catching the six-figure mistakes: how to tackle payer underpayments

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  • Copyrighted Material - Any Duplication requires PMMC Approval 1

    Catching the Six-Figure-Plus Mistakes: How to Tackle Underpayments

    Bart Carmichael

    AVP Recovery Services

    PMMC

    November 19, 2014

  • Copyrighted Material - Any Duplication requires PMMC Approval 2

    About the Speaker

    Bart Carmichael AVP Recovery Services

    PMMC

    20+ years experience working with the Revenue Cycle in Healthcare including A/R management and medical collections.

    Previously the Director of Professional Fee Revenue Cycle for Melbourne Internal Medicine Associates (a 120 physician multi-specialty group practice)

    Wharton School of Business

    MBA University of Miami

  • Copyrighted Material - Any Duplication requires PMMC Approval 3

    Todays Agenda

    Introduction to PMMC

    Underpayment Stats and Impact

    Evolution of Payment Terms

    Types of Underpayments

    Accurate Calculations

    Steps for Collecting Underpayments

    PMMC Process and Recommendations

    Q&A

  • Copyrighted Material - Any Duplication requires PMMC Approval 4

    Solid Foundation

    Began in 1986 Retains entrepreneurial spirit Corporate Office Charlotte, NC Consistently Recognized on INC 5000 List

    Solid Financials Privately-held with low overhead Win-Win solutions for its clients

    Solid Client Base Modern Healthcare Top 5 Largest Revenue Cycle

    Firms in 2014 400 hospitals 21,400 physicians 35 states

    Core mission is to assist healthcare providers with revenue cycle management tools that efficiently and cost-effectively address reimbursement and financial related issues.

    Company Results

    Strategic Recognition / Partnerships Designated Microsoft Solution Provider Recognized DELL Business Partner HFMA Peer Review Designation HBI Solution Provider SSAE 16 Certification

    Cost-Effective with Proven ROI Results $120-plus million per year in underpayment

    collections for Contract Management clients

    $46 million in contractual write-off recoupment for Recovery Service clients

    1030% average ROI based on cash-flow improvements for Patient Estimation clients

    About PMMC

    4

  • Copyrighted Material - Any Duplication requires PMMC Approval 5

    ONLINE ANALYTICS - Comparative Pricing (charge) Analysis - Resource Consumption Analysis - RAC Coding Comparison

    REVENUE MASTER - Strategic Pricing - Net Revenue Modeling - CDM Review

    Strategic Pricing

    CONTRACT PRO / PHYSICIAN PRO - Contract Rate Modeling - Reimbursement Auditing - Denial Code Monitoring - Financial Reporting

    RECOVERY SERVICES - Underpayment Collection Service

    Contract Management

    ESTIMATOR PRO - Patient Estimates - POS Collections - Benefit & Eligibility Verification

    Patient Access & Collections

    Goal: Deliver Revenue Cycle-Oriented Software with Knowledge & Commitment To Enhance Our Clients Bottom Line

  • Copyrighted Material - Any Duplication requires PMMC Approval 6

    Todays Agenda

    About PMMC

    Underpayment Stats and Impact

    Evolution of Payment Terms

    Types of Underpayments

    Accurate Calculations

    Steps for Collecting Underpayments

    PMMC Process and Recommendations

    Q&A

  • Copyrighted Material - Any Duplication requires PMMC Approval 7

    Underpayment Stats

    What is an underpayment? An underpayment occurs when

    Claims to third party payers result in payments that are less than expected according to the contractual terms of your agreement.

    How big is the problem? On average, estimates generally

    run from 1 to 4% of facility revenue

    AMA survey suggests a payment accuracy rate by insurers as low as 62%

    0

    10

    20

    30

    40

    50

    60

    Underpayments in2012 (billions)

    42.3

    13.7

    Medicaid

    Medicare

    Source: AHA

  • Copyrighted Material - Any Duplication requires PMMC Approval 8

    Todays Agenda

    About PMMC

    Underpayment Stats and Impact

    Evolution of Payment Terms

    Types of Underpayments

    Accurate Calculations

    Steps for Collecting Underpayments

    PMMC Process and Recommendations

    Q&A

  • Copyrighted Material - Any Duplication requires PMMC Approval 9

    Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here.

    Please continue to the next slide, or to see the full version, contact:

    Brad.Josephson@PMMConline.com

    Evolution of Payment Terms 1965 vs. Today

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    Evolution of Payment Terms

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    Evolution of Payment Terms Payer Category Hospital Outpatient Hospital Inpatient

    Government Programs (Medicare/Medicaid)

    APC Ambulatory Payment Classification (Hospital is reimbursed based on a set fee for the procedure performed)

    EAPG

    DRG Diagnostic Related Group (Hospital is reimbursed a set fee based on DRG payment rate for the patients condition and related treatment)

    Commercial and other Third party payers (BCBS, Aetna, Cigna, Humana, etc.)

    Case Rate Contract Rate Fee for Service Percent of Charges EAPG

    Case Rate Contract Rate Fee for Service Flat Rate Percent of Charges Per Diem

    Managed Care Plans Case Rate Contract Rate

    Case Rate Contract Rate

  • Copyrighted Material - Any Duplication requires PMMC Approval 12

    Evolution of Payment Terms

    What you need to know to get paid

    Charge Master

    Medical Record Support of Charges

    Facility Contract with the Payer

    Payer Policy Guidelines

    State Statutes

    Federal Laws

  • Copyrighted Material - Any Duplication requires PMMC Approval 13

    Todays Agenda

    About PMMC

    Underpayment Stats and Impact

    Evolution of Payment Terms

    Types of Underpayments

    Accurate Calculations

    Steps for Collecting Underpayments

    PMMC Process and Recommendations

    Q&A

  • Copyrighted Material - Any Duplication requires PMMC Approval 14

    Types of Underpayments

    Know your Contracts with Payers

    Fee Schedules Payment

    Methodology

    Carve outs and Thresholds

    Time Elements

    Precertification and

    Authorizations

    Other Contract Terms

  • Copyrighted Material - Any Duplication requires PMMC Approval 15

    Types of Underpayments

    Know your Payer Policies Could impact how you negotiate your contract What is not addressed in your contract is subject to

    the Payer Policies Consolidation of charges into other billed items

    Limits the total charge in percent of charge contracts

    Method to determine the primary procedure Lowest numbered CPT code is primary when surgical codes

    receive equal allocation of charges impacts multiple procedures reimbursement

    Bilateral procedures are paid at the same single procedure rate

    Implants must remain in the body greater than six months Vs. must be in the body when patient leaves the hospital

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    11 Types of Underpayments

    Require an implant invoice to be submitted with the claim

    Certain surgical codes include payment for the implant 1. Implants not paid

    Condition code is not on the claim

    Charges consolidated into other codes reducing total charges below the threshold amount

    Charges denied based on payer policies

    Carve out items excluded from the calculation of threshold

    2. Outlier Rate not paid

    Med/Surg rate paid when patient is in ICU

    Total days in the hospital were not paid

    DRG carve-outs are paid at the per diem rate instead

    3. Per Diem Rates paid incorrectly

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    11 Types of Underpayments

    Not on File

    Billed items do not match what was authorized

    Level of Care paid based on what was authorized not what occurred

    Denied when requested

    Number of days and areas authorized not paid

    4. Authorizations

    DRG Rate underpaid

    Incorrect DRG Paid

    Payer Error

    Billing system/Intermediary drops ICD 9 Codes causing DRG Change

    5. DRG Rate

    MRI/CT not paid

    Radiology rate not paid

    Carved out Ancillary not paid

    Incorrect rates

    6. Ancillary

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    11 Types of Underpayments

    Payer pays incorrectly

    Incorrect or generic Factors loaded by payer 7. Traditional

    Underpayments

    Incorrect Network utilized to price the claim

    Incorrect Payment methodology 8. Payer delegates Pricing

    Pharmacy (250) vs Detailed Drug (636)

    Supplies (272) vs Implant (278)

    Pacemaker (275) vs Implant (278)

    Surgery (360) vs Treatment (700 Level)

    9. Revenue Codes

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    11 Types of Underpayments

    Total Billed Charges do not exceed the reimbursement

    Per Day Limitation

    Number of Days Li