Games Insurance Companies Play to Pay Less on Medical and Dental Claims—and What Providers Can Do About It

In the world of healthcare billing, many providers encounter a frustrating reality: insurance companies often play tactics that delay or reduce payments for medical and dental claims. These "games" are not necessarily illegal, but they create significant financial challenges for healthcare providers and federally qualified health centers (FQHCs). The complexity of the claims process, intricate coding requirements, and an overwhelming volume of claims provide insurance companies with multiple avenues to reduce their payout obligations. Here are some common strategies they use, how they manage to get away with them, and what providers can do to counteract these tactics.

Common Tactics Insurance Companies Use

1. Delaying Claims Processing (The Stall Game)

One of the most common tactics insurance companies use is to delay the processing of claims. This might involve requesting additional documentation or repeatedly denying claims for minor issues such as incomplete patient information or missing signatures. These delays can last for months, leaving providers with an unhealthy cash flow situation. The longer a claim sits unprocessed, the less likely it is for providers to get reimbursed in full.

How They Get Away With It:

Insurance companies often have ambiguous deadlines for processing claims and may use bureaucratic barriers to stretch out the review process. They may request unnecessary or redundant documentation, knowing that many practices don’t have the resources to repeatedly follow up.

2. Downcoding Claims

Insurance companies may downcode claims, which means they assign a lower-value code to a procedure or service than the one submitted by the provider. For example, if a provider submits a claim for a complex procedure, the insurer might classify it as a simpler, less expensive service, reducing the reimbursement.

How They Get Away With It:

Downcoding is difficult to challenge without in-depth knowledge of coding guidelines. Insurance companies often cite a "medical necessity" review to justify the lower payment, arguing that a higher-level service wasn’t warranted based on the patient’s condition.

3. Bundling Services

Bundling occurs when insurance companies combine multiple procedures into a single claim, reimbursing them as one service rather than paying for each individually. This practice often results in lower payouts for providers.

How They Get Away With It:

Insurers cite "global payment" policies or national coding edits that allow them to bundle related services together. Providers often lack the time or expertise to challenge bundling decisions, especially when the rules governing what can be bundled are complex.

4. Requesting Unnecessary Pre-Authorization

Some insurers require pre-authorization for specific treatments or procedures but then deny the pre-authorization request without valid reasons. In other cases, they delay approving treatment, claiming that they need further review, which can lead to patients either not receiving the care they need in time or providers being forced to render services without certainty of payment.

How They Get Away With It:

The pre-authorization process is intentionally opaque, with vague reasons for denial or approval. Additionally, insurers might argue that they are simply following the guidelines to ensure the medical necessity of the services, even if these requests seem overly burdensome.

5. Non-Coverage Denials

Insurers may deny claims by stating that a particular treatment or procedure isn’t covered under the patient’s plan, even when it clearly is. This forces the provider to go through an appeals process that can be time-consuming and often discouraging, leading some providers to abandon the claim entirely.

How They Get Away With It:

Denial notices often use complicated language, and coverage terms can be intentionally vague. Without significant pushback, insurers don’t face immediate repercussions for denying legitimate claims, especially since many providers lack the resources to appeal every denied claim.

6. Applying Incorrect Deductibles or Co-Payments

Insurers sometimes apply the wrong deductible or co-payment amounts, resulting in a lower payout to the provider. This tactic can confuse patients and providers alike, especially when the discrepancies are small and require significant time to track down and correct.

How They Get Away With It:

With the complexity of insurance policies and different plan structures, it’s easy for insurers to apply the wrong amounts, knowing that many providers won’t catch the discrepancies in time. Even when they do, the administrative burden of correcting these mistakes often falls on the provider.

Why They Get Away With It

Insurance companies operate within a regulatory framework, but the complexity and sheer volume of claims give them cover to engage in these practices without facing significant penalties. There are several reasons why insurers manage to play these games:

1. Lack of Oversight and Enforcement:

 While there are regulations in place to govern claims processing and payment timelines, enforcement is often lax. Regulatory bodies like state insurance commissioners or the Centers for Medicare & Medicaid Services (CMS) may not have the resources to investigate every delay or denial.

2. Provider Burnout and Resource Constraints:

Insurance companies know that healthcare providers, especially smaller practices and FQHCs, don’t have the time, staff, or resources to challenge every denied or downcoded claim. This makes it easier for them to implement tactics that slowly chip away at reimbursement without immediate backlash.

3. Complex Appeal Processes:

The appeals process for denied claims is often intentionally complicated and time-consuming. Insurance companies benefit from this because many providers simply give up on appeals, opting instead to write off the loss or pass costs to patients.

4. Patient Confusion:

Patients often don’t understand their insurance benefits or how the claims process works, which gives insurers further leverage to delay payments or deny coverage. Providers can be caught in the middle, trying to educate patients while fighting for payment.

What Providers Can Do

While insurance companies may play these games, there are steps providers can take to protect their revenue streams:

1. Be Diligent with Pre-Authorizations:

Ensuring that pre-authorizations are correctly obtained and documented can reduce the chances of claim denials. Providers should consider using automated systems or dedicated staff for tracking pre-authorizations and responding promptly to any insurer requests for additional information.

2. Audit Claims Regularly:

Providers should perform regular audits of submitted claims, payments, and denials. This allows them to spot patterns of downcoding or bundling and gives them the information they need to challenge these practices effectively.

3. Appeal Denials Aggressively:

 Although time-consuming, appealing denied or underpaid claims is essential. Providers should have a clear process in place for appealing claims, and they should follow up persistently. Many insurers rely on the fact that providers will give up on claims; challenging denials can pay off in the long run.

4. Educate Patients:

Providers should help patients understand their insurance coverage and financial responsibility. This can involve creating patient-friendly billing explanations and offering assistance with navigating insurance disputes, which can increase patient satisfaction and reduce unpaid balances.

5. Leverage Professional Associations:

FQHCs and healthcare providers can benefit from joining professional associations, which often have resources and legal teams dedicated to addressing these issues. These organizations can apply pressure on insurers and advocate for policy changes to protect providers.

6. Use Data to Your Advantage:

Data analytics can be an invaluable tool in spotting trends in denials, payment delays, or downcoding. By tracking these patterns, providers can better anticipate issues and address them before they lead to financial loss.

Conclusion

While insurance companies have developed numerous ways to reduce or delay payments, providers are not powerless. By understanding these tactics and taking a proactive approach to claims management, healthcare providers can protect their revenue and ensure they are fairly compensated for the services they provide. Persistence, attention to detail, and an organized system for managing claims and denials are key to overcoming these hurdles in today’s complex healthcare landscape. If your center needs help reducing A/R and insurance denials, and would like to increase your cash-on-hand schedule a discovery call today.  We are here to help. 

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