According to a recent article, commercial health insurance companies, also known as the “payers” in this situation, have been targeting out of network claims lately. This means that many of those claims end up being underpaid. While the number of underpayments can vary – even a claim that has been shorted a small amount is considered one – what matters is that they add up over time. As many hospitals and clinic networks run on tight margins, these shortfalls can quickly spell catastrophe. Thankfully, some measures can be taken in order to take care of those underpayments.
The Basics of Out of Network Underpayments
It’s easy to define exactly what an out of network underpayment is. It’s a claim that has been filed for care that took place out of the main provider network. In most cases, the patient had approval for this treatment or appointment to take place, but in emergency situations, this may not have been the case at all. Either way, it’s up to the hospital or clinic to get that claim paid – and the commercial health insurance company might be dragging their feet or only paying a small amount of the claim at a time, based on the guidelines that they have in place.
Negotiations Can Help
Negotiations are one of the best solutions to this out of network claim underpayment situation. According to one expert, here is how these negotiations add up over time, “You should still be negotiating all of them [because] the margin to negotiate is so great. [Frequently,] they’ll first pay you 20 percent, 30 percent and you have an opportunity to get up to 80 percent, 90 percent — if not on that one bill, over time. Even if you have five bills and you can get an extra $2,000 on a bill, that’s $10,000 in that month — that’s $120 grand in the year — and that’s just from negotiating five cases.” This means that you need to keep pushing the company before your state level appeals are exhausted.
In addition to these aggressive negotiations, you also should have a dedicated staff member dealing with them. That same expert explained how this works, “You need somebody that’s spending time on this; appeals can take anywhere from one to six months to resolve.” Because the out of network bills are more complicated than others, due to the coding involved, you do need to ensure that your best staff members are working on them.
Why Out of Network Underpayments Occur
Many out of network underpayments happen for the same reasons as unpaid claims. Some of the reasons include payor miscalculation, contract issues, and misinterpretations, general billing errors, and even accidentally using incorrect contract terms. The general billing errors are the easiest to avoid. In some cases, the documentation and all of the paperwork aren’t sent with the claim, or the wrong ones are included. The bill could also be for the wrong amount – or so the commercial insurance believes. They’ll end up just paying whichever amount that they think is correct.
Contract terms are another issue that causes these underpayments. Every clinic, practice, or hospital has a contract with each commercial health insurance agency. When those terms get interpreted wrong, billing issues occur. This leads to underpayments, as the insurance company thinks that they’re paying the correct amount, when they, in fact, are not. Incorrect calculations and other contract issues can lead to underpayments as well. Although these claims issues are tough to clear up, they can be avoided with some clear communication between your practice and the commercial health insurance company.
How to Prevent Underpayments
In general, there are three main ways to deal with those out of network underpayments. You can start by breaking them down by the payer, or the company that underpaid the claims in the first place. This makes it easier to see which companies tend to underpay the most. Once you have determined this, you can speak with your representative from that company to see if there are lingering billing issues that need to be cleared up. Remember that communication is important!
You can also set up a reporting system, such as a spreadsheet, that is handled by your billing personnel and the accounting staff at the commercial health insurance company. This also opens a line of communication, albeit in spreadsheet form, between your employees and those at the insurance company. If something ends up getting underpaid, everyone is aware of it, making it easier to ask that important question – “why?” Finally, you need a way to store those underpayments. You don’t want them to get forgotten!
State-Level Appeals Still Apply
No matter the size of the underpayment, you still receive three state-level appeals on it. This means that when the insurance company refuses to pay them in full, you have three additional chances to get them to do so. Here’s how that process usually works:
The insurance company receives the claim, and for whatever reason, they end up paying only half of what’s due. The payment is sent to you, and then you send the balance out for an appeal. The insurance company might pay an additional 5 or 10% on it. Your employees then file another appeal. This goes around and around until the appeals are exhausted, and a balance is still due. Thankfully, you have one additional option at this point.
Use the Federal ERISA Laws To Get Them Paid
You’ve no doubt heard about Federal ERISA laws before. They’re a set of federal laws that govern things like employee retirement accounts and self-paid insurance plans. According to ERISA, those commercial health insurance companies need to clear up those underpayments. Otherwise, they’re running afoul of the law. The main issue here is that many hospitals, clinics, and even practices, never file those appeals.
Why? Because these businesses don’t know that they can file those Federal ERISA appeals, and even if they do, they aren’t quite sure how. Most medical billing and coding courses don’t cover ERISA at all. Even if they did, your billing employees are far too busy to go through the lengthy process. This would take away from the many other tasks that they tackle every day. To go even further, most law schools don’t cover the material at all. You need to find a company that specializes in these appeals, like us, ERISA Recovery.
Hire Help to Collect Those Out of Network Underpayments
If we haven’t already made this clear, you need help collecting on those commercial health insurance company underpayments. Once your three state-level appeals are gone, you need to file a Federal ERISA claim on them, lest your revenue cycle end up out of balance. We can do that for you. Just call us, ERISA Recovery, and ask to speak to one of our Federal ERISA experts. You can reach us at (972) 331-4140 or through the contact form on our website. We don’t charge anything upfront, and have a $1 million guarantee – that’s the amount that we’ll collect for you in 12 months, as long as you can provide all of the paperwork that we need. Don’t wait any longer to collect on those out of network underpayments.