If you're singing slow-pay blues, change your tune
How to deal with late-paying HMOs
Money doesn't always talk when it comes to getting an HMO's attention, as last year's $3.5 million fine on Oxford Health Plans shows. Although the fine levied on the Norwalk, CT-based insurer was originally seen as a warning to slow-paying HMOs, it hasn't turned out that way.
Practices interviewed by Physician's Managed Care Report say underpayments or late payments for claims filed with HMOs are still common.
States such as New York, New Jersey, and Texas have responded with legislation requiring managed care plans and insurers to pay their claims within a certain time period or be fined.
But some provider representatives say this has not solved the problem.
"Based on what I see and hear from our physicians, I'd say the slow-pay problem is getting worse on an almost daily basis," says Bradley Reiner, manager of payer relations for the Texas Medical Society in Austin.
"It has not been unusual for some of our payers to take 12 to 14 months to settle up. In fact, I recently had a bunch of payments from claims submitted at the end of 1996 come across my desk," notes Kristen Jabs, director of managed care accounting for Seattle's Medalia Health Care, an organization of 350 mostly primary care physicians.
Contract clauses can help
There are solutions to this quandary, however. The key to getting paid promptly starts when you are negotiating the particulars of your managed care contract, says reimbursement expert Gloria Mayer of Mayer & Mayer Consulting in Huntington Beach, CA.
"When providers are hammering out the details of these managed care contracts, they get so involved in how big the capitation rate will be that they forget to include any safeguards ensuring when they'll actually get paid," notes Mayer.
Here are some potential contract clauses to help ensure prompt payment:
1. Performance guarantees. For both current and future managed care contracts, Mayer strongly recommends instituting a performance clause that guarantees the insurer will be fined if its payments are late. "This penalty can be based on anything; a percentage of premium, the per member per month cap rate, whatever," stresses Mayer. "But it needs to be specific to both the time frame - 30 to 45 days days after the claim is filed, for instance - and the penalty. Also remember to put in when and how the penalty is to be paid."
2. Problem claim notification. The contract also should contain a provision requiring the payer to notify you promptly if it finds a possible problem with the claim. "This avoids the game where you wait 30 to 45 days, then call to see why the claim has not been paid only to find out there is some alleged problem with your paperwork, which means the prompt-pay clock has not yet started according to the HMO," notes Mayer.
Mayer advises including a clause requiring the payer to notify you within three days after receipt of any problems with your claim, along with five days for your billing office to correct the error.
3. Deep discounts. Another way to encourage prompt payment is to offer a deep discount off your regular fee schedule for payment received within a certain period of time, after which the fee goes back to your regular posted rate.
Go to the front of the line
"A 30- to 45-day payment period to be eligible for the discount is normal," notes Mayer. "However, I have worked with one group that offered a very deep discount if paid within 10 days. But, on day 11, their bill reverted to full fee for service."
By offering a discount for prompt pay, it pushes your practice to the front of the to-pay line. "If I'm a claims manager and my accounts show I missed receiving a significant discount because I was not able to cut a check in time, my boss will probably want to know what happened," says Mayer.
4. Direct billing. In situations where a large medical group has a global capitation contract with an HMO and the group is slow in paying the specialists or other outside physicians it subcontracts with, these outside physicians can bill the HMO directly for the money owed them. "The HMO will then subtract this amount from the group's global cap payment," says Mayer.
Once you have some checks and balances for timely payment in your managed care contracts, you should institute internal systems to monitor payment promptness.
One reason many physician practices end up with late payment problems is that they are hesitant to add a regular audit function to their operation, say experts.
"Most medical groups simply do not have the kind of staff needed to monitor their contracts and payments like they should be watched. Otherwise, they can quickly end up being paid both wrong and late," says Mayer. Most practices audit payments once a year. Ideally, these accounts should be reconciled every month, or at least quarterly, says Mayer.
Look at your audit function as a potential profit center, not as overhead. "One of the roadblocks I run into when talking about adding an audit function to a larger group practice is the doctors start thinking it's going to add another $50,000 to $60,000 to their overhead," says Mayer.
But this investment is easily returned, Mayer points out. A good auditor should save or find four to six times his or her salary in overlooked payments and unnecessary expenses.
"For that $50,000 investment in salary, the group should get back $200,000 to $300,000," says Mayer.
This tactic has worked well for Medalia. "We've started monthly reconciliation audits of seven of the insurance companies we work with," says Jabs. "We not only look at how fast they turn around claims, but if there are any errors in terms of both the claims and the terms of our contract and the performance guarantees we've negotiated."
Another way to keep payments flowing smoothly is to schedule regular monthly or quarterly meetings with payers. This also helps establish a personal relationship and professional rapport with the voices on the other end of the telephone, as well as allowing billers and others to get their questions answered directly and have an action plan put in place on the spot.
Allan Dekaye, president of Dekaye Consulting in Oceanside, NY, advises his clients to have a specific person designated by the payer and the provider in the contract as the contact point between the two organizations when there is a problem or questions to be answered. "This puts into the contract that someone will be responsible" for responding to any problems, says DeKaye.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content