Updated on: November 28, 2016

Clearinghouses: Front-End Payer Rejection Rates Low

By Betty Lengyel-Gomez
Original story posted on: November 2, 2015

The healthcare clearinghouse industry has not seen a substantial increase in call volume or cases related to the recent implementation of ICD-10, but as a group, the Cooperative Exchange anticipates that as activities ramp up over the next few weeks, this may change. 

Clearinghouses are finding that their numbers are running about the same as they were prior ICD-10; there has been no significant increase or decrease reported.

In the first few days of October, clearinghouses initially received less than 10-percent volume for ICD-10; however, those numbers steadily increased day by day. As of Oct. 23, a total of 75 percent of total claims volume was sent coded in ICD-10, and this volume has remained consistent. Our members report that 99.8 percent of providers are coding claims in ICD-10.

Since Oct. 1, payer front-end rejection rates are also low. Both clearinghouse and payer rejection rates are within the baseline average since the transition. 

Not only has call volume generally remained the same during this ICD-10 transition, but also in some instances, it has decreased. We believe that early testing and education was an important component of readiness for those in the industry that have led us through this transition. Cooperative Exchange members have processed millions and millions of dollars’ worth of claims that have made their way to adjudication with only minor ICD-10 issues.  

Early Issues

Some payers have implemented ICD-10 code set-specific rules in their front-end translators and are rejecting entire batches with a batch acknowledgement (999) rather than at the claim acknowledgement level (277CA).  

Our members experienced an issue with trading partners with erroneous rejection of codes, for example e-codes specifically. Some providers are sending ICD-10 and ICD-9 codes on the same claim, causing clearinghouse rejections.   

Clearinghouses are seeing some claims with ICD codes with incorrect qualifiers as well. This issue is likely due to incorrect settings within the vendor’s software. Our members are also seeing pockets of unforeseen issues with very small payers, but they are reacting quickly to fix them. It seems as if some payers have made changes to their systems after Oct. 1 that are causing unwarranted rejections not related to ICD-10.

Best Practices and Recommendations

  • Qualifiers and codes must match. If you send ICD-10 codes, you must send ICD-10 qualifiers. If you send ICD-9 codes, you must send ICD-9 qualifiers.
  • Payers may have their own requirements that do not follow Centers for Medicare & Medicaid Services (CMS) guidelines for claims that span the compliance date. You need to look at individual payers’ guidance on this topic.
  • ICD-10 LCDs and NCDs became active as of Oct. 1 and will apply to ICD-10 submitted claims.
  • ICD-10 codes must be submitted with the required number of digits.
  • Early identification of an issue is critical to minimize a negative impact to your business as well as your customers and their revenue.
  • Monitoring is essential for inbound/outbound claims, payor rejections and 835 reimbursements.
  • Know your business pre-ICD-10 so comparisons can be made for claims, rejections, and reimbursements. A variance in numbers will lead to early identification.

Recommended ICD-10 Provider Benchmark Metrics

  • Front-end rejection error rates
  • Percentage of 277 CA front-end rejections by status code measured over unit of time
       (usually two-week intervals)
  • Revenue payment cycle variance metrics                                          
  • Average time (days) from claim submission to payment
  • Denial rate variance metrics (payor/provider benchmark)
  • Dollar amounts submitted on claim, amounts denied
  • Percentage of ASCX12 835 payment denials by type of denial code (CARC/RARC)

Lessons Learned

Clearinghouses are all in agreement that early preparation and educating clients was key to success in the transition to ICD-10. The good news is that there’s nothing but positives to report. In general, claims are moving, payors are accepting, and rejections are very low. 

Rejections are in line with our everyday metrics created before ICD-10. We will be watching remits closely in the coming weeks. Promote X12 best practices to appropriately reject claims in a provider-actionable manner via clear claim status messaging (277CA) versus a 999 acknowledgement batch file rejection. The 999 file acknowledgement transaction should only be used to report X12 syntax or TR3 HIPAA errors. Clearinghouses were ready for the transition and have spent an abundance of time and energy on testing to be sure the transition for their clients was as smooth as possible.

About the Author:

Betty Gomez is the Cooperative Exchange ICD-10 liaison and the compliance manager/director of Government Healthcare Solutions for Xerox Healthcare, LLC.

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Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.

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