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

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<ul><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 1 </p><p>Catching the Six-Figure-Plus Mistakes: How to Tackle Underpayments </p><p>Bart Carmichael </p><p>AVP Recovery Services </p><p>PMMC </p><p>November 19, 2014 </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 2 </p><p>About the Speaker </p><p>Bart Carmichael AVP Recovery Services </p><p>PMMC </p><p> 20+ years experience working with the Revenue Cycle in Healthcare including A/R management and medical collections. </p><p> Previously the Director of Professional Fee Revenue Cycle for Melbourne Internal Medicine Associates (a 120 physician multi-specialty group practice) </p><p> Wharton School of Business </p><p> MBA University of Miami </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 3 </p><p>Todays Agenda </p><p> Introduction to PMMC </p><p> Underpayment Stats and Impact </p><p> Evolution of Payment Terms </p><p> Types of Underpayments </p><p> Accurate Calculations </p><p> Steps for Collecting Underpayments </p><p> PMMC Process and Recommendations </p><p> Q&amp;A </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 4 </p><p> Solid Foundation </p><p> Began in 1986 Retains entrepreneurial spirit Corporate Office Charlotte, NC Consistently Recognized on INC 5000 List </p><p> Solid Financials Privately-held with low overhead Win-Win solutions for its clients </p><p> Solid Client Base Modern Healthcare Top 5 Largest Revenue Cycle </p><p>Firms in 2014 400 hospitals 21,400 physicians 35 states </p><p>Core mission is to assist healthcare providers with revenue cycle management tools that efficiently and cost-effectively address reimbursement and financial related issues. </p><p>Company Results </p><p> Strategic Recognition / Partnerships Designated Microsoft Solution Provider Recognized DELL Business Partner HFMA Peer Review Designation HBI Solution Provider SSAE 16 Certification </p><p> Cost-Effective with Proven ROI Results $120-plus million per year in underpayment </p><p>collections for Contract Management clients </p><p> $46 million in contractual write-off recoupment for Recovery Service clients </p><p> 1030% average ROI based on cash-flow improvements for Patient Estimation clients </p><p>About PMMC </p><p>4 </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 5 </p><p> ONLINE ANALYTICS - Comparative Pricing (charge) Analysis - Resource Consumption Analysis - RAC Coding Comparison </p><p> REVENUE MASTER - Strategic Pricing - Net Revenue Modeling - CDM Review </p><p> Strategic Pricing </p><p> CONTRACT PRO / PHYSICIAN PRO - Contract Rate Modeling - Reimbursement Auditing - Denial Code Monitoring - Financial Reporting </p><p> RECOVERY SERVICES - Underpayment Collection Service </p><p>Contract Management </p><p> ESTIMATOR PRO - Patient Estimates - POS Collections - Benefit &amp; Eligibility Verification </p><p>Patient Access &amp; Collections </p><p>Goal: Deliver Revenue Cycle-Oriented Software with Knowledge &amp; Commitment To Enhance Our Clients Bottom Line </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 6 </p><p>Todays Agenda </p><p> About PMMC </p><p> Underpayment Stats and Impact </p><p> Evolution of Payment Terms </p><p> Types of Underpayments </p><p> Accurate Calculations </p><p> Steps for Collecting Underpayments </p><p> PMMC Process and Recommendations </p><p> Q&amp;A </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 7 </p><p>Underpayment Stats </p><p> What is an underpayment? An underpayment occurs when </p><p>Claims to third party payers result in payments that are less than expected according to the contractual terms of your agreement. </p><p> How big is the problem? On average, estimates generally </p><p>run from 1 to 4% of facility revenue </p><p> AMA survey suggests a payment accuracy rate by insurers as low as 62% </p><p>0</p><p>10</p><p>20</p><p>30</p><p>40</p><p>50</p><p>60</p><p>Underpayments in2012 (billions)</p><p>42.3 </p><p>13.7 </p><p>Medicaid</p><p>Medicare</p><p>Source: AHA </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 8 </p><p>Todays Agenda </p><p> About PMMC </p><p> Underpayment Stats and Impact </p><p> Evolution of Payment Terms </p><p> Types of Underpayments </p><p> Accurate Calculations </p><p> Steps for Collecting Underpayments </p><p> PMMC Process and Recommendations </p><p> Q&amp;A </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 9 </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p><p>Evolution of Payment Terms 1965 vs. Today </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 10 </p><p>Evolution of Payment Terms </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 11 </p><p>Evolution of Payment Terms Payer Category Hospital Outpatient Hospital Inpatient </p><p> Government Programs (Medicare/Medicaid) </p><p> APC Ambulatory Payment Classification (Hospital is reimbursed based on a set fee for the procedure