It’s hard to make sure insurance payers are issuing payments according to your contract. This is why it’s likely they’re not — it’s been found that medical practices typically lose about 5 to 10% of their revenue because of insurance underpayments.
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 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.
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.
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.
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
Carl Mays is President and Founder 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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