Protect Your Practice from Reimbursement Rates and Abusive Payment Tactics

By Delly Parham, CPC

Financial challenges are the top concern in practices today. One of these challenges lies in the obligations defined through physician contracts. Understanding the payer side of the industry better, so you can think like a payer, and knowing how they make money and set reimbursement rates, may help you to identify ways to prevent abusive payment tactics and improve your bottom line.

If you are one of those practices hard pressed to find a file drawer with all of the original agreements, addenda, and rates associated with reimbursement, you may end up with rates that do not even cover the cost of bringing patients through the door.

Tips for Overcoming Payer Challenges and Increasing Income

1. Be organized, consistent, and standardize your practice protocols.

  • Compile and maintain all original agreements, addenda, and fee schedules in one place.
  • Review your contracts with payers annually for rate changes, coding guidelines, policies, and pre-certification and authorization requirements.
  • Stay informed of current CPT®, HCPCS Level II, and ICD-9-CM code changes and requirements. Submit timely, clean claims by using the appropriate codes and modifiers.
  • Identify and bill the correct payer. Make sure the name and identification number on the insurance cards are the names and numbers submitted with the claims.
  • Comply with all requirements for claims submission—including method and mode of submission.
  • Evaluate Electronic Remittance Advice (ERA) and Explanation of Benefits (EOB) to detect processing errors, such as:
    • Coding changes
    • Reimbursement rates and adjustments
    • Reason/explanation codes for denial of benefits
  • Submit timely, formal appeal letters with supportive documentation.

2. Know your reimbursement rates and how these rates are determined. Your fee schedule is the most important factor in determining how much revenue your practice will generate.

You can better understand payers and how they make money if you understand how they arrive at the reimbursement rates paid to your provider. The reimbursement rates of payers vary in each geographic region and are usually determined by the number of providers in the same specialty in that region, the cost of living, and the product line. For example, a preferred provider organization (PPO) plan may pay a higher rate than a health maintenance organization (HMO) or Medicare replacement plan. This is because the premium your employer pays for a PPO plan is usually higher than the premium paid for an HMO plan.

Like all for-profit businesses, payers are in it to make money and keep it in their own pockets. It’s to their advantage to negotiate the lowest rates possible. If your provider specialty is needed in their network in that geographic region, you are at an advantage in negotiating a reasonable rate. Whereas, if there are a large number of providers in your specialty in your geographic region, negotiations become tougher.

3. Recognize the cause of abusive payment tactics and how to handle them.

The two most common payment tactics used today can best be described as delay of payment, and payment that falls short of the contracted rates.

Delay of payment may be due to a number of reasons, such as:

  • Outsourcing by payers. This has increased over the past few years, and may take staff more than an hour to get through to a person who can help resolve a claims denial.
  • Appropriate staff. Staff handling accounts receivables must be persistent and must follow through. Otherwise, deadlines for refilling claims may expire.
  • Unclear reason codes for denials. A call to clarify the denial reason may be needed. For example, Blue Cross Blue Shield uses a denial reason that reads “OA-133: The disposition of the claim/service is pending further review.”  If there is no follow-up, you may never know that this means Blue Cross requires a copy of the reports to review the claim before it’s paid.

Payment that falls short of contracted rates usually is discovered by evaluating the EOBs or ERAs for accuracy, and are usually an action taken by or omission of the payers, such as rate changes or coding changes. Or, the provider may not be linked to the contracted rates in the payer’s system.

Lastly, you may file a complaint with your state insurance commissioner for bulk claims that are delayed beyond state-required time frames. You may also involve your county and state medical societies regarding a pattern of delayed payment, or payment not adhering to coding guidelines or negotiated reimbursement rate.


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2 Responses to “Protect Your Practice from Reimbursement Rates and Abusive Payment Tactics”

  1. Cheryl Odquist, CPC, CPC-I says:

    I believe the McKesson Editing System is a fraud and subjects Providers to accept the bundled edits as CMS edits.

  2. Tammy Anderson CPC says:

    I would use caution using the word fraud, since coding application can be contractual. CPT and CCI/CMS in many cases are the same, so each provider should know and understand the contract method, and edit application.

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