Nov 8, 2009
How To Keep Insurance Underpayments From Hurting Your Practice
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.
Recently, a National Health Insurer Report Card was compiled by the American Medical Association. The AMA looked into the payment performance of the following big payers — Medicare, Human, Aetna, United Healthcare, Anthem BCBS, Cigna, and Coventry. To certain extents, each payer underpaid practitioners regularly.
The worst of the lot was United Healthcare, which failed to pay contracted rates in 38.4% of their cases. Cigna was the second-worst performer, underpaying 33.8% of their cases. Aetna followed at third place (29.2%), then Anthem BCBS (27.9%), Humana (15.8%), and then Coventry (13.3%). Even Medicare underpaid 2% of their cases.
It’s not easy tracking these underpayments. If you look across different medical practices, you’ll find the exact same CPTs getting underpaid at around the same amount by the same payer during the same month. But the next month, you may notice the payer switching to a different group of CPTs.
These under payments are not huge but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount “under the radar” can make this difficult for an individual practice 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.
A medical practice or billing service must deploy and fully utilize the proper technology to systematically and effectively identify and pursue underpayments. Most billing systems do not allow effective management, identification and easy pursuit of underpayments. They typically fall short on at least one of these areas. Without the correct technology and supporting processes efforts to capture underpayments die under the complexity of the task.
Despite the complexity, however, it is worth solving this problem. Comparison of payments to allowables can increase a medical practice’s collections by 5 to 10 percent. This of course requires a strong process, powerful reporting technology and ability to track complex procedures methodically-in the end, it can however add thousands of dollars to your bottom line.
2009 copyright by Carl Mays II
Carl Mays is President and CEO of ClaimCare, a medical billing company that services clients in over 20 States. Carl is an expert in medical billing and physician revenue cycle management. He has an MBA from Wharton and a BSE from Princeton University.