Contractual Errors on Payer’s Side
According to industry statistics, commercial health insurers have a claims processing error rate of 19.3% on average. Insurance claims are paid according to contracts between insurance companies and healthcare providers. However, no matter how carefully worded a contract is, there may be clauses that are unclear or open to interpretation.
One example is the “lesser of” clause. This standard clause allows the insurance company to pay the amount billed, even if it is lower than the contracted amount. For instance, if the contracted payment for a service is $200, and the provider bills $100, the insurer is entitled to pay the “lesser of” the two figures because the total service only came to that amount. This saves the insurance company $100 and costs the healthcare provider $100.
The insurance company is not required to let the provider know that it is paying the “lesser of” amount and may not realize there is a difference in interpretation over the costs of care. The best practice is for providers to be aware of these issues and look for ways to correct them.
Both insurers and healthcare providers contribute to the problem of underpaid claims. Contracts, billing and coding errors are the top causes of underpayment. Although both sides share responsibility for contractual compliance and accurate coding, each side has its own duty to follow the rules.
Negotiating the “Four Corners” of the Contract
Know what your contract says. Some clauses, like the “lesser of clause," favor the insurance company. If you’re unsure about what a clause means or what it requires you or the insurance company to do, ask for clarification.
You should understand that courts will not go outside the “four corners” of the document in a contract dispute. That means that when a contract is litigated, the only thing that matters is what is written in the contract itself.
When it’s time for a contract to be negotiated or renegotiated, be sure that any amounts discussed will give full coverage to the patient’s care and still leave a sufficient profit margin for costs and expenses. Make your needs and desires known early and often.
Financial Impact on Physicians
Providing healthcare is not cheap. Doctors are entitled to adequate compensation for their work. Medicare and Medicaid, account for a substantial percentage of healthcare reimbursement annually. About 7-11% of all government and commercial insurance claims are underpaid, as reported in a recent study.
When the number one concern of #patients is the rising cost of #healthcare, this lost money should cause great concern to #physicians.
Most Physicians Will Not Drop Payer Contract Despite Poor Pay
Only 19 percent of physicians in a recent survey said they would get rid of a payer contract if the reimbursement was poor.
Provider organizations should be monitoring their payer contracts to ensure fair reimbursement, but most physicians still would not drop a payer if they were paying poorly, a recent survey found.
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The poll of 20,000 physicians across 29 specialties revealed that just 19 percent of providers would back out of a payer contract if the reimbursement rates were poor.
But the majority of respondents said they would not abandon the payer despite reimbursement performance. Twenty-two percent reported that they need all payers and 24 percent said it was inappropriate to ditch a payer contract because of poor payment.
Summary
CodeToolz understands that physicians and medical practice administrators can become overwhelmed or lack the resources or time to negotiate competitive terms and reimbursements with health plans. Our services act as a bridge, utilizing our expertise and experience to facilitate mutually beneficial and profitable agreements between payers and physicians.
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Hospital Recruitment and Contract Manager
1ySo important to review and re-review after each updated version.
Healthcare Reimbursement Attorney | Managed Care Contracting | Advocate for Providers & Navigating Complex Claim Issues | Audit Defense and Appeals
1yAll great info. This quote in particular is so critical: “the only thing that matters is what is written in the contract itself.”