Healthcare underpayments from public and private insurers plague hospital revenue recovery efforts with many battles even spilling into court cases. What’s at stake? Around $77 billion in disputed payments from Medicare and Medicaid from a 2017 estimate, plus the continuing underpayments by commercial payers which can rival the amounts of the federal and state payers.
There are four main reasons for underpayments that we have identified:
Hospitals need to ask their medical billing and coding service provider to list the topmost performed procedures and top paying consult codes. Next, they should verify their contracts to confirm the rates that were agreed upon or ask their insurance company to provide them with the fee schedules for the listed procedures. Once the fee schedules are available, it will be possible to cross-check the reimbursement rates against each claim. In fact, reliable contract management software performs this exercise on a regular basis as part of its workflow. Eligibility, patient payment, contract management, claims and AR management, are fed into a single seamless process, allowing hospitals and health systems to identify, manage, and quickly respond to discrepancies that are flagged and helps providers follow up on unpaid and or underpaid claims promptly.
As the claimant, the provider is obligated to show what the insurance company’s contractual obligations were and prove that the insurance company failed to satisfy them. This can become complicated as provider agreements are often fraught with ambiguity. This provider burden has remained the same during the past four years.
If your organization needs assistance recovering revenue, contact Withum’s Healthcare Advisory Services.
Without a doubt, this type of work needs to be handled by experts. This expertise is essential in determining how to best argue and collect clinically disputed underpaid claims for providers and work with your respective fiscal intermediary. Often, improper coding, whether it is diagnosis and procedure-related, DRG, discharge disposition or value or condition codes can significantly impact whether a claim is underpaid, sometimes resulting in underpayments exceeding millions per year.
This involves searching beyond the self-pay population to find additional coverage for Medicaid, Medicare, and commercially insured patients. The task may seem futile because patients are already covered by a payer, but proactively identifying primary coverage sources for all patient populations can increase revenue, decrease costs, and help prevent bad debt.
Success in this process can have a material impact on a hospital’s bottom line. Recoveries vary considerably depending on the effectiveness of current efforts and the complexity of payor contracts can range from 2-6 percent of paid claims. Importantly, it can also help providers achieve higher patient satisfaction levels, because patients (and medical staff members) often wind up in the middle of an inaccurate claim’s adjudication process.
In today’s highly competitive healthcare environment, hospitals cannot afford to confuse, irritate or lose patients due to administrative complexities. The additional margin pressure hospitals are enduring due to the pandemic is even more of a reason to assure any and all underpayments are identified, resolved and collected in a timely manner.