Are You Leaving Money On The Table?

Many Providers Using Available Fee Schedule Analyzer Resources.

Many practice administrators liken not appealing usual and customary denials to leaving money on the table. However, appealing denied benefits requires providers to justify charges - a task many have found problematic.

The Solution:  Thanks in part to the explosion of managed care, medical reimbursement rates are now readily accessible to the public. Several companies provide average reimbursement rates broken down by CPT code, specialty and geographic location. But while insurers have been quick to capitalize on the use of such information on claims where they expect to find incorrect or excessive charges, providers have not traditionally used such tools to address underpayment.

Better than a double-barrel shotgun

"You're losing money if you are a doctor and not using a fee analyzer. The more ammo the better," said Wayne Germano, executive director for Children's Eye Center in El Paso, Texas.

Germano says he purchases a fee analyzer every year from Medicode. Medicode provides the reimbursement levels for CPT codes broken down by zip code and specialty. The fee analyzer provides the reimbursement information for your area's 50th, 75th and 95th percentiles to help providers determine competitive fees. According to Medicode's promotional information, the fees are drawn from a database of actual physician charges containing over 500 million actual payor records.

The listing also gives providers the relative value units (RVU) for each CPT code to allow you to better assess the reimbursement rates for Medicare.

Germano says he uses the information to establish billing rates. However, the fee analyzer is not put away until the next time billing rates are adjusted. Germano routinely uses the information to appeal poorly paid claims by writing a short letter with a copy of the usual and customary rate for that CPT code from Medicode's fee analyzer.

Germano says he can easily cover the cost of the billing tool with just a few appealed claims.

Two Resources Better Than One

Large group medical providers even buy multiple fee analyzers from different companies so that they can compare reimbursement figures. Rosemary Gammon, managed care negotiator for Pediatrix Medical Group, Inc., says they use at least two such medical reimbursement databases in order to establish rates and better negotiate contracts.

Gammon said they also use the information in appealing usual and customary denials and out-of-network reimbursement. Pediatrix, based in Fort Lauderdale, Florida, provides physician services to neonatal intensive care units and is the largest physician practice management company in that specialty group.

"This is the only business where you never know what you are going to get paid." Gammon said.

One of the reimbursement references Gammon uses is compiled by Atlanta-based Medirisk, Inc. According to Lisa Borders, Vice President of Strategic Sales for the company, sales to medical clinicians have accounted for only about 25 percent of the company’s sales while managed care organizations account for the remaining 75 percent. Most of the sales to medical providers are to large groups such as Pediatrix. However, Borders says they do have some sole practitioners as clients. Aggregates for a specific specialty and specific zip codes can be obtained for as little as $700. Also included is an appeal letter which assists providers in citing information from the database when appealing for additional payment.

Borders states that sales to medical clinicians have grown within the past 18 months. She attributes this to the fact that more providers are merging into larger groups. The concentration of personnel often allows the group to designate a practice administrator whose job duties include securing analytical tools for the business. Because of the increasing number of patients in managed care, doctors have also had to assume more financial risk associated with medical care. With the increased risk has come a need to become more knowledgeable about the market value of medical services.

"Doctors are often unaware that this information even exists," said Borders. "Payors have used it to negotiate with providers for years. We want everyone to have this information so that it is a level playing field.

"Everyone has an excel spread sheet but not everyone has the data. The doctors have the spread sheet but they do not have the data."

While being a useful learning tool, Gammon says such reimbursement databases are not without problems. For example, one of the most difficult aspects of specialty medicine reimbursement is that, as new procedures become more standard, codes are added to better represent the treatment involved. New CPT codes are generally left out of the reimbursement tables until statistics are gathered regarding reimbursement. According to Borders, it takes about one year to generate enough claims to allow them to reach a statistically sound aggregate for the code.

While they do appeal certain underpayments, Gammon said they typically hold the patient responsible for usual and customary denials unless a provider contract prohibits collecting such balances from the patient. Many court decisions affirm the liability of the patient in situations where their insurance carrier refuses to pay charges deemed above the usual and customary. However, patients often protest the charges if their carrier issues a denial stating the charges were excessive.

Again, providers who have a reimbursement reference which cites local aggregates for the treatment may be in a better position to address questions about the billing rates.

In a recent Indiana case, a patient was hospitalized at Columbus Regional Hospital for 73 days for coronary care and subsequent rehabilitation. The insurance carrier paid for the majority of the charges, but advised the hospital that an auditing company had been retained to review the bill for duplicate or excessively billed charges.

Columbus Regional responded with a letter stating they did not recognize the decision of the auditing company named and sent a certified notice to the patient requesting payment by a specified deadline. There was no evidence that the patient responded to the notice or objected to the charges until after suit was brought against him.

The court ruled that the patient owed the bill stating, "An agreement that the balance is correct may be inferred from delivery of the statement and the account debtor's failure to object to the amount of the statement within a reasonable time."

Medical office staff members need to be aware that such usual and customary denials are not automatic write-offs. A written policy should be in place to deal with such denials, which incorporates both advising the insurance carrier and patient of your position in the matter. Presenting evidence to substantiate your billing will also establish your office as one that is prepared to defend your treatment rates in any forum. Such a policy often takes research and preparation but could substantially pay for itself when accompanied by a successful appeals program.


AppealLettersOnline.com can assist providers implement an effective denial management program.

AppealLettersOnline.com is an interactive resource provided to level the playing field between Insurance Companies and Medical Providers. You will find appeal letters, case studies, articles, other resources and the latest intelligence necessary to help healthcare providers make vital decisions and take strategic actions to address payer denial issues. AppealLettersOnline.com will help health care providers actively develop the processes, analytical tracking information, educational programs and procedures needed for implementing an effective denial management program.

Some of the topics covered at AppealLettersOnline.com include addressing payment reductions such as usual and customary and out-of-network care reductions, lack of timely filing denials, pre-existing conditions and medical necessity appeals and improving verification of benefits procedures. Treatment exclusions, maximum benefits denials and subrogation/coordination denials are also discussed. Tips are also provided on appealing for interest and penalty payment on late payments and appealing a request for a refund of previously paid claims. AppealLettersOnline.com discusses all types of claims including Managed Care, Indemnity, Government, Self-Funded, ERISA claim issues and managed care contractual payment discrepancies.