upon termination of an insurance policy, a carrier will send this certificate; however, patients often don’t know what they are supposed to do with it! Practitioners are powerless to affect pre-existing denials; the only way to get pre-existing limitations waived from the new policy is 1) if the patient’s policy qualifies under HIPAA; and 2) the patient must send the certificate of prior “credible” (i.e. HIPAA-eligible) coverage from the first carrier, to the new carrier (and of course, follow up on its receipt and processing). Another option, if the patient complies and there is no pre-existing history, is to go through the medical record review process. However, this takes time during which the unpaid bills are multiplying.

If the gap between policies was longer than 63 days, or if it is individual insurance (legalized discrimination against the self-employed!), denial of claims for any condition determined to be “pre-existing” is legal for the first 12 months after the policy effective date. Typically, “pre-existing” is defined as any condition for which treatment was sought in the 6 months prior to the policy effective date.

These situations can be costly to practitioners if left unresolved, but as long as the patient does his/her part, they don’t have to be. Good practice management means being proactive and communicating with your patients about financial and insurance issues in a timely manner. Therefore, it’s important to identify these situations early, to prevent the accounts receivable from getting too overwhelming. Verifying benefits either prior to or soon after the first visit can uncover potential problems, as can prompt claims filing and follow-up. Patients tend to disappear from treatment when bills get too high; it’s important that if you send a bill, you discuss with the patient what his/her options are and how s/he can participate in the process of getting the claims paid.

Susan Frager, LCSW, is a nationally recognized managed care expert. To access the Billing Hotline or to suggest future newsletter column topics, call Susan at 636-464-8422, or email: susan@psychadminpartners.com. © Susan Frager 2007.