Learn More About Payers to Improve Collections Success
November 1, 2017 7 minutes read
EXECUTIVE SUMMARY
Learning more about the payer market can help surgery centers reduce denials and improve collections.
- Self-funded plans are offered by companies that pay to insure their own employees.
- Fully insured coverage is what people think of as traditional health insurance. These are regulated differently than self-funded plans.
- Patients must pay for their copays and deductibles.
Surgery centers must understand the payer landscape, compartmentalize payer categories, and create strategies for each one. Without this multimodal line of attack, they could leave themselves open to
thousands of dollars in unpaid bills.
Medicare payments are predictable, so long as a surgery center submits claims correctly. Medicaid payments vary from state to state. Government healthcare payments do not pose the same issues for ASCs as private pay.
To determine ways to improve collections from private payers, learn what you can about each entity, advises Lisa Rock, president of National Medical Billing Services. Rock speaks regularly at national conferences on the topic of how ASCs can improve their collections. She offers the following suggestions:
1. Look at each category of private payers: patient, self-funded, and fully insured.
ASCs usually will need to collect some portion of the procedure cost from patients due to copays, deductibles, and out-of-network costs.
Surgery center administrators must know the difference between self-funded and fully insured coverage. Self-funded refers to plans that employers pay for. They can be administered by Blue Cross Blue Shield and other payers, but the employers bear the costs. They are incentivized to keep their employees healthy to reduce healthcare spending.
“Health insurance premiums are really expensive, and employers feel they can save costs by cutting out the middleman,” Rock explains. “It’s true they can save significant money by paying their own claims and stop loss coverage.”
Fully insured coverage refers to traditional healthcare insurance, and these plans are regulated differently than self-funded plans.
“If it’s fully insured, the carrier is paying the bill,” Rock says. “For fully insured plans, carriers hire actuaries and calculate premiums and give all different [types of] benefit packages.”
There are numerous benefit configurations, depending on what the employer’s preference. Patients pay the costs of surgical procedures that are not covered by their insurance. These can include high deductible amounts, copays, and the excessive charges from using an out-of-network provider.
ASC staff usually can find out whether a patient’s plan is self-funded or fully funded by looking at their insurance card, which often states “self-funded” when that’s the case.
2. Determine what patients and insurers will pay.
The difference between a surgery bill and what the insurance company will allow can be striking. For example, a patient with a self-funded employer who hires low-wage workers comes in for surgery. The employer’s plan pays only 160% of Medicare for out-of-network services.
Suppose the ASC submits a claim for $10,000 for the surgery. Medicare would allow only $1,000 for the surgery, so the employer will pay only $1,600. On top of that, the patient carries a high deductible, and the employer ends up sending the ASC a check for $300 for the $10,000 bill. The rest of the bills are the responsibility of the patient, who likely will not be able to pay much of that outstanding $9,700, Rock says.
In this example, when the ASC receives the $300 check, the first instinct is to file an appeal. But that won’t work because the self-funded employer paid exactly what their plans says they’ll pay. “You’re going to waste a lot of money when you’re appealing and don’t know what you’re appealing,” Rock says.
This is why it’s crucial for ASCs to know these rules going into each and every case so they won’t be blindsided by denials at the end.
“You can start the process to qualify patients [by knowing] what their coverage is and how it works,” Rock says. “You’ll be more successful that way.”
“I used to work for an insurance company, and we had 800 denial codes,” Rock says. “I would recommend converting all of your denial codes to one system so you can track them, and I’d recommend having a very specific appeals process and to understand whether the appeal goes under ERISA or under the fully insured product that is governed by the state or the patient.”
3. Know how to handle appeals.
ASC directors should understand the three different categories so they can better understand what their options are if a surgical bill is underpaid or unpaid, Rock says.
“Let’s say I have a denial, which is anything less than the full value of that claim because even a partial payment is a denial that needs to be worked out,” she explains. “So, I’m sending in an appeal.”
