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Outsourced Medical Billing Must Pursue Underpayments

Sep 1, 2008
You are losing up to ten percent of your collections if payer underpayments are not being aggressively pursued by your outsourced medical billing company. It is simply a minimum requirement of being in business that medical billing services compare your payments to the amounts your payers have agreed to pay you.

If you make the decision to outsource medical billing or are currently outsourcing, then there are a number of critical tasks and process steps that your medical billing service should provide. These include scrubbing claims before they are submitted, systematic follow-up on submitted claims, posting denials, pursuing underpayments, using patient expected payment scores just to name a few.

Today's focus will be on pursuing underpayments. The first step of this pursuit is comparing a practice's Explanation of Benefits from the payers to the amounts the payers have agreed to pay for each procedure. Many billing processes assume the payment posters will catch these underpayments; this is a bad assumption. The billing process must have an automated comparison process.

The reason that comparison to allowables must be automated is because of the clever and systematic manner in which payers typically underpay claims. These underpayment patterns can be difficult to spot, but one of the advantages a Medical Insurance Billing Service has is that it sees payment information and patterns across many clients for many payers. This allows medical claims billing services that regularly and systematically compare payments to contractual allowables to spot patterns that a single practice might miss.

As billing companies look across multiple clients they will frequently see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all of their clients. The following month they will see the same payer switch to underpaying a different set of CPTs.

These underpayments are not huge (5 to 10 percent) but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount "under the radar" can make the underpayments difficult for an individual practice to spot.

The pattern outlined above is why it is critical that a strategy for pursuing underpayments is not based upon payment posters picking up on the underpayments. Most payment posters will notice a large underpayment, but it is too much to expect them to spot a $5 underpayment.

What does all of this mean to your top line? A medical insurance billing service that properly implements the pursuit of underpayments can increase your revenue by between 5 and 10 percent - and this is pure profit.

Identifying the underpayments is the first step of the journey. Dogged pursuit of the underpaid amounts is what actually drives up your practice's revenue. This pursuit needs to go down to even small underpayments because once a payer sees that the small underpayments are being pursued they typically taper off and contractual payments resume at the appropriate level. Much like a small child, the insurance companies are trying to see what the can get away with.

Copyright 2008 by Carl Mays II
About the Author
Carl Mays II, CEO of ClaimCare Medical Billing Services, has spent the past 15 years improving the operations of his clients. To learn more about selecting Medical Insurance Billing Services see his other articles.
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