Introduction:

In the long-term care industry, Skilled Nursing Facilities (SNFs) must comply with the Centers for Medicare and Medicaid Services (CMS) regulations for submitting claims and receiving payments electronically. This requirement applies to various claim types, including Medicare, Medicaid, Veterans Affairs (VA), and private insurance claims. As the healthcare industry increasingly relies on digital infrastructure for these processes, the risk of system breaches and inefficiencies also grows. This case study examines the billing challenges faced by an SNF in California and how 24/7 Medical Billing Services resolved these issues after a major technical disruption.

Background: The Importance of Electronic Claims Submission

To comply with CMS requirements, SNFs use specialized software to submit claims electronically to federal agencies and insurance companies. Electronic Funds Transfer (EFT) is the preferred method for receiving payments, simplifying the process and reducing delays in cash flow. The software facilitates efficient submission and payment processes but is vulnerable to hacking and system outages. In this case, Change HealthCare, a primary provider of electronic claims submission software, was hacked, leaving many SNFs unable to process or submit timely claims.

Challenges Encountered by the SNF

A Skilled Nursing Facility (SNF) in California had contracted 24/7 Medical Billing Services to manage its billing processes just before the hacking incident at Change HealthCare occurred. The hacking event resulted in a temporary shutdown of the claims submission system, preventing the SNF from submitting its managed Medicaid claims.

Due to the shutdown, the SNF could no longer submit claims electronically through Change HealthCare’s software. The lack of claims submissions created a backlog, jeopardizing the facility’s timely filing and cash flow. The situation was further complicated by the SNF’s limited enrollment in alternative electronic claims systems, as it had only signed up for the State Medicaid Web Portal, which allowed a narrow scope of claims submission.

Immediate Solutions: Working Around the System Outage

To mitigate the immediate issue of submitting claims, 24/7 Medical Billing Services collaborated with the SNF’s Business Office Manager. They manually enrolled the facility into various insurance companies' Provider Web Portals, gaining access to submit claims manually. Although this process took about a week to complete, it enabled the facility to continue submitting claims.

However, some insurance provider portals only allowed submissions for professional claims (1500 Forms), which physicians, laboratories, and specialized service clinics typically use. Since the SNF needed to submit institutional claims (UB-04 Forms), the manual submission of weekly Medicaid claims was denied due to improper claim format.

After contacting the insurance company’s support center, it became clear that the portal was not designed to process institutional claims manually. To resolve this, 24/7 Medical Billing Services suggested the SNF enroll in Office Ally, an alternative electronic claims software system that could handle both Medicaid and managed Medicaid claims.

Partial Success and Ongoing Problems

Using Office Ally, the SNF successfully submitted claims to Medi-Cal and Kaiser Permanente Community Care, resulting in timely payments. However, issues with one of the managed Medicaid insurance companies persisted. The insurer continued to delay or deny claims processing, leading to significant cash flow problems for the SNF.

The root of the problem was the insurance company’s policy of taking 30 business days to upload, process, and pay claims—double the typical 14 business days expected under Medicaid and managed Medicaid claims guidelines. Furthermore, the company was not using standard Claims Adjustment Reason Codes (CARCs) as mandated by CMS, making it difficult to understand why claims were denied.

Best Practices for Resolving Claims Denials

The 24/7 Medical Billing Services team used industry best practices to resolve the situation. These practices included:

• Reviewing Denials: The billing staff reviewed the claims denials within the insurance provider’s portal but found that non-standard CARCs were being used, causing confusion and hindering resolution.
• Persistent Communication: Multiple attempts were made to contact the insurance company’s support center via phone. After being placed on hold or disconnected several times, the billing consultant escalated the issue by speaking directly with a supervisor.
• Documentation: Throughout the process, the team ensured that critical details were documented, including representative names, email addresses, supervisor names, and reference numbers, to follow up on unresolved issues.

Despite these efforts, the insurer failed to meet promised deadlines and provided inconsistent responses. After several weeks of communication, 24/7 Medical Billing Services recommended that the SNF contact the county Ombudsman’s office, framing the issue as a potential violation of residents’ rights or financial exploitation.

Escalating the Issue

Undoubtedly, involving the county Ombudsman proved highly effective. Although the Ombudsman could not investigate directly, they contacted the insurance company, which immediately responded. A conference call was arranged, and shortly after, the SNF received a lump sum payment covering several months' worth of claims.

While this payment resolved many of the outstanding issues, the underlying problem of the insurer’s 30-day processing policy remained. The SNF and 24/7 Medical Billing Services continue to work with the State Medicaid Agency to address the insurance company’s non-compliance with CMS guidelines.

Conclusion

This case highlights the complexities and challenges SNFs face in navigating electronic claims submission and managed Medicaid insurance processes. The technical disruptions caused by the Change HealthCare hacking incident exacerbated a difficult situation. However, 24/7 Medical Billing Services was able to secure timely payments for the SNF by using best practices of strategic workarounds, persistence in communication, and escalating the issue to the appropriate authorities,

The key takeaways from this case study are:

1. Electronic claims systems are vulnerable to disruptions, and alternative submission methods should always be part of a facility’s contingency plan.
2. Persistent follow-up and adherence to industry best practices are crucial in resolving claims processing delays and denials.
3. Escalation to external agencies, such as the Ombudsman, can effectively resolve insurance company non-compliance issues.

Therefore, SNFs can navigate these challenges while ensuring their residents receive the care and benefits they deserve by partnering with experienced Medical billing consultants like 24/7 Medical Billing Services.

Note: The name of the Skilled Nursing Facility (SNF) has been withheld for security reasons.