Seven to over ten percent of your practice’s revenue is being lost if your medical billing company is not systematically comparing your insurance payments to the amounts allowed in your payer contracts. Any competent medical insurance billing service should offer this feature as part of their standard service.
Medical billing services have a number of basic steps they should incorporate into their billing process. These steps should include using a claims scrubber, use of no-response calls, posting zero pays, pursuing underpayments, and using likelihood of payment scores for patient collections.
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.
The reason that comparison to allowables must be automated is because of the clever and systematic manner in which payers typically underpay claims. These underpayment patterns can be difficult to spot, but one of the advantages a Medical Insurance Billing Service has is that it sees payment information and patterns across many clients for many payers. This allows medical claims billing services that regularly and systematically compare payments to contractual allowables to spot patterns that a single practice might miss.
As billing companies look across multiple clients they will frequently see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all of their clients. The following month they will see the same payer switch to underpaying a different set of CPTs.
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.
The pattern outlined above is why it is critical that a strategy for pursuing underpayments is not based upon payment posters picking up on the underpayments. Most payment posters will notice a large underpayment, but it is too much to expect them to spot a $5 underpayment.
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.
Identifying the underpayments is the first step of the journey. Dogged pursuit of the underpaid amounts is what actually drives up your practice’s revenue. This pursuit needs to go down to even small underpayments because once a payer sees that the small underpayments are being pursued they typically taper off and contractual payments resume at the appropriate level. Much like a small child, the insurance companies are trying to see what the can get away with.
Copyright 2008 by Carl Mays II
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