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| MONITORING
THRID PARTY PAYMENTS
One of the most challenging tasks for ophthalmology practices is the business process of sending thousands of fee-for-service claims (for both medical and surgical services) to third-party payors and of ensuring proper payment. In this issue of Watching your Bottom Line, we'll examine some of the methods that practices have found successful for monitoring payments and for ensuring that every payment is received when promised and in the promised amount. What are some of the ways that a health lan may pay less than promised?
Tools
Identifying
Problems Plans tend to gather around a statistical mode of payment. For instance, most plans in a market will pay at a similar multiple of the Medicare fee schedule. If your system allows, you can load fee schedules at 90%, 95% 100%, 105%, 110%, 115%, and 120% of the MFS, and then point or link each insurance plan to the appropriate schedule. If your system does not have the ability to load multiple fee schedules, or if the implementation of that function is difficult and cumbersome in your system, use a manual system. Develop a spreadsheet of allowable payments and an accompanying spreadsheet of plan payment levels (see below). Both spreadsheets should be available to each staff member posting payments.
A - Sample MFS data
Note that in the case of plans that pay at a percentage of charges, the allowable can be calculated as follows: Practice fee schedule as a age of the MFS = 150% Contract calls for payment at 80% of charges 80% of 150% = 120% of the MFS The contract's commitment for timeliness will drive your monitoring of accounts receivable (AR). Run an AR for each plan, by patient account, within 5 days after the promised payment time. For example, in the table above, Acme promises payment within 45 days. Each month, an AR report by plan that has accounts unpaid after 60 days should be followed up. Repeated non-response should trigger a call and letter to the plan reminding them both of their timeliness contractual obligation and of any prompt-payment regulations in your state. Continued tardiness warrants a repeat letter with copies to the state agencies responsible for that type of plan. It is important that you have a system in place to identify claims that are ignored by the plan. Retrospective
Reporting For a manual review, collect EOBs (Explanation of Benefits forms) covering a one-month period and compare each payment to the expected amount. Select one or two payors to review each month, beginning with those representing the highest age of your charges or those with a high index of suspicion for inadequate payments (or both). If your practice management computer system has flexible reporting, you can use this function for a more comprehensive and accurate review. The report you want is one stratified by insurance plan and then by payment by CPT code. The following is an example:
Your system may provide an additional column for the expected amount, based on a fee schedule in the system for that plan. As an alternative, you can export the report to a spreadsheet program if your system is capable of exporting data. A workaround to use if your system cannot export data is to print the report on a laser printer, and using a scanner (now available for well under $100) and a document-handling software package, scan the report. Using the software's optical character-reading capability, place the data into a spreadsheet. With the data in a spreadsheet, add the additional columns needed for the analysis:
In this example, the practice's fee schedule is at 150% of the MFS. This payor, after a contract renegotiation, agreed to pay 110% of the MFS. By dividing the allowed amount (110%) by the practice fee (150%), the expected collection of 73.33% was derived. The payor, although agreeing to an increased reimbursement, was still paying at an old (and lower) rate. These administrative errors in the payors' claims-processing operations are common, and it is worth a significant amount of revenue to the practice to monitor the payors. In ordering the report, specify a time period of charges for which all (or at least most) payments have been received. For example, if the plan's allowable payment changed on April 1, 2001, and you ordered the report in December of 2001, you should include only charges from April 1 through September 30. This will ensure that most claims have had at least 90 days to be paid. At this point, you need to really understand the way your system reports. For instance, many systems have a well-designed report that provides the data as described above, but provides no way to isolate only those claims with a zero balance. By including claims that have not been completely paid, the collection ratio is not a true representation of the payor's performance, since some partly paid or completely unpaid claims are represented. Actions
After the Analysis If the payor cannot or will not pay the contracted amount, the next step is to send copies of all relevant correspondence to the state agency that is responsible for the type of insurance plan in question. Similar steps should be taken if the payor's payments are chronically late (later than contracted or allowed by state regulations or law). Implementation Summary
Ron
Rosenberg, PA, MPH, Author |
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