The health care hue and cry grows louder every day; Medical and mainstream publications are filled with stories focusing on the barriers doctors and hospitals face in getting paid in today's health care environment. Pre certification, managed care and tight timely filing deadlines are just some of the hurdles medical professionals must finesse when seeking reimbursement. And if one hurdle is missed, the effort and attention expended in the examining room is all for nothing in the business office.

Yet most medical providers and, or consumers ignore what is perhaps the most effective action they can take for securing immediate payment on a denied medical claim - filing an appeal.

Did you know that Ninety-five percent of the doctors and hospital offices that I have worked with do not appeal their insurance denials? They do not know how and they do not have the time.    My companies motto is to appeal everything.  The worst thing the insurance company can say is "no" but then we ask again, we call this the mommy, daddy effect.

Are Appeals Worth the Effort: 
Absolutely! While many carriers do not routinely release the number of claims overturned on appeal, statistics indicate that a well written appeal may be effective in securing payment. According to an article printed by The Dallas Morning News, "Texans File Few Health Care Appeals," the Texas Department of Insurance is receiving a fraction of the expected number of appeals under a law requiring carriers to pay for external reconsideration of claim denials. The story quotes several insurance industry officials who believe appeal numbers are low because most appeals are favorably resolved through the insurance carrier's appeal process.

That story states Prudential HealthCare has a two-step internal appeals process and about 25 percent of treatment denials are overturned during the first phase. Of those cases appealed a second time, another 20 to 25 percent are overturned.

Ever Heard of the "Good Faith Act", "the Bad Faith Act" and the "Unfair Claims Settlement Act"?

It is imperative that a physician's and, or hospital office doesn't just base their claim's appeal on billing guidelines but also the regulatory environment that the payor must exist under.  I encourage physicians and hospitals to know and understand state and federal insurance laws and regulations such has the "Good Faith Act", the "Bad Faith Act" and the "Un Fair Claims Settlement Act".  

Most physicians, hospitals or consumers don't even know these laws exist or how to apply them to get those claims overturned, but you better believe the insurance companies know these laws exist and use them to their benefit.

Now let's look at what the "The Good Faith Act" states:
While the duty of good faith and fair dealing has been held to apply to both insurance companies and policyholders, only insurance companies can be said to owe a fiduciary duty. In fact, insurance companies have argued that very proposition. In one instance, the insurance company argued that "any fiduciary duty rests with the insurers on behalf of the insured, not vice versa."

In other words the insurance companies know that they received and accepted the policyholders money this binds them to the policyholder by law, and the policyholder selects a certain hospital or doctor per their agreement with the insurance company.  Now the hospital and, or physician accepted and treated the policyholder in "Good Faith" knowing they would receive payment from the insurance company regardless. 

In other words the insurance companies know they owe the responsibility to the policyholder and the treatment of that policyholder of theirs regardless!

Now let's talk about Bad Faith Claim
When an insurance company fails to uphold the duties it owes to its policyholders, the insurance company has committed a bad faith act.

Insurance companies owe their policyholders (or "insured's") important duties by virtue of the insurance contract, including the duty of good faith and fair dealing. For example, when a policyholder files a claim with his or her insurance company (or a hospital, and or physician files a claim for the policyholder such as assignment of benefits), the insurer is required to conduct a reasonable and full investigation into the claim. The insurance company cannot arbitrarily deny the claim, delay payment or decide to pay less than the full value of benefits owed under the insurance policy.

Unfortunately, bad faith practices have become far too common in the insurance industry. While many insurers are more than happy to accept a policyholder's premiums, they have been less than willing to pay out the same policyholder's legitimate claims even when those claims clearly are covered by the policies they issued.

Bad faith acts can occur under any type of insurance policy, including auto, homeowners, health, disability, life insurance, boat and recreational vehicle policies.

In some cases, insurance companies also will use a policyholder's previous claims history as grounds to deny a current claim. (This is the reason why they ask for medical records at times). This practice is a bad faith act. Insurance companies have the opportunity to assess the risk a particular policyholder may pose at the time the policy is underwritten. Based on this risk, the insurance company decides the cost and level of protection it will offer the policyholder. After the underwriting process is completed, however, the insurance company should not use a particular policyholder's claims history as a reasonable basis to deny a new claim for benefits.

Unfair Claims Act
Can't refuse or delay claims without a darn good reason. An insurance company may not refuse to pay your claim or delay payment without a valid reason. It must promptly provide you with a reasonable explanation why your claim was denied or why a compromise settlement was offered. The insurer is required to make a good faith attempt to process a prompt, fair, and equitable settlement of claims in which liability is reasonably clear.

By taking the time and applying these laws in the body of your appeal letter you will have greater success in overturning and winning that appeal.  

Cynthia Martinez, CPAM is the CEO of Specialized Medical Recovery Team based in Amarillo, TX. She and her team and dedicated to providing assessments on your Revenue Cycle. smrt.cynthia@live.com, http://specializedmedicalrecoveryteam.health.officelive.com