Here's what to do when the check's not in the mail

How to collect what payers owe you

Home care agencies are one of the few businesses which provide a service only to be told weeks later that payment is denied for services already provided because the service had not received final approval from the people paying the bill. Worse, even when agencies ask for a written commitment, many payers refuse to put it in writing.

Home care agency and patients are often stunned when a payer rejects thousands of dollars in claims.

Payment woes are reaching crisis point

The problem of payers taking too long to pay, or refusing to pay at all, is worsening. It's reached a crisis point where home health agencies have to work harder to make sure payers pay, says Lynn S. Muller, RN, BS, JD, CDMS, CCM, an attorney and partner with Muller & Muller in Bergenfield, NJ. "I think aggressive collection practices, unfortunately, are going to have to be the way of the `90s," Muller says.

Increasingly, payers are taking longer to pay providers for services rendered, and as Medicare money tightens, this can have a troubling effect on agencies' bottom lines, says Elizabeth Hogue, Esq., a health law attorney in Burtonsville, MD. "This difficulty is cropping up all over the country, and it's a very serious one because we're talking about some payment cycles with managed care organizations (MCOs) that are very long," Hogue says. "Basically, [MCOs] are beginning to look at this long payment cycle as sort of 'business as usual,' although that's not very fair."

Getting down to cases

In one noteworthy case study, a home care agency provided $60,000 of services to a dying woman. The payer rejected the claim after the patient died and the service ended, says Renee Krul, RN, BSN, CCM, clinical director and principal at Total Claims Review & Management Inc. in Montclair, NJ.

The home care agency only had received verbal approval of the services from a lower- level employee at the insurance company. The patient's family had signed an agreement to pay for any services not covered by the payer after assurances that home care services were covered under the policy.

The family was shocked when a $60,000 bill arrived from the home care agency, Krul says. The home care agency ultimately sued the family for $180,000, including the bill, interest, and legal fees. The family brought the payer into the lawsuit. Then the family's attorney contacted Krul, a case management expert, to review the case.

The payer ended up paying the $180,000 to the home care agency. However, the legal battle created additional heartache for the grieving family and a long expensive legal mess for the home care agency, which went out of business before receiving payment, Krul says. (See legal case studies of nonpaying payers, p. 109.)

The agency could have prevented such a disaster if it had taken certain precautions and been more proactive in dealing with the insurance company, say legal experts. (See story on how to prevent nonpayment of claims, p. 110.) Agencies not only can spare themselves headaches, but they have a certain moral responsibility to their clients to advocate on their behalf, says Mary Elizabeth Derwin, JD, MS, RN, CNAA, staff attorney for the Visiting Nurse Association Inc. in Oak Park, MI. "In order to be an advocate, you need to know the appropriate appeal process and grievance procedure to deal with a denial, exclusion, or adverse determination," Derwin says.

The one step Derwin does not recommend is to sue clients when their insurers do not pay because this will harm community and client goodwill, as well as waste time and money, she adds. "The patients they're suing are ill, and many have limited resources,"Derwin explains.

Krul says the home care agency in the case study above had not served as a patient advocate for the dying woman when the payer refused to pay for home care services. "While they did a good job in providing care to the patient, they forgot about the family and caused years of suffering afterward," she says.

Most states have an insurance commissioner or insurance bureau that regulates commercial insurance, and that job is to protect citizens' interest, Derwin adds. In addition, most insurance companies have some type of grievance process that the home care agency may pursue. "You need to ask about the appeal process when you get a denial," Derwin says. "If they don't disclose it, then find out who they are regulated by in the state."

Other help available

Also, if a payer refuses to pay a claim, the agency could turn to the patient's employer for help because employers have an interest in making sure their employers are being taken care of by their insurance companies, Derwin says.

Some states are helping out providers by passing laws that require MCOs to pay their claims within 30 days, Hogue says. "Insurance commissioners are becoming very active in this area," she adds. "For example, the insurance commissioner in New York just fined a health plan for its failure to pay claims on a timely basis, so the fight is not as lonely as it used to be."

Meantime, agencies always are better off preventing any appeals and fights over payment by being proactive. And agencies should keep in mind that most payers have a three-pronged process for approving claims, Muller says. The process includes:

1. The physician has ordered home care is medically necessary.

2. The patient has available home care benefits.

3. Limits are placed on what is paid for specific services.

"The problem is a home care agency will call the payer and make only one of those three determinations, and then think there are available benefits," Muller says. "If it stops there, it might find out at a later time that the services will not be covered."