| Healthcare insurance business continued to boom in | | | | plans, namely, United, WellPoint, and Aetna together |
| 2006, mostly at the expense of both providers and | | | | cover 77.7 million lives. In 2006, consolidation rate |
| patients. A review of recent healthcare insurance | | | | accelerated. For instance, United Healthcare Group |
| industry trends help identification of six payer activities | | | | purchased 11 plans in 2006, including MetLife, PacifiCare, |
| that will impact medical billing and healthcare providers | | | | and Oxford. Turning down a contract offered by a |
| revenue in 2007. | | | | payer that controls such a large portion of population |
| Two key aspects dominated business background for | | | | results in giving up significant revenue from medical |
| insurers in 2006. They | | | | billing. Providers face the lose-lose choice of seeing |
| | | | fewer patients or accepting lower rates. |
| 1. Must meet tougher profit margin benchmarks. For | | | | 5. Drive providers into networks (which offer lower |
| instance, United Healthcare saw its earnings rise 38% | | | | allowed amounts). United Healthcare has announced a |
| in the 3rd quarter of 2006 alone. To keep its share | | | | new national policy to discontinue direct payment of |
| value growing, United Healthcare will have to | | | | medical billing to out of network providers. Effective |
| demonstrate still better performance in the 3rd quarter | | | | July 1, 2007, under the "pay the enrollee program," |
| of 2007. | | | | United Healthcare will direct out-of-network benefit |
| 2. Approach the limit of their ability to grow premiums. | | | | checks to the insured member rather then |
| Premiums increased significantly beyond inflation and | | | | non-participating providers. This policy forces the |
| workers' earnings growth in 2001-2006. For instance, | | | | providers to choose between chasing the patients for |
| health insurance premiums increased 65.8% between | | | | payments or joining the payer's network. In any case, |
| 2001 and 2006 while inflation grew 16.4% and workers' | | | | provider loses some of earned revenue. Oxford |
| earnings increased 18.2% during the same period. | | | | Health Plans, a United Healthcare Company, |
| Therefore, in 2007, insurance companies will continue | | | | implemented the Pay the Enrollee policy on April 1, |
| to pay less using the following six key strategies: | | | | 2006. According to the Oxford web site |
| | | | announcement, Oxford may refuse to honor the |
| 1. Add new denial reasons and increase costs of | | | | assignment of benefits for claims from non |
| medical billing service and software because of | | | | participating providers pursuant to language in the |
| growing complexity. In January 2007, thousands of | | | | Certificate of Coverage. If enrollees choose to receive |
| physicians discovered they were having trouble getting | | | | treatment out-of-network, the claim reimbursement |
| Medicare to pay for services billed under the codes | | | | may be sent directly to the enrollee. In such cases, the |
| 99303 and 99333. The reason for denial was simple: | | | | non-participating provider will be instructed to bill the |
| Medicare deleted codes 99301-99303 from CPT in | | | | covered patient for services rendered. |
| 2007, forcing the physicians to review the new | | | | 6. Return for refunds and penalties. Justice Department |
| 99304-99306 codes in an up-to-date CPT code book. | | | | recovered a record of $3.1 billion in refunds and |
| The 99331-99333 codes also were deleted in 2007. | | | | penalties in 2006. It is the largest amount ever |
| Review the new codes, 99324-99328. The | | | | recovered in a single year. Invariably, providers are in |
| payer-related component of the medical billing process | | | | denial about their exposure, and insurers are quick to |
| costs an average 8% to 10% of providers collections. It | | | | comfort them. They will tell you that medical billing |
| includes claim generation, scrubbing, electronic | | | | audits are an unfortunate but necessary tactic for |
| submission to payers, payment posting, denial | | | | keeping fraud in check, implying that honest providers |
| identification, follow up, and appeal. By complicating the | | | | have nothing to worry about. But insurers are not |
| process, payers increase the likelihood of failing the | | | | crusaders for truth and justice. Providers need to |
| payment and winning the subsequent appeal process. | | | | understand that payer's motive is money, the means is |
| Providers face the lose-lose choice of expensive | | | | a gargantuan statistical database, and that every |
| medical billing process upgrades or forfeiting denied | | | | provider is an opportunity. Healthcare finance insiders |
| payments. | | | | call this a Big Brother system and, setting aside the |
| 2. Reduce allowed fees. Average physician | | | | melodramatic implications of such a name, it is easy to |
| reimbursement from billing Medicare and commercial | | | | see why. While executives have a soft spot for pretty |
| payers dropped 17% in 2002-2006. From 2005 to | | | | charts, the true power of such a system is its ability to |
| 2006, allowed amounts for E&M visits alone | | | | drill into the data and find outliers (when they talk about |
| dropped 10% nationally, 27% in the Northeast, and 20% | | | | this type of tool, Information Systems specialists use |
| in Northwest. | | | | jargon like data mining and On Line Analytical |
| 3. Underpay. Partial denials cause the average medical | | | | Processing, or OLAP for short). The system |
| practice lose as much as 11% of its revenue. Denial | | | | automatically pinpoints providers that are "easy audit |
| management is difficult because of complexity of | | | | targets: because they are: |
| denial causes, payer variety, and claim volume. For | | | | 7. - Doing something differently from the pack, |
| complex claims, most payers pay full amount for one | | | | 8. - Lacking infrastructure for systematic denial follow |
| line item but only a percentage of the remaining items. | | | | up, |
| This payment approach creates two opportunities for | | | | 9. - Lacking compliant medical notes. |
| underpayment: the order of paid items and payment | | | | Having acquired the means to cost-effectively target |
| percentage of remaining items. Additionally, temporary | | | | providers, insurers have begun the hunt. It behooves |
| constraints often cause payment errors because of | | | | providers to arm with powerful electronic medical billing |
| misapplication of constraints. For instance, claims | | | | software and fight back for improved revenue. |
| submitted during the global period for services | | | | References |
| unrelated to global period are often denied. Similar | | | | |
| mistakes may occur at the start of the fiscal year | | | | 1. Neil Weinberg, "Envy Engines," Forbes, March 14, |
| because of misapplication of rules for deductibles or | | | | 2005 |
| outdated fee schedules. Payers also vary in their | | | | 2. "Fraud Statistics - October 1, 1986 - September 30, |
| interpretations of CCI bundling rules or coverage of | | | | 2004", Civil Division, U.S. Department of Justice, March |
| certain services. | | | | 4, 2005 |
| 4. Increase leverage over providers through | | | | 3. Capra, Lirov, and Randolph, "The "Business" of |
| consolidation. It is harder to drop a contract with low | | | | Healthcare Provider Audits - How Payers Are Getting |
| allowed amounts when there are fewer remaining | | | | Away with Practice Murder," Today's Chiropractic, |
| payers. Consolidation in the insurance industry reduces | | | | January 2007, pp. 60-62. |
| competition among payers for physician's services, | | | | 4. P. Moore, "Power to the Payers - Consolidation Puts |
| allowing payers pay less to providers. Today, 73% of | | | | Insurers in Charge," Physicians Practice, January 2007, |
| insured population are covered by 3 plans alone: the | | | | pp. 23-30. |
| top ten health plans cover 106 million lives, while three | | | | |