Seven to over ten percent of your practice’s revenue is being lost if your medical billing company is not systematically comparing your insurance payments to the amounts allowed in your payer contracts. Any competent medical insurance billing service should offer this feature as part of their standard service.

Medical billing services have a number of basic steps they should incorporate into their billing process. These steps should include using a claims scrubber, use of no-response calls, posting zero pays, pursuing underpayments, and using likelihood of payment scores for patient collections.

This article focuses on just one of the key elements you need from your medical billing service: pursuit of underpayments. Pursuit of underpayments starts with a critical step: comparison of EOBs to your contractual allowables (the payment your payers have agreed to make for each CPT code). You cannot count on payment posters to catch underpayments with their naked eye; the comparison must be automated and systematic. It goes without saying that if you do billing in-house the comparison still should be done.

The reason that comparison to allowables must be automated is because of the clever and systematic manner in which payers typically underpay claims. These underpayment patterns can be difficult to spot, but one of the advantages a Medical Insurance Billing Service has is that it sees payment information and patterns across many clients for many payers. This allows medical claims billing services that regularly and systematically compare payments to contractual allowables to spot patterns that a single practice might miss.

A pattern that is often seen by billing companies is one where a payer will underpay the same codes across multiple providers by the same dollar amount in month one. Then in month two, the payer will resume paying the code correctly and will begin to underpay a different code (or codes) across multiple clients.

These underpayments are not huge (5 to 10 percent) but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount “under the radar” can make the underpayments difficult for an individual practice to spot.

The pattern outlined above is why it is critical that a strategy for pursuing underpayments is not based upon payment posters picking up on the underpayments. Most payment posters will notice a large underpayment, but it is too much to expect them to spot a $5 underpayment.

This single action (comparison of payments to allowables) can increase a medical practice’s collections by 5 to 10 percent. This is why you need to insure this critical step is being completed by your medical billing service.

Identifying the underpayments is the first step of the journey. Dogged pursuit of the underpaid amounts is what actually drives up your practice’s revenue. This pursuit needs to go down to even small underpayments because once a payer sees that the small underpayments are being pursued they typically taper off and contractual payments resume at the appropriate level. Much like a small child, the insurance companies are trying to see what the can get away with.

Copyright 2008 by Carl Mays II

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