According to the experts, hospitals in the United States were saddled with 38.3 billion dollars worth of uncompensated care in 2016. This marked the first year in four where that amount actually increased, which means that no matter which way you look at it, uncompensated care and underpayments are beginning to raise. While there are many reasons for these underpayments, there are few ways for hospitals to collect on them. For the most part, these uncollected amounts go through all of their state-level appeals before ending up in a debt bucket. Thankfully, we have a good solution for this problem: the Federal ERISA appeals process.
Finding the Final Payment Resolution
In order to get those underpayments cleared up, several things need to be done. The hospital or clinic billing staff needs to examine the potential reasons for those commercial health insurance underpayments. This is a time-consuming process that doesn’t always lead to a good final payment resolution. According to Jonathan Wiik, a representative of TransUnion, “These issues present unique challenges as they are often large matrix issues across multiple departments, fraught with labor-intensive investigations from staff. The magnitude of getting to final payment resolution often produces inconsistent results. Given the nature and scope of these problems, I feel that hospitals need to look closely at data and analytics to change the paradigm.” We’ll go into some depth on how to examine the data and produce some useful analytics below.
However, even the best data isn’t always enough to get those underpayments taken care of. In reality, this revenue leakage will continue up through the three state-level appeals until one of two things happen – the amounts are paid (through the Federal ERISA process), or the debt ends up on the accounting department’s balance sheet, unpaid. What it all comes down to is finding a workable approach to tackling these underpayments. One that won’t cost the hospital a fortune yet keeps them safely within positive profit margins. Wiik went on to say that “Leveraging consumer financial insights for this approach can help a recovery team work smarter — not harder — by getting the right accounts to the right representative, at the right time, for the right workflow. Revenue leakage can be prevented, but not in the traditional way — hospitals need to shift to identifying and prioritizing high yield, low effort accounts — which can drive cash flow and positive outcomes.” While it can be hard for hospitals to choose between these priorities, after all, the main goal is to provide care to patients in need, examining the reasons for the underpayments usually helps move things in a positive manner.
Underpayments Are Usually Caused By Miscalculations and Errors
Many 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.
Don’t Forget To Track Your Underpayments
In general, there are three main ways to deal with those commercial health insurance underpayments. You can start by breaking them down by the payor, 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!
The State-Level Appeals Process May Help
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.
Get Those Underpayments Paid By Filing Federal ERISA Appeals
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.
Request Help from the Experts
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 underpayments.