Beware Of Insurance Underpayments
Do you know if insurance companies are paying you accurately in accordance with your contracts? The odds are, as you will see below, that they are not. Most practices lose between 5 and 10% of their potential collections to insurance underpayments that are never identified or pursued.
The American Medical Association recently compiled a National Health Insurer Report Card for seven of the biggest payers in the industry -- Anthem BCBS, Aetna, Coventry, Cigna, United Healthcare, Humana, and Medicare. Every single one of these payers failed to abide by their contracted payment rates to varying degrees.
The worst offender was United (did not pay contracted rate in 38.4% of cases), followed by Cigna (did not pay contracted rate in 33.8% of cases), Aetna (did not pay contracted rate in 29.2% of cases), Anthem BCBS (did not pay contracted rate in 27.9% of cases), Humana (did not pay contracted rate in 15.8% of cases) and Coventry (did not pay contracted rate in 13.3% of cases). Even Medicare missed contracted payment rates in almost 2% of cases.
It is hard to methodically track these underpayments. If one looks across multiple practices you will see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all practices. The following month you will see the same payer switch to underpaying a different set of CPTs.
Most underpayments aren't substantial when considered one by one, but they can accumulate to thousands of dollars in the long run for any medical practice. Payers use a combination of switching the CPTs being underpaid every month and keeping underpayment amounts too small to attract notice, which makes these underpayments hard to spot.
It's also hard for medical billing services to find when they don't compare your payments to your contracted rates (as well as properly dealing with multiple procedure complexities). Properly maintaining and using more than one complex allowable table is difficult at best.
Any billing service (or stand-alone medical practice) needs to acquire and fully use industry technology to find and pursue underpayments. Most systems being used today are woefully ill-prepared to handle such cases -- a good system should effectively manage, identify, and pursue these underpayments, but most systems fail in at least one of these areas. It's a truly complex task that's difficult to manage.
But it's still very important to try solving the problem. Merely comparing payments to allowables can increase your practice's revenues by 5-10%. Of course, you'll need a strong process, some really good reporting technology, and a methodical way to track complex procedures. Done correctly, you'll add thousands of dollars to your practice's profits.
2009 copyright by Carl Mays II
About the Author:
Carl Mays is Chairman and CEO of ClaimCare, a medical billing company that services clients across the nation. Carl is an expert in medical billing and physician revenue cycle management. He has an MBA from Wharton and a BSE from Princeton University.
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