Each month, for every hundred claims wrongfully denied, you lose approximately $30,000 for the year. SurgeryShopper's program helps eliminate this slippage permanently.
Perhaps you’ve pondered the “cost” of denials but have you really analyzed your losses from an activity-based cost perspective?
We asked Maria Todd, our key expert, author and consultant about the costs associated with revenue management and the costs associated with overturning denied claims. Here’s what she had to say: “Overturning denied claims should be tracked for frequency, amount, reason codes and average turnaround delay. If you are going to continue in a relationship with an “abuser”, you should insist that the initiate a corrective action plan (CAP) or decide if its time to part company.”
Every claim that is wrongfully denied costs money. Money that erodes margins and profitability. It causes your staff stress, stresses the shareholders, upsets and creates anxiety for your patients and creates financial windfalls and unjust enrichment for the payer who continues to abuse the trust of its trading partner. Imagine how much interest grows in the payers’ bank accounts with every 100 denied claims per check run. That’s unjust enrichment and a loss of opportunity (because the cash isn’t in your bank account) and loss of interest on the money that you could be accruing. Why put up with it?
According to several sources, depending on which source you believe, 65-75% of denied claims are never resubmitted or followed up. Also according to which source you believe, between 4-14% percent of claims are wrongfully denied on first pass. The game must stop, but single providers don’t really have the leverage to change bad behavior any more than a battered spouse can change the violent abuser in a domestic relationship. The solution: In both cases, the only way out may be to end the relationships.
“In the case of managed care plans and PPOs, I tend to study patterns and trends if there are any. If I can see them, we call the payor out and ask why the problem exists. If they cannot remedy, in accordance with their own contract which usually state the terms to remedy a breach of contract, it’s time to quit the relationship. But that’s not the end of the world, by a long shot,” says Todd.
About 74% of the payors on PPO and many HMO network agreements are self-funded employers. If you’ve been using your billing and patient accounts software properly (a big “if”, as most providers skip this field out of ignorance), you’ve loaded the employer information in the system. “It is easy enough to determine which employers will be affected. One strategy is to contact them directly to determine if they are interested in continuing a relationship with you directly.
You may be surprised to learn that they’ve been paying much more on every claim from you than you receive. They may as well. “Often, I learn that TPAs and others “embed” additional percentage fees you as the provider never see,” says Todd. You may submit a bill for $15,000 on a bundled-price surgery and the self-funded trust fund is billed $18,000 or more. “When the money is drawn out of the trust account to pay claims, the embedded amount is stripped off and divided among one or more parties. You get the check for what you expected and you and the employer are none the wiser. But the employer things you are a greedy son of a so and so.” Todd explains.
The self-funded employer often has no idea that they are often being charged double and triple hits beyond their PEPM network access fees. I recently consulted to a municipality that had the same broker and TPA for 28 years. All the while, they faithfully continued to pay and pay and pay and pay and pay. Then with a quick claims analysis and a call to a few providers, we discovered that providers were contracted to pay 8% of revenue back to the TPA which was then split between the TPA and the broker. Within two weeks the mayor ordered an RFP be released to find a new TPA, a new broker and new PBM.
Don’t be intimidated and fearful. Deal in facts, mitigate risks and keep good data about denials and appeals and payment patterns. And if the handwriting is on the wall, start calculating an alternative reality financial. Life without that particular health plan. They don’t deserve your services or a discount.
If you need help with the first few until you’re comfortable and confident in the process, or you need a contract template to help you seal the deal, call Maria Todd.