performed) </p><p> EAPG </p><p> DRG Diagnostic Related Group (Hospital is reimbursed a set fee based on DRG payment rate for the patients condition and related treatment) </p><p> Commercial and other Third party payers (BCBS, Aetna, Cigna, Humana, etc.) </p><p> Case Rate Contract Rate Fee for Service Percent of Charges EAPG </p><p> Case Rate Contract Rate Fee for Service Flat Rate Percent of Charges Per Diem </p><p> Managed Care Plans Case Rate Contract Rate </p><p> Case Rate Contract Rate </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 12 </p><p>Evolution of Payment Terms </p><p> What you need to know to get paid </p><p> Charge Master </p><p> Medical Record Support of Charges </p><p> Facility Contract with the Payer </p><p> Payer Policy Guidelines </p><p> State Statutes </p><p> Federal Laws </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 13 </p><p>Todays Agenda </p><p> About PMMC </p><p> Underpayment Stats and Impact </p><p> Evolution of Payment Terms </p><p> Types of Underpayments </p><p> Accurate Calculations </p><p> Steps for Collecting Underpayments </p><p> PMMC Process and Recommendations </p><p> Q&amp;A </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 14 </p><p>Types of Underpayments </p><p> Know your Contracts with Payers </p><p> Fee Schedules Payment </p><p>Methodology </p><p>Carve outs and Thresholds </p><p>Time Elements </p><p>Precertification and </p><p>Authorizations </p><p>Other Contract Terms </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 15 </p><p>Types of Underpayments </p><p> Know your Payer Policies Could impact how you negotiate your contract What is not addressed in your contract is subject to </p><p>the Payer Policies Consolidation of charges into other billed items </p><p> Limits the total charge in percent of charge contracts </p><p> Method to determine the primary procedure Lowest numbered CPT code is primary when surgical codes </p><p>receive equal allocation of charges impacts multiple procedures reimbursement </p><p> Bilateral procedures are paid at the same single procedure rate </p><p> Implants must remain in the body greater than six months Vs. must be in the body when patient leaves the hospital </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 16 </p><p>11 Types of Underpayments </p><p> Require an implant invoice to be submitted with the claim </p><p> Certain surgical codes include payment for the implant 1. Implants not paid </p><p> Condition code is not on the claim </p><p> Charges consolidated into other codes reducing total charges below the threshold amount </p><p> Charges denied based on payer policies </p><p> Carve out items excluded from the calculation of threshold </p><p>2. Outlier Rate not paid </p><p> Med/Surg rate paid when patient is in ICU </p><p> Total days in the hospital were not paid </p><p> DRG carve-outs are paid at the per diem rate instead </p><p>3. Per Diem Rates paid incorrectly </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 17 </p><p>11 Types of Underpayments </p><p> Not on File </p><p> Billed items do not match what was authorized </p><p> Level of Care paid based on what was authorized not what occurred </p><p> Denied when requested </p><p> Number of days and areas authorized not paid </p><p>4. Authorizations </p><p> DRG Rate underpaid </p><p> Incorrect DRG Paid </p><p> Payer Error </p><p> Billing system/Intermediary drops ICD 9 Codes causing DRG Change </p><p>5. DRG Rate </p><p> MRI/CT not paid </p><p> Radiology rate not paid </p><p> Carved out Ancillary not paid </p><p> Incorrect rates </p><p>6. Ancillary </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 18 </p><p>11 Types of Underpayments </p><p>Payer pays incorrectly </p><p> Incorrect or generic Factors loaded by payer 7. Traditional </p><p>Underpayments </p><p> Incorrect Network utilized to price the claim </p><p> Incorrect Payment methodology 8. Payer delegates Pricing </p><p>Pharmacy (250) vs Detailed Drug (636) </p><p>Supplies (272) vs Implant (278) </p><p>Pacemaker (275) vs Implant (278) </p><p>Surgery (360) vs Treatment (700 Level) </p><p>9. Revenue Codes </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 19 </p><p>11 Types of Underpayments </p><p> Total Billed Charges do not exceed the reimbursement </p><p> Per Day Limitation </p><p> Number of Days Limitation </p><p>10. Caps on reimbursement </p><p> Patient registered incorrectly </p><p> At the Payer or the Hospital 11. Registration issues </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 20 </p><p>Todays Agenda </p><p> About PMMC </p><p> Underpayment Stats and Impact </p><p> Evolution of Payment Terms </p><p> Types of Underpayments </p><p> Accurate Calculations </p><p> Steps for Collecting Underpayments </p><p> PMMC Process and Recommendations </p><p> Q&amp;A </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 21 </p><p>Accurate Calculations </p><p> Percent of Charge </p><p> Outlier </p><p> Medicare Fee Schedule/APC (Outpatient) </p><p> Per