You are losing up to ten percent of your collections if payer underpayments are not being aggressively pursued by your outsourced medical billing company. It is simply a minimum requirement of being in business that medical billing companies compare your payments to the amounts your payers have agreed to pay you.
If you make the decision to outsource medical billing or are currently outsourcing, then there are a number of critical tasks and process steps that your medical billing service should provide. These include scrubbing claims before they are submitted, systematic follow-up on submitted claims, posting denials, pursuing underpayments, using patient expected payment scores just to name a few.
Pursuing underpayments is the focus of today's article. This pursuit begins first and foremost with comparing the payment information from EOBs to the allowables outlined in the practice's payer contracts. This comparison must be done in an automated manner and cannot rely upon payment posters catching the underpayments on their own.
Payers have adopted underpayment techniques that are too difficult for a payment poster to spot on their own. Medical billing companies can design their process to battle payers underpayment techniques because they have an advantage over individual practices - they see EOBs for a given payer across multiple practices and multiple states. The enhanced scope allows medical billing services that pay attention to identify patterns that might be overlooked by individual medical practices.
A disturbing pattern that can regularly be seen by a medical billing company that is paying attention is one where a payer will select a set of procedures and underpay this set of procedures across a large number of providers (often by the same amount). This will continue for about 30 days and then the payer will resume paying the procedures at the correct amount and begin underpaying a whole new selection of procedures.
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.
Identifying and pursuing underpayments can yield big returns for a medical practice (the average practice can increase collections by 7%). Therefore, it is imperative that your billing service is aggressively pursuing these underpayments on your behalf.
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, CEO of ClaimCare Medical Billing Services, has spent over 14 years improving the financial performance of his clients. To read more about what to look for in Medical Insurance Billing Services subscribe to Carl's blog
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