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Responding to a rapid rise in downcoding and retrospective denial of provider claims by payers, the American Medical Association is organizing a campaign to get lawmakers and regulators to crack down on the problem.
As part of this effort, the AMA plans to lobby health plans and utilization review organizations to give both providers and patients timely written notification explaining why claims are denied and the clinical rationale used in making the determination. The AMA also wants insurers to provide a description of the appeals process when claims are denied retrospectively or when a service is downcoded.
A Dec. 3 on-line survey by the AMA found one-half of responding physicians had had medical claims denied retrospectively by managed care plans over the previous 12 months. Of these, one out of two respondents had had between 1% and 3% of their service claims denied retrospectively. Another 29% said 10% to 19% of their claims had been retrospectively denied, while 13% said 20% or more of their claims had been retrospectively turned down over the last year, the survey found.
The most common reasons given by the managed care plans for retrospectively denying payment was that the service was not covered (27%); prior authorization had not been obtained (22%); or the service had not been coded correctly (12%).
The problem of retrospective denial has become so troublesome in New Jersey that the state is considering legislation making insurers pay for services unfairly retrospectively denied, say AMA officials. Meanwhile, downcoding continues to be a problem with payers, the survey also found.
Some 45% of physicians surveyed said that between 1% and 9% of their claims had been downcoded in the last 12 months; 19% indicated that between 10% and 19% of their service claims had been downcoded, and 11% said that 20% or more of their claims had been downcoded. The most frequent reasons given by managed care plans for downcoding was that the claim was coded incorrectly (43%), or the service was not medically necessary (20%), according to the report.