Payer Reimbursement Pitfalls

Contributed by Dana Bellefountaine, President of Codetoolz. Payer Reimbursement Pitfalls.

We often find that the reason behind declining medical practice revenues doesn’t have to be uncovered – it’s right there in plain sight in your payer contracts.

  • Practices that don’t track their payer contract rates are reimbursed on average 4 percent less. (1)

  • Payers make inaccurate payments on one out of every 14 healthcare claims. (7.1%) (2)

  • A recent study showed that physicians billed $5.15 below their contracted fee schedule per code. (3)

While working with healthcare groups across the country, we have seen payers reduce their fee schedules by 5 to 12%.

Fortunately, longstanding patterns of poor attention to contracts can be broken by analyzing and monitoring your payer contracts. You’ll be more informed and in a much better position to compete and thrive.

Updating Your Charge Fee Schedule

Making yearly updates to your charge fee schedule is one of the most important things a provider can do to ensure the collection of an appropriate amount for services.

Rates change over the years due to Amendments, Proprietary Market Fee Schedules, or CY Medicare-Based Fee Schedules.

Payer Reimbursement Pitfalls

  • “Evergreen” Clause

Most contracts contain an evergreen clause, which is a fancy way of saying that the contract goes on and on until something triggers renegotiation and/or termination. The contract is automatically renewed unless one or both of the parties modify or terminate it.

  • % of Billed Charges (BC)

Contracts that are primarily based on a percentage of billed charges (BC) will be devastating if, for example, your charges are at 150% of CY Medicare and the Agreement pays 50% of billed charges – you are getting paid 75% of CY Medicare.

  • Payer Amendments

Oftentimes an agreement will state that the payer has the right to amend the contract without prior written notice. Reject any language which gives the payer unilateral amendment rights.

If the agreement requires the payer to provide notice of the amendment, remember, usually; “Following (30) days written notice. Failure to object constitutes agreement.”

  • “Lesser of” Language

All too often, practices have certain codes that fall below contract rates and almost all contracts have a “lesser of billed charges (BC) or contract rate” provision. Meaning, if your contract rate is $100 and your charge is $50 – you just lost $50 and cannot get it back!

The primary mission of CodeToolz is to help medical providers increase their revenue. It’s as simple as that.

  1. Texas Medical Association, 2019

  2. American Medical Association’s National Health Insurer Report Card, June 2019

  3. Medscape Physician Compensation Report 2019

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