At a Glance
- Ensuring accurate insurance payments is crucial for your practice’s financial health.
- To identify underpayments, obtain fee schedules from insurance companies and explore publicly available reimbursement rates, while also trying communication if necessary.
- Establish an automated process to compare incoming payments with expected rates, and incentivize staff to prioritize accuracy, recognizing that underpayments can come from both insurers and patients.
For your practice’s financial health, it’s unsustainable to have a significant portion of insurance payments be incorrect. While insurance companies once paid a percentage of your charge, they now set prices for each service. The challenge is to secure that price. Underpayments in medical billing often go unnoticed but still impact your bottom line. Improving your payment tracking and management will pay off now and later. Here’s how to do so.
Know what you should get paid
It’s impossible to identify underpayments if you don’t know what you deserve to be paid. Request a current fee schedule from all relevant insurance companies. They may hesitate to share their rates for all 10,000-plus CPT(R) codes. Instead, focus on your top 50 CPT codes, including modifiers. Compile and ask the payer to provide its fees for each.
Explore other sources
Some companies may be unresponsive to pricing inquiries. But Medicare and Medicaid reimbursement rates are publicly available. The Centers for Medicare and Medicaid Services (CMS) offers an online tool for Medicare. Most states also post their workers’ compensation rates online. However, acquiring commercial reimbursement data remains a challenge.
Try alternate strategies
If you are signing up with a payer for the first time, require that a list of the rates for your specialty’s top services accompany your contract before committing. If you are already contracted, refer to the provider manual for contact options like chat, email, or the customer service center. Some payers offer expedited provider lines or assigned representatives — reach out to them. If those channels don’t work, connect with the medical director. Document each communication attempt. If your efforts fail, write to the medical director to request the fee schedule. No response? Write again, but CC your state’s insurance commissioner. Many states mandate insurance companies to respond to physicians’ rate requests. If you are unsure about your state’s regulations, ask your medical society, which can also fill you in about the AMA’s settlements with major insurers over unjust payment practices.
Establish a process to ensure payments are correct
Having your rates is the first step; ensuring that you get them is the second. While your staff could manually compare each incoming explanation of benefits (EOB) against the payer’s rate schedule, doing so is time consuming. Instead, opt for automation: choose a practice management system that stores rate schedules and auto-checks each line item. Comparing the incoming remittance with the expected rate flags discrepancies. Act on underpayments as diligently as you would denied claims. Examine underpayments by line item, not by encounter, to ensure that each is accurate. Remember that rates change, so update rates in your system for this process to be successful.
Evaluate staff motivation
Determine if your incentive structure might unintentionally discourage staff from ensuring accurate payments. Tracking key performance indicators, such as days in receivables outstanding, is critical, but be wary of a potential oversight in identifying underpayments. Here’s how it can happen: when payments from insurers are below your full charge, the difference is considered a contractual adjustment. By contract, you may or may not be able to seek that difference from the patient; the variance is typically written off. Posting the payment, and making the adjustment, clears that invoice from your receivables. So some staff might prioritize doing so over ensuring payment accuracy in order to wrap up their work. You may be inadvertently encouraging this behavior if you focus on100% completion rates or reward high-volume production. Instead of emphasizing just reduced receivables and increased throughput, promote a balanced approach. Highlight the importance of payment accuracy and cash flow, which, after all, pays their salaries.
Recognize that underpayments may not come from insurers
Insurance company fee schedules represent total allowable collections from the insurer and from the patient. Historically, insurers covered the majority of this. With the uptick in high-deductible plans and increased patient financial responsibilities, patients now shoulder more healthcare costs. If you consistently get less than expected for contracted services, consider the impact of uncollected coinsurance, unmet deductibles, and missed copayments from patients. You may have to start paying closer attention to collecting cash more effectively from both patients and their insurance companies.
Don’t just pursue medical billing underpayments — prevent them
Underpayments aren’t just occasional nuisances. It pays to pursue them, but proactive prevention is more efficient. The return on investment to improve detection of underpayments can pay off year after year. Now is the time to ensure that you receive your rightful earnings.
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