Why Insurance Underpayments Are Hard To Track
Are you sure your insurance companies are paying you according to your contracts? You may be surprised to know that it’s unlikely that they are. The average medical practice loses approximately five to ten percent of their collections because most insurance underpayments are never pursued or even identified.
A recent National Health Insurer Report Card compiled by the American Medical Association measured payment accuracy of seven major payers: Aetna, Anthem BCBS, Cigna, Coventry, Human, United Healthcare and Medicare. All of these payers to some degree strayed from contracted payment rate.
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.
Tracking these underpayments is tricky. If you watch many different medical practices, you’ll find the same CPTs receiving underpayments, at around the same deficiency, from the same payer, and around the same period of time. But after a month, you may find the payer playing the game with different groups of CPTs to avoid being spotted.
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.
Medical billing services may have difficulty finding these underpayments without comparing them with your contracted rates, as well as dealing with multiple procedure complications properly. Dealing with multiple complicated tables can be a challenge.
Billing services (and medical practices with their own in-house billing solutions) need to get and utilize industry technology to identify and correct underpayments. Most systems today are incapable of providing a workable solution.
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 across the nation. Carl is an expert in medical billing and physician practice management. He has an MBA from Wharton and a BSE from Princeton University.
Tags: Advice, Ask an Expert, Business, Business and finance, Business services, Business to business, Camping, Consulting, How to, Medical billing, Medical billing services, Medical services, Outsourcing, Small-Business