Don’t take late MCO payments lying down
How to get paid accurately, on time
It should be easy. You render a service, submit a claim to an insurance company for payment for the service, and you get paid. Right? Well, not always.
Instead, one of three things typically happens:
• reimbursement is lower than your office expects;
• payment is late;
• even worse, 30 days later, you still haven’t been reimbursed for services billed to an MCO.
This column offers insight into why this happens and what you can do about it.
Reimbursement is either less, late, or missing because MCOs benefit by paying you less than you bill for — they keep the difference. Also, MCOs benefit by generating interest on their money by delaying payments due to you.
Like it or not, reconciling what you’ve billed with what you were reimbursed is a reality your office staff has to take responsibility for. Here are some ways to make the follow-up process run more smoothly:
1. Invest time and money to set up a well-organized front-office structure. The success of your billing and other back-office functions in collecting payments due from any source is heavily dependent on the success of front-office functions — particularly proper patient and insurance data collection and verification, and accurate coding and billing. (See article on p. 43 for tips on improving front-office organization.)
2. Your office staff must understand the mechanisms behind third-party reimbursement. Hire people who understand how to interpret explanation of benefit statements (EOBs), how to post payments, and how to manage accounts receivable.
Here is a primer on third-party reimbursement:
How much a practice or a physician is reimbursed for a service depends on the patient’s insurance benefits, which vary from payer to payer and even within the same payer based on the product line. Some large payers, for example, have several different benefit packages within their PPO or HMO product lines. Your staff must determine if the payer uses a a discounted fee schedule based on a discount off the bill that is submitted. The more popular discount mechanisms include the Resource-Based Relative Value Scale used by Medicare or usual, customary, and reasonable targets. In addition, if you are capitated, then you do not bill; however, a standard encounter form provided by the payer still must be accurately and appropriately filled out.
3. Review documents from the MCO to ensure accuracy. Part of understanding third-party reimbursements is understanding EOBs. When your office receives a payment from the insurance company, the amount paid is also recorded in the patient’s member services account file. Accompanying the insurance company’s payment is the EOB explaining why the insurance company paid the amount it did. These EOBs should be compared with the original insurance claim to make certain the bill was paid accurately.
Carefully look for changes in CPT coding by the insurance company, and if appropriate, appeal the insurance company’s downcoding of a service that was performed. Investigate all services that were denied payment. Appeal them through the health plan’s appropriate appeal process (usually the member services director or medical director) if there is any doubt of the appropriateness of the denial.
4. Reconcile the amount you billed with the amount you have been paid. After performing the tasks outlined above, the next step in establishing the accuracy of the amount that your practice was reimbursed from the insurance company is to track the amounts due your practice and payments received. Appropriate accounts receivable management will go a long way toward improving your practice’s cash flow.
5. Establish a procedure for handling unpaid claims. Finally, your practice must have a policy on how to follow up on unpaid insurance claims. The claim might be unpaid because it was denied, or payment might simply be late. At least once a week, your office should identify all unpaid insurance claims that are at least 25 days old. By starting at 25 days old, your office can identify very easily that the payment is late and address the most prevalent chronic problem of offices related to insurance companies: The insurance company says they have no record of receiving claims. After 25 days, your office can refile the claims early. The sooner your office begins the follow-up process, the quicker claims will be paid on balance.
Any claim over 25 days old should generate a phone call from your office staff to the insurance company that owes you money. Your staff should document the call in writing, including the name of your contact at the insurance company, why the claim has not been paid, and when payment is expected.
If you do not have enough staff to call the insurance company, or if the unpaid amount is relatively low, your staff should file tracer claims. A tracer claim is a copy of the original claim form with the word "TRACER" stamped in red on it. The date of the tracer should also be written on the claim. If the call or the tracer claim generates no response in the form of a payment or explanation, your office should refile the claim.
Lateness or non-payment of claims is becoming an increasing problem for physician offices. Other than following the above suggestions, there are also other items for you to consider. Look at your contract with the insurance company to see if it specifies how soon the claims are supposed to be paid. Is the insurance company, by being chronically late with payments, violating the terms of the contract? If there is no language specifying the insurance company’s responsibility relative to timeliness of payment, what is the usual standard in your community?
Make your dissatisfaction known to the insurance company by writing a letter of protest and stating that they are violating the terms of their contract, or at least the usual standards for prompt payment. If they do not respond by improving, consider dropping that company from the list of insurance companies you work with. If, after repeated letters or phone calls, the insurance company still fails to appropriately respond within 25 days, send a letter of complaint to your state insurance commissioner. The letter should specifically identify the insurance company in question, the nature of the problem, your efforts to work with the insurance company to rectify the problem, and your inability to do so. Too often, physicians just take abuse from insurance companies without speaking up. If the insurance commissioner receives several complaints against the company, some kind of action generally will be taken.
[Editor’s note: Some of the information in this article was originally published in Mastering the Reimbursement Process (Chicago: American Medical Association; 1996). The information is used with permission.
Has your practice employed other techniques to deal with late payments from MCOs? If so, contact Managing Editor Francine Wilson at (404) 262-5416 or via e-mail at francine [email protected] and tell us how you’ve dealt with this perennial problem. Look for further coverage of this topic in future issues of Physician’s Managed Care Report.]
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