The Business of Billing

Evaluating managed care companies and their payment practices.the business of billing

In the ever changing world of imaging providers, gone are the days of maximizing volume to make up for low reimbursement rates. A once straightforward business process is now a complex set of possibilities.

Utilization management practices and tougher scrutiny from benefit management companies and insurance carriers are now the catalysts for change in radiology practice management strategy.

Now, it's a cash play from the payers in terms of how they're directing business. Contracting has changed as well. Instead of seeking more patients, groups are looking for the right contract from the right carrier.

Take, for example, an imaging group that's offered contracts from two managed care companies, both of which have the same number of patients to offer. Managed Care Company A has bad payment practices, takes 45 days to pay, denies 15 percent of claims, and requires the group to jump through a lot of hoops for payment. Meanwhile, Company B has a denial rate of 5 percent and is easier to work with, but its reimbursement rates are slightly lower.

In this environment, you don’t just want to go for every extra dollar from additional volume. You also need to understand the other ancillary activities that the payer makes you go through and that cost you money. This level of analysis has not typically been conducted. Radiologists don’t spend enough time going through managed care contracts. Instead, they receive them, sign them, and send them back without really understanding what they are signing.

Too often, physicians simply accept what is offered from carriers without looking at the true cost of a contract. It’s not just about reimbursement anymore; it’s about process engineering. In the past, the reimbursement and time to payment was always good enough, so radiologists took the contract and lived with it. That’s not the case anymore.

Here are some areas practices should evaluate when it comes to managed care companies and their payment practices:

Denials

Denials are increasing as payers seek ways to improve their bottom lines in a tough economy. As always, they hope some percentage of the denials will never be challenged. Combine that with the changes in CPT codes that will increase the work required to submit claims, and radiologists must consider more than just dollars when evaluating a managed care contract. Compared to your company average, denials can be more than two standard deviations higher than the norm, which costs more in personnel time and effort. And, of course, if the denials are never followed up on, that money is lost. The group and the payer should agree on a specific time frame in which a submitted claim may be rejected. A recommended time frame is within 180 calendar days of submission.

Pre-exam requirements and paperwork for authorizations

It is important to prove that your group uses clinical decision suport software on exam appropriateness. This can also be expensive and time-consuming since you are employing people to handle these tasks. The need for pre-authorization decreases with the integration of pre-authorization and decision support databases. Decision support is superior to the use of prior-authorization screening.

Supplies

Additional exams tend to not be covered after initial exams are completed. Radiologists need to negotiate these in before committing.

"In the past, the reimbursement and time to payment was always good enough, so radiologists took the contract and lived with it. That’s not the case anymore."

Claims submission

Since version 5010 standards were implemented, certain carriers’ claims acceptance rates have been inconsistent (read more at http://bit.ly/CMS5010). As a result, more claims end up “missing as never received.” This also is costly in the time value of cash and people required to research and resend the claims to be paid. Groups need to have an electronic submission and validation of claims received.

Copayments and deductibles

As the cost of health care shifts increasingly to the patient, up-front and accurate payment collections are more important than ever. Attempting to obtain copays and deductibles after the visit and processing refunds are incredibly labor intensive and expensive processes. Your practice cannot afford to allow patients to be billed for their copays and deductibles. The perfect time to collect them is at the time of service, although federal requirements indicate that any refund processing must occur within a 60-day period. If there is a deductible and fixed dollar copay, make the collection effort at the time of check-in. If there is a percentage copay and you are uncertain of the potential fees for the day’s visit, collect a percentage at checkout. Doing so is critical to maximizing the collection of dollars on the front end of the revenue cycle.

Negotiated rates

You may negotiate a great rate, but health savings accounts and other high-deductible plans lead to increased bad debt. The carrier can allow whatever amount, but with the patient responsibilities increasing, it is a crapshoot. A contract loaded with too many requirements can dramatically lessen the financial impact of what seems like a reasonable payment rate. For example, you might agree on a rate that sounds good at first, but after all of the staffing and authorization requirements and hoops that the carrier makes you go through on the front-end, it may end up being 70 percent of what you thought it was going to be. If you don’t understand your true costs, it’s impossible to know whether the rate is profitable for you or not. You have to have a system in place to analyze those costs and figure them into the contract negotiations.

Once the contract is signed, you still have to make sure you are being paid according to the terms of the agreement. While that sounds easy, it will require oversight, auditing, and measurement standards to determine when the agreement has been breached. Fight for what is rightfully yours and make sure you are getting everything that you are due. Load the contract details into your system, including information like surgical periods, supplies included, etc. Being able to review actual payments versus contract payments is key. Review volume measurement and the value of total contract, if negotiated. For example, if the purpose of the contract is to be paid a baseline of Medicare, then you need to audit and measure what you are receiving to ensure that the baseline to Medicare is being received. To read more about evaluating contracts, visit http://bit.ly/ContractEval.

If you discover that you’re being shortchanged, you’ll need to work with provider relations to figure out if the contract details were not loaded into the carrier system correctly. If the details of the contract were not loaded correctly, then it should be an easy fix by simply correcting the erroneous information in the system. However, if there are other reasons, research may be required to determine where the issues lie. Be prepared to take some time to uncover the issues and document your process to prevent similar issues in the future.


By Taylor Moorehead
Taylor Moorehead is regional partner and corporate compliance officer for Zotec Partners.

Share this content

Submit to FacebookSubmit to Google PlusSubmit to TwitterSubmit to LinkedIn