Any strong medical billing process and medical billing company must compare insurance payments to your contractual allowables and aggressively pursue underpayments. If this is not happening then most likely 5 to 10% of your practice's revenue is being lost.
Any medical billing process must include features that are specifically designed to counteract the actions taken by payers to withhold money from medical practices and facilities. Examples of these features include: comparing claims to payers adjudication rules before submission, calling on submitted claims that have not been denied or paid, posting all payment information - including denials, pursuing underpayments, and using predictive payment estimates in the patient collection process.
This article focuses on just one of the key elements you need from your medical billing service: pursuit of underpayments. Pursuit of underpayments starts with a critical step: comparison of EOBs to your contractual allowables (the payment your payers have agreed to make for each CPT code). You cannot count on payment posters to catch underpayments with their naked eye; the comparison must be automated and systematic. It goes without saying that if you do billing in-house the comparison still should be done.
The need for automated comparison to allowables is not because of any short coming with the average payment poster, but because payers employ sophisticated techniques to make underpayments difficult to identify. Medical billing companies with well designed processes can counteract these techniques because they have much more scope than a single medical practice. By scope I mean that they see what payers do across multiple providers in multiple states. This broader view of the world allows a billing company that is leveraging its scope to uncover payer behaviors more easily than a single medical practice.
A pattern that is often seen by billing companies is one where a payer will underpay the same codes across multiple providers by the same dollar amount in month one. Then in month two, the payer will resume paying the code correctly and will begin to underpay a different code (or codes) across multiple clients.
Each individual underpayment is typically less than $20 and often less than $10. It is, however, death by a thousand cuts as these small losses can quickly reduce a medical practice's revenue by 5 to 10 percent. The tactics of constantly switching which CPTs are being underpaid and then underpaying in amounts that are small at the claim level make it hard for a practice to realize the magnitude of the money they are losing.
Needless to say, it would be difficult for a payment poster to remember enough about the allowed amounts across a practice's tens of payers and dozens of CPTs to spot the underpayment strategy described above. This is why it is critical that automated comparisons be performed by your medical billing service.
What does all of this mean to your top line? A medical insurance billing service that properly implements the pursuit of underpayments can increase your revenue by between 5 and 10 percent - and this is pure profit.
After the underpayment has been noticed it must be relentlessly pursued - this is what actually leads to top line improvement for your practice. Even the small underpayments cannot be ignored - to do so will invite larger and more frequent underpayments. Payers are constantly testing their boundaries. If they see that you respond at the first sign of stepping across the boundary they will quickly fall in line and pursue less vigilant targets.
Copyright 2008 by Carl Mays II
About the Author:
Carl Mays II, President of ClaimCare Medical Billing Services, has spent over 14 years enhancing the financial performance of his clients. To learn more about what to look for in Medical Insurance Billing Services subscribe to Carl's blog
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