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Underpayments to providers under their payer agreements are a cause of many thousands of dollars in lost revenue. Providers should devise a plan to make certain that payments made to them are accurate, on time, and adhere to other contractual obligations. The importance of developing and implementing such a plan is substantiated by the fact that nearly 100 percent of a provider's commercial business is under contract.
As a starting point, providers may wish to focus on five common types of underpayments: underfunding due to late payments; fee-schedule changes that are contractually disallowed; miscalculation of performance-based bonuses and errors in risk-payment reconciliations; inappropriate denials or inappropriate downcoding of claims; and non-- payments. The successful execution of a plan to identify and resolve problems and recover payments owed relies on the provider's ability to document and prove that payment is due.
Contractual underpayments are a widespread, but sometimes difficult-to-detect, problem. that can result in hundreds of thousands, if not millions, of dollars in lost revenue. A relatively low-cost and effective set of auditing processes can be put in place to uncover and remedy payer mistakes and provider business office deficiencies that lead to lower-than-anticipated payments. Although efforts to resolve payment problems may require the commitment of considerable resources and, possibly, the services of attorneys and consultants, providers who undertake these efforts are likely to recoup their investment several times over in recovered payments.
Common types of underpayments fall into one of five categories:
* Underfunding due to late payments;
* Fee-schedule changes that are contractually disallowed;
* Miscalculation of performance-- based bonuses and errors in risk-- payment reconciliations;
* Inappropriate denials or inappropriate downcoding of claims; and
* Nonpayments.
The critical element of success in payment recovery is the discovery and documentation of evidence to support underpayment claims and payer contract noncompliance through auditing.
Late Payments
All but two states and the District of Columbia have enacted laws or regulations requiring the prompt payment of clean claims.a The specific provisions of these regulations vary from state to state, but many states require insurers to pay interest on payments that are delayed more than a specified amount of time. For this reason, providers need to be sure that they have a mechanism in place to...