Reimbursement analysis provides an accurate picture of the reimbursement environment, which is important to ensure your practice will be able to provide new, innovative services. A comprehensive reimbursement analysis should be conducted with adequate lead time to include an in-depth understanding of payer-mix, the delivery cost of the new service, and the anticipated reimbursement by the designated payer.
Accepting denials and underpayments as the status quo is one of the most common reasons why practices struggle to remain profitable. Without a focused strategy to analyze payer reimbursement—and dive into the root causes of any problems—practices run the risk of leaving money on the table, and that’s no way to run a practice. Many practices claim they don’t have the time or staff to oversee payment accuracy, but that’s usually not true. Practices do have the staff to do this. They just need to put a strategic plan in place to do it.
In most industries, paying for a service or item is straightforward. You see the price, make the payment, and receive the item or service. The entire transaction takes a matter of seconds. Healthcare reimbursement is far more complicated. The biggest difference between healthcare and other industries is that providers are paid after services are rendered. Healthcare reimbursement is often a month’s long process that requires multiple steps, each of which can go wrong at any moment, further delaying payment to the provider and potentially saddling patients with bills they don’t understand and therefore don’t pay.
1. Identify Payment Trends
The billing team member either coder or biller can review the practice’s top 10 codes (by volume) per payer per month for six months. Ask these questions: What should the practice have been paid according to its payer contract? What was the practice actually paid? Is there a discrepancy? If so, why? This gives you some data to understand what’s being denied, what are being underpaid, and what’s the root cause. You need this information before putting processes and procedures in place. Otherwise, you could be focusing on the wrong spot.
Practices may find it helpful to purchase contract management software to identify these payment gaps more easily. However, they can also perform this type of analysis manually using a contract matrix to identify reimbursement trends with the overarching goal of bringing these trends to the payer’s attention and/or fixing processes internally.
2. Find Resolution for Major Claim Denials
Some practice management vendors offer robust billing analytics to help practices understand the root of the denials, but some practices may need to do this manually by analyzing the claim adjustment reason code (CARC) and remittance advice remark code (RARC) that are included in each transaction. Payers—particularly local Medicaid and Medicaid managed plans—may also use their own non-official reason codes. When these codes aren’t readily available on the payer’s website, practices should call them to obtain the list. If you really narrow it down to your practice and what you do, you can learn your payer codes pretty easily.
3. Follow up with Payers on Underpayments
Underpayments are tricky because there are no associated reason codes. With underpayments, you get paid, but you don’t know whether the payment is accurate. This is where a lot of practices lose money. Underpayments typically occur because of a coding error, a fee schedule misalignment, or both. For example, with coding, practices may incorrectly report a level 3 evaluation and management (E/M) code even though the documentation actually supports a level 4 E/M code. With fee schedule misalignments, payers may neglect to update their adjudication systems to reflect new codes and updated relative value units effective January 1.
Practices that take the time to analyze their reimbursement—and fight denials and underpayments, when appropriate—may even find that payers ultimately become more communicative and open to corrective action. If your payer knows that you follow your denials, look at your underpayments, and fight for every penny, the payer representative treats you differently. Ultimately, practices should strive to prevent denials and underpayments proactively rather than manage and address them retrospectively.
This requires a team approach that emphasizes the importance of data integrity and coding compliance—a process redesign that takes some effort but is certainly well worth it in the long-run. If you don’t have such a team then you can always take help from expert billing companies like Medical Billers and Coders (MBC). To know more about our in-depth coding and billing services you can contact us at email@example.com