Posted: Friday, December 2, 2011 4:21 pm – Orlando Medical News
Most experts agree that the contractual relationships between healthcare providers and managed care organizations (MCO’s) have not matured as expected from a strategic, financial, or operational perspective. In fact, the integrity and longevity of many managed care contracts has deteriorated.
Physicians have been forced by insurers to play a guessing game when it comes to the amounts they should bill. This is a losing game. Approximately 20% of medical claims are paid incorrectly, 1 out of 5!
There are tens of thousands of CPT® codes and hundreds of insurers and plans. All pay varying amounts. Few practices can deal with this situation. The insurers have armies of staff and physicians only a few already overworked to exhaustion and barely keeping their heads above water.
Administrative complexity and inefficiency are major cost-drivers in a largely fragmented health care delivery system. A typical physician practice must contend with each payer’s way of contracting, credentialing, preauthorizing, coding, billing and reimbursing.
Health insurer contracting and billing represent the major sources of administrative burden for physicians. Physicians divert substantial resources – as much as 14 percent of their total revenue – to ensure accurate insurance payments for their services
If physicians guess high their claim can be rejected or delayed. If they guess low the insurers gladly underpay. When claims are delayed the money earns interest for the insurers and costs the physician dearly.
A fair system would be easy to implement. The physician files a claim, the insurer knowing full well what to pay according to their contracts pays the maximum allowable, simple. Except for the lost millions in undeserved interest and ill gotten gains obtained by short changing the doctors. The board of directors of an insurer would crucify the CEO that proposed such an outlandish scheme.
The focus for physicians, regarding contracts, has to be on (1) payment terms (allowables) and any proposed changes (year-to-year), (2) payer reimbursement compliance, and (3) physician fee vs. contract allowable.
The physicians contract is at the center of the reimbursement issue; specifically “payment terms.” This has been un-manageable for many physicians; it’s not that they don’t care; it’s that their practices have turned into revolving doors to try and keep up with declining reimbursements and the demand for healthcare.
The physicians themselves point out that while the administrative costs of operating a doctor’s office have risen and the demands on them have increased, reimbursement rates from insurers have stagnated.
Consider this, a family practitioner can spend up to an hour with one patient and be reimbursed in the area of $75.00; factor in expenses and you see the problem. At the end of the day physicians must identify and manage these contracts. It is no longer sufficient to trust their income to others.
Physicians spend an average of 142 hours a year interacting with health insurers at an estimated cost of $31 billion, or $68,274 per physician, according to a national study of doctors and medical group administrators that appeared in the journal Health Affairs.
Managed care contracts are one of the most important drivers of a healthcare organization’s financial reimbursement, cash flow and profitability. A well-developed managed care contracting strategy is integral to understanding, planning for, and controlling revenue streams. The effective use of analysis can lead to major revenue enhancements and overall improved financial performance for your practice – without necessitating any changes in day-to-day operations.
While waiting for the sun to flame out, and for the insurers to be fair with physicians, there is help. CodeToolz.com, now available on smartphones contains a database that can calculate for any insurer and plan what the maximum allowable is. It contains over ten years of CPT® codes (all AMA-approved codes) and Medicare base amounts. Instead of guessing, doctors use the maximum allowable amounts and get paid exactly what they have earned and deserve every time.
Physicians in private practice are going extinct and we propose that underpaying is a major cause. The time has come to fix this. We are doing our part and in that spirit we are making our service available for free to any and all doctors. We are allowing sponsors to pay to get an unobtrusive banner ad on the screen.
CPT® codes and descriptions are copyright 2010 American Medical Association. All rights reserved. CPT® is a registered trademark of the American Medical Association (AMA).