Managing Your Practice

Appealing rejected claims


As third-party payers become stingier and stingier with their payments, it becomes more and more important to hold them accountable for decisions that impact patient care – and your revenue. Physicians have the right to a full and fair appeal review of all rejected and underpaid claims; yet surprisingly, less than 5% of denied dermatology claims are appealed, according to one study.

Many practitioners seem to feel that appeals are simply not worth the time and effort, particularly in a high-volume field such as dermatology; but since the chance that appealing will increase your reimbursement is more than 50%, it is usually well worth the effort – particularly in the current climate of steadily decreasing reimbursements. Furthermore, once insurers become aware that you are scrutinizing your payment statements and challenging all unwarranted rejections, they will be less cavalier in denying legitimate claims.

Dr. Joseph S. Eastern

Dr. Joseph S. Eastern

Granted, navigating the appeals minefield can consume a lot of time and effort; but most appeals are relatively simple, easy to execute, and can be delegated to front-office personnel. For the rest, there are a number of ways to streamline the process.

The first thing your office manager should do is determine the reason the claim was rejected. In some cases, the benefits verification computer has ruled the patient ineligible, or decided that the provided service is not covered by the patient’s policy. If that is false, the appeal letter will be relatively simple; you can design a boilerplate form to cover those instances. If it is true, your pretreatment evaluation process needs to be examined; you should not be treating ineligible patients or performing ineligible treatments in the first place, unless such patients are made aware that their care will not be covered and that they will have to pay for it themselves. In some cases, the amount in dispute really is so small that the appeal process may indeed not be worth the bother; but such cases, in my experience, are quite rare.

Once you determine that it is worth the effort to go through the appeals process, you will need to familiarize yourself with the appeal procedure – which varies from payer to payer – and then incorporate all of the elements that comprise a successful appeal.

The basis of every appeal, obviously, is an argument against the reason given for rejecting the claim. Unfortunately, payers do not always spell out their reasoning clearly. Rejected claims often include only a cryptic statement on why the claim was denied, without explaining the motivation behind the actual denial. Explanations are often in the form of an important-sounding “code,” such as a “claim adjustment reason code” or “remittance advice remark code,” referencing a generalized, nonspecific rejection excuse. (This is a purposeful attempt, of course, to discourage you from fighting the denial.) Your manager may have to place a call to the payer, demanding more specific information.

If a valid reason is not forthcoming, the appeal process once again becomes simple. You should have another boilerplate for such circumstances; just fill in the blanks. If a specific reason behind the rejection can be identified, that will determine the basis of your appeal: coding, medical necessity, or administrative.

Coding appeals usually involve either miscoding by the practitioner, or misinterpretation of the correct code by the payer. If the fault is yours, admit it, and supply the correct code – with documentation, when necessary. If the payer has erred, clearly explain the error – again with documentation when needed – and spell out the reasons that payment is warranted (and expected) immediately.

Medical necessity appeals require you to go into detail about the patient’s medical history, condition, symptoms, and treatment. If treatment with an expensive medication has been rejected, explain the advantages of that medication over cheaper alternatives. A reference to accepted standards of care is often persuasive.

An administrative appeal may be necessary if you have a weak clinical argument. You’ll need to argue that the services you provided were consistent with how the payer defines appropriate treatment. If Medicare is the primary payer, a reference to appropriate passages in the Medicare Benefit Policy Manual is usually helpful.

If you get nowhere with written appeals, a peer-to-peer call to the payer’s medical director may solve the problem, since you can explain the patient’s specific situation in more detail, and appeal to your colleague’s empathy – and common sense.

Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at

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