Timely Filing Issues
A Day Late and a Dollar Short: Claims Denied Due to Failure to Timely File Can be Appealed
Your business office
missed the timely filing deadline by 30 days.
The claim is filed and
comes back denied.
Now you have to make a
decision - pursue the patient, write-off or appeal. If the coverage is
managed care, your choices are narrowed to just two. The answer is simple.
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deadlines are getting shorter and medical billing more complicated. With
the heightened concern over fraud and abuse, medical business offices must
scrutinize claims even more closely before submitting. This is a poor
combination for any medical business office trying to meet an arbitrary
deadline imposed by the carrier, but an advantageous one for the insurers.
Providers must take an aggressive appeal position on such claims.
Medical providers do
have a valid basis for appealing any denial based solely on failure to
file a claim by the filing deadline.
Prior to 1980, a
majority of courts held that notice provisions in insurance policies were
mutually agreed upon conditions of coverage.
Therefore, failure by
the insured party to adhere to such provision were grounds for claim
denial. However, many courts now look at insurance contract provisions as
far from a mutual agreement and acknowledge that the true nature of
insurance contract negotiating is a take-it-or-leave-it offer by an
insurance carrier. Such non-negotiable contracts are known as adhesion
contracts and the courts have determined that unfair contract clauses
should not be a technical "out" for insurance carriers to avoid liability.
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According to Insurance
Coverage Litigation by Anderson, Stanzer, Masters and Rodriquez, there has
been a dramatic shift in recent years toward this line of thought and its
application to policy notice provisions. The "modern rule," followed by
most states including Texas, is that an insurance carrier must prove that
it was prejudiced by the policyholder's delay in providing notice in order
to avoid coverage.
"Courts following the
old rule tend to view insurance policies as consensual contracts;
according to this view, an inexcusable breach of a condition precedent may
result in the complete forfeiture or rights under the insurance policy.
Courts that follow the modern rule, in contrast, tend to see insurance
policies more as they really exist today, as contracts of adhesion.
According to this view, a technical provision that might work to the
disadvantage of the nonassenting party - the policyholder - should not be
strictly enforced," states the authors.
states have rejected the old notice rule in part because it was
antithetical to the policyholder's reasonable expectations of coverage, a
doctrine that has been adopted in a number of jurisdictions, in part, to
address the imbalance of bargaining power in typical insurance policy
Terms such as
"imbalance of bargaining power" and "take or leave it" aptly describe the
unfair contraints under which most medical providers sign managed care
contracts today. Providers do not like signing documents agreeing to no
reimbursement if a claim is not filed within 90 days; however, they do so
daily. Most providers can and do submit claims within such time
constraints. However, an occassional claim does not follow routine
procedures and, in those cases, there is a basis for appeal.
Your appeal letter
should raise the question of whether the insurer was prejudiced by the
late filing. In Insurance Coverage Litigation, the authors state that most
court cases applying the modern rule have recognized that the purpose of
notice provisions are to give the carrier an opportunity to investigate
the claim, prepare a defense and to protect against fraud. If the carrier
can still fully perform these routine claim processing and risk management
functions, it may not be able to prove any prejudice resulted from the
late filing. In Texas, the burden of proof is on the carrier to establish
it was not prejudiced by receipt of a claim beyond the contractual
Since the burden of
proof is on the carrier, your appeal letter should demand an explanation
of how it was prejudiced by the late filing of the claim. Ask that the
legal department review the matter and provide a written explanation as to
the specific prejudice resulting from the late filing. Further, point out
that the complete medical record is available and contains all the
necessary information to process the claim.
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- Medical Necessity
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- Lack of Precertification
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