If the appeal is going to a self-funded plan, it’s governed by one law (ERISA), and there are certain rules to follow, including the most basic one of gaining permission from the patient to make the appeal, Rock says.
Under ERISA, ASCs and other providers are not entitled to appeal unless they have received permission from the patient in writing and include that permission with their appeal. If an ASC sends in an appeal without following the rules and submitting the patient’s permission, then the appeal will not be accepted.
“You appeal differently for fully insured plans than for self-funded,” Rock says. “Those are governed by the state insurance commission. ERISA plans, typically, do not have to abide by state laws.”
Information about ERISA claims can be found at: http://bit.ly/2fnujCB.
4. Understand what your net revenue is.
Knowing net revenue can help with collections, Rock says. For example, if an ASC administrator knows that the center’s patient base is all in-network and fully insured, then it’s possible to determine reimbursement and revenue, she says.
It’s more challenging to predict reimbursement and revenue when patients present with high-deductible health plans and self-funded employers with different policies or erratic reimbursement policies.
“Everyone is tired of paying high medical bills,” Rock says. “Everyone is trying to figure out how to get control of that so people can get the care they need and providers are paid a fair price for their services. You have to understand how this business works to master it.”
A surgery center is a business, and someone must lead it as such. “The number one problem I personally see is a lack of respect for the complexity of the revenue cycle,” Rock says. “It is really complicated, and that’s not just the collections, but everything leading up to it.”
An ASC must stay on top of balancing, coding expertise, managing contracts, and knowing how to read the contract and pull it through the whole revenue cycle, she adds.
5. Avoid payer negotiation pitfalls.
There are multiple tricky aspects to negotiating with payers. For instance, an ASC could negotiate certain rates per CPT code. Then, the carrier could add a statement to the contract that says the carrier can bundle codes within a case. So, the ASC submits, for one case, two CPT codes to the carrier. The carrier pays only one, sending the ASC less than what was expected. The reason for the difference is the carrier says the additional CPT code was incidental, Rock explains.
“You get really busy, working at a surgery center, and the last thing on your list is doing due diligence of insurance verification,” she says. “You could ask the patient to get a copy of what they’re supposed to pay for in- or out-of-network, or see if they have it, but it’s a lot of work. Some self-funded plan descriptions are 200 pages long, so you can check the benefits, but there is no guarantee of payment.”
6. Make it easier for patients to self-pay.
Collecting from patients can be difficult, particularly if they were not prepared for a big bill. It’s not that easy to write off the patient’s debt, either.
“When patients owe a lot of money, you can’t write it off unless they’re financially or medically indigent or if it’s a bad debt,” Rock says. “If you can’t write it off, then you have to attempt to collect, and it’s expensive to send out statements.”
Rock recommends ASCs create patient portals to reduce the overhead of people continually calling or writing to patients. “Go electronic with the statements, and this will help offset the cost of collecting,” she offers.
These portals should be secure websites where patients can make payments. When ASCs create these portals, they typically see an increase in collections, she adds.
7. Watch for changes in payer trends.
ASCs are starting to see a trend in which some ASCs are sent more patients by carriers because of their tier rating, which is determined by their costs, Rock notes.
“We’re starting to see this waiver of copay deductibles for tier one providers, and so they’re driving the business to tier one providers,” she explains.
The payer tells patients that if they visit an ASC or professional provider that is a tier three, patients will pay a copay and large deductible. If patients go to a tier two ASC, then the insurance will waive half of patients’ out-of-pocket costs. But if patients visit a tier one ASC, the insurance will pay the whole cost, meaning the patient owes nothing, Rock says.
“Imagine your doctor says you need hernia repair, and you call your insurance company, and they say, ‘If you go to this other doctor, you won’t have to pay anything,’” Rock says. “It’s an interesting way to attempt to control costs.”
For ASCs that are designated tier two or tier three, this can affect both their volume and their collections. “Volumes are going down if you’re a tier two or tier three, and it’s just beginning to happen,” Rock adds.
Learning more about the payer market can help surgery centers reduce denials and improve collections.
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