Contractual underpayments are silent revenue killers. They lurk in the shadowy depths of complex payer contracts and result in missed revenue opportunities. According to the MGMA, healthcare insurers underpay providers by 8-11% on an average. The most common mistakes that lead to underpayments are:
Insufficient documentation.
Delay in identifying underpayments.
Misinterpretation of payment contracts by providers.
Identifying and correcting payment variances is difficult. Provider offices work with multiple insurers and payment contracts. There is low visibility and control over contract processes. It is next to impossible to prevent payers from adjudicating claims incorrectly. But it is possible to ensure that underpayments are not a hidden tripwire that slows down the path to profitability.
When several procedures are carried out on the same date of service it can result in reimbursement cuts for subsequent procedures. This is a common problem faced by healthcare providers.
When a procedure is terminated early or canceled it has an impact on allowables. There are also several coding related clauses such as the credential of the provider that can result in inconsistencies in payment.
1. It is best practice to review and update fee schedules, contractual terms and EOBs (explanation of benefits) regularly. This will prevent delays in identifying underpayments and subsequent revenue loss.
2. Review 835 payment data from the insurer closely as it contains information on claim payments. This provides details on claim denials, claim adjustments, rejections and bundled claims. Implementing a system to analyze this data can save time and missed revenue.
3. Tighten the appeals process to avoid exceeding timely filing limits and quicken the resolution process.
4. Understanding payer contracts is vital to architect a strong and consistent reimbursement structure. Implementing a contract management system or a process to analyze contracts will ensure underpayments are outliers and not a recurrent problem.
5. Run comparison reports spanning all major insurers to check reimbursement velocity. Identify payers who routinely underpay. Scheduling a call to resolve payment issues will ensure fighting underpayments is not a long and
uphill battle.
6. Address areas in which your provider organization loses money whether it is risk-sharing agreements, episodic payments or bundled claims and make course corrections.
7. Review qualitative and quantitative reimbursement data to assess the profitability of payer contracts. This is especially helpful when renewing contracts.
Weed out payment inconsistencies with our revenue cycle specialists.
Let’s light the way for stronger payment contracts