Checking behind MCOs can mean extra payments
Guest Column
Checking behind MCOs can mean extra payments
By Reed Tinsley, CPA
The Horne CPA Group, Houston
How do practices and health care providers know they are receiving correct reimbursements from their managed care payers? According to an informal polling of practitioners at a recent health care conference, more than 50% of participants indicated that errors have been found with regard to what the medical practice was contracted to receive as payment and what the managed care company actually paid for the service.
For example, one practice was contracted to receive $44 for visit code 99213 from ABC Man aged Care Company, but the Explanation of Benefit (EOB) statement indicated only $38 was paid. Unfor tunately, this type of situation seems to be occurring with increasing frequency. It affects not only physician medical practices but all other health care providers as well, including hospitals, health care facilities, and other health care service providers.
Managed care companies do make mistakes, and it is up to the health care provider to catch the errors and file an appeal for the additional reimbursement. Catching reimbursement errors can be extremely difficult for many providers, especially smaller service providers, including one- and two-physician practices.
Small practices or health care providers often have neither the time nor the personnel to pay attention to this type of activity, as important as it is. However, a good software system usually can catch these reimbursement errors. Unfortu nately, most systems in the marketplace today are quite expensive, and many health care providers have not sought to acquire them.
It is difficult to ask a provider to make a large capital investment in computer software (and hardware) when most payers are reducing their reimbursements. One reason we are seeing an increase in provider affiliations is that providers together can obtain the capital necessary to upgrade their informational systems.
At a minimum, a health care provider should have a manual system to spot-check managed care reimbursements. The easiest system is one whereby a weekly sample of managed care reimbursements is reviewed by a designated person.
Here is a typical process for a manual system. It works best for smaller providers but can be adapted to larger ones as well:
o Obtain reimbursement rates for the top 25 revenue-producing CPT codes (or utilized services) of the medical practice or health care pro vider. Place them in a spreadsheet for easy access. These should be obtained from the top 10 to 15 managed care plans from which the practice or provider generates revenues. Each week, take a sample of reimbursements from these plans (the provider can decide which ones) and compare the reimbursement per the EOB to the spreadsheet.
o If an error is found, file an appeal immediately. If errors continue to be consistent for a particular payer, meet with the payer to discuss why the mistakes are occurring and how they can be corrected.
A manual program of this type can be cumbersome, so each practice or health care pro vider will have to decide how to implement such a system. A provider could create a computer database in which the contracted reimbursements for a specific managed care payer are preloaded and EOB-approved amounts are entered into the system manually. The database then could make a comparison and detect payment errors.
Effective detection system needed
The main point to be made, and one you must keep in mind, is that managed care payers are making reimbursement mistakes, and health care providers everywhere must have a way to detect these errors to get paid correctly. If left undetected, significant revenues could be lost.
As mentioned, most systems in place today cannot compare managed care reimbursements and detect payment errors. Most cannot even tell a health care provider what a payer reimburses for a particular service. That is because most software systems used by medical practices and health care providers today were built for a fee-for-service environment.
Unfortunately, these software systems have not adapted themselves to a managed care environment. As managed care continues its growth throughout the country, the level of operational sophistication needed increases, and these systems just cannot provide the critical information needed to succeed in this type of environment.
The manual system, whether or not it can be computerized, will be insufficient over the long haul; the burdens are often too great. Therefore, health care providers everywhere should begin evaluating their current informational systems and define what they need both now and in the future as managed care continues to penetrate the marketplace.
Realize this process is an investment in the office, practice, or facility, and not just another piece of overhead. To be successful, health care providers and their managers must understand the long-term benefits of investing (i.e. spending money) in new informational systems.
Reed Tinsley, CPA, is shareholder in charge of Horne CPA Group’s Houston office and an editorial advisory board member of Practice Marketing & Manage ment. He can be reached at (713) 975-1000.
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