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Usual and Customary Reductions
Usual and Customary Reductions Cost an Arm and a Leg
Medical pricing has never
been under as much scrutiny as it currently is.
Medicare, HMO's, worker's
comp carriers and repricing companies all seem to have come up with a
different rate to pay for the same procedure -- all without stepping foot
into your office or facility.
Most of these rates are
arrived at by some mathematical calculation which factors in wholesale
price quotations or rates charged by other medical providers.
Unfortunately, this often
amounts to an apples-to-oranges comparison.
Medical providers are
under no obligation to agree to price reductions not associated with a
contractual agreement. Therefore, medical providers need to educate their
staff on what charges are subject to write-offs and which ones should be
pursued for full payment. You may be able to successfully appeal for
additional payment if the paid amount is not a contractually-agreed upon
If a bill is reduced
because it is over the "usual and customary charge," instruct patient
account representatives to first contact the insurance carrier and
request a list of the specific items which were denied and why. Some
repricing companies routinely reject any ambiguous charges. "Surgical
tray" might be rejected because the tray items are unknown. "IV
solution" may be denied because the carrier does not know what
particular solution was used and the concentration. The simplest
resolution may be to supply additional product information. If such
information is not available, the provider should request, at a minimum,
payment of the average price the company has approved for these items
with other providers. Providers may also demand an on-site audit in
order to resolve such billing issues.
Also, deal directly
with the insurance company rather than a third party repricing company.
The insurance company has a contractual obligation to the insured to pay
You can appeal the
usual and customary denial based on the verification of benefits.
If the insurance
carrier verified that benefits are 80%, however, the usual and customary
reduction reduces the payment to 50%, the carrier may not be honoring
the verification of benefits. There are many state and federal cases
that indicate the carrier has an obligation to pay at that rate verified
at the time of admission.
If the reductions are
large, you may want to discuss the potential for compromise in quality
that such reductions may lead to. The bottom line is that nobody,
insurance carrier or patient, really wants to affect the quality of
If the insurance
carrier is complaining that your services cost an arm and a leg, remind
them that quality health care just