Diem </p><p> Per Case </p><p> Per Case by EAPG </p><p> Carve Outs </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 22 </p><p>Percent of Charge </p><p> Provider will be paid at 47.2% of billed charges </p><p> LESSER of Logic </p><p> When the Contracted Services rendered by Provider are paid on a fee for service basis, Provider shall be paid the lesser of the rate in this agreement or Providers billed charges. </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 23 </p><p>Percent of Charge Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 24 </p><p>Outlier Calculation </p><p> For any inpatient stay that exceeds 110,000.00, Hospital shall be reimbursed for the single admission at 74.83% of Covered Billed Charges, less: </p><p> Applicable Copayments </p><p> Co-insurance </p><p> Deductibles for covered services rendered during the entire covered inpatient stay </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 25 </p><p>Outlier Calculation - Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 26 </p><p>Medicare Fee Schedule/APC Outpatient and Multi Procedure Discount </p><p> Ambulatory Surgery is paid at the Medicare Fee Schedule </p><p> When more than one surgical procedure is performed, the first procedure is paid at 100% of the Medicare APC, the second and subsequent procedures are paid at 50% of the Medicare APC </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 27 </p><p>Medicare Calculation - Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 28 </p><p>Outpatient CPT Fee Schedule </p><p> For Outpatient covered services, reimbursement will be the lesser of billed charges or 148% of the applicable Outpatient Fee Schedule found in Attachment A. </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 29 </p><p>Outpatient by CPT Fee Schedule - Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 30 </p><p>Per Diem Hospital shall accept as full and final payment for all </p><p>covered services provided to participants who are admitted as inpatients the lesser of billed charges or the reimbursement in the applicable schedule. Such reimbursement covers all in patient covered services including and not limited to room and board, OR, hospital based physicians and other medically necessary services provided to a participant. Payer shall deduct any Copayments, Deductibles or Coinsurance from payment to the Hospital. </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 31 </p><p>Per Diem </p><p>Location Description Rate </p><p>Medical Surgical Adult and Pediatric </p><p>Revenue codes 100-169 $1,900 per diem </p><p>All ICU including medical, Surgical, Cardiac and Pediatric </p><p>Revenue Codes 200, 201, 202, 203, 207-212, 219 </p><p>$2,500 per diem </p><p>Intermediate intensive Care </p><p>Revenue Codes 206, 214 $2,300 per diem </p><p>C-Section Delivery MS-DRG Codes 765,766 $3,163.20 per diem </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 32 </p><p>Per Diem </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 33 </p><p>Per Case </p><p> Hospital shall accept as full and final payment for all covered services provided to participants who are admitted as inpatients the lesser of billed charges or the reimbursement in the applicable schedule. Such reimbursement covers all in patient covered services including and not limited to room and board, OR, hospital based physicians and other medically necessary services provided to a participant. Payer shall deduct any Copayments, Deductibles or Coinsurance from payment to the Hospital. </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 34 </p><p>Per Case </p><p>Location Description Rate </p><p>Cardiac Valve and Other Major Cardiology </p><p>DRG 219 $55,000 Case Rate </p><p>Chest Pain DRG 313 $5,310 Case Rate </p><p>Revision of Hip or Knee DRG 468 $22,000 Case Rate </p><p>Major Joint Replacement DRG 470 $14,000 Case Rate </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 35 </p><p>Per Case - Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 36 </p><p>Per Case by EAPG - Screenshot </p><p>Sorry, this slide contains proprietary PMMC content and weve chosen not to share it here. </p><p>Please continue to the next slide, or to see the full version, contact: </p><p>Brad.Josephson@PMMConline.com </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 37 </p><p>Carve Outs </p><p> Exclusions </p><p> When Hospital billed charges for the revenue code listed below, Hospital shall be reimbursed separately less applicable Copayments, Coinsurance, and Deductibles. Hospitals total billed charges for the revenue codes below will be excluded from the Hospitals stop Loss calculation and any lessor of calculation for reimbursement. </p></li><li><p>Copyrighted Material - Any Duplication requires PMMC Approval 38 </p><p>Carve Outs </p><p>Exclusion Description Threshold Rate </p><p>Orthotics and Prosthetics, Pacemaker Supplies, Implants </p><p>Revenue Codes 274, 275, 278 </p><p>$1,500 38% reduction...</p></li></ul>