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David McGill Blogger

The Power of the Appeal

Posted by David McGill | September 20, 2012

Figuring out how to deal with a claim denial on the ground that the provided device/service was either (a) medically unnecessary or (b) experimental and investigational is a critical component of your business’s long-term success. Search the internet and you can find hundreds of articles detailing the elements of a successful appeal in a few hundred words. Attend a seminar and you can spend a day getting blow-by-blow instructions on the elements of a successful claims and appeal process. But both of these solutions assume an important truth: that appealing a denied claim actually works.

Though the data on this isn’t new, so few people know about it that spending a moment on the topic may prove an eye-opening exercise.

Why You Should Appeal: the Data Shows That it Works!

In 2011 the OIG published a report titled “Data on Application and Coverage Denials”. Key findings included:

  • In the first quarter of 2010, only one-half of one percent of denied claims in Ohio were appealed. Stated another way, 99.5% of denied claims in that state ended with the insurer’s denial
  • Successful internal appeals of claim denials ranged from a low of 39% for NY HMO’s to a high of 59% for Connecticut HMO’s. Overall, across the four states examined – CT, MD, NY, and OH – internal appeals resulted in successful outcomes nearly 50% of the time.
  • Successful external appeals of claim denials ranged from a low of 23% in OH to a high of 54% in MD and CA. Most of the other states analyzed – CT, FL, NY clustered between 40% and 50% external appeal win rates.

What Does This Mean?

First, it’s important to recognize that most denials result in … nothing. Most suppliers/insureds never appeal the initial denial of their claims, letting payers walk away from any financial responsibility for the treatment scot free.

Second, those that do choose to appeal win. A lot. According to the data, your worst-case scenario involves a nearly 1 in 4 chance of defeating the insurer. While that may not sound fantastic, on a prosthetic claim worth $15, $25, or $50 thousand, why wouldn’t you take the time to file an appeal for a 25% chance to prevail?

And as noted, that’s the worst-case scenario; the data show that more often than not, your chances of successfully appealing a denied claim range from 40 to 50+ percent.

Finally, remember that this data only reflects averages. If you develop a sophisticated claims and appeal process, those numbers can trend higher. We know anecdotally that customers who take the time to develop an appropriate documentation trail win 75%+ of their claims. In my past life as a co-owner of a DMEPOS supplier, we had an appeal win rate in excess of 90%.

I will leave you with one final story: a customer who attended a reimbursement seminar I delivered came up to me two weeks ago at a conference. He shook my hand and told me that his company had implemented our recommendations. Since doing that last August, in one of the most claim-unfriendly environments in recent memory, his company has had 12 claims for high-end prosthetics denied. The company has appealed every one. They are 12-0.

Take the time to appeal. If you already do that, then take the time to learn how to do it better. The results are worth the investment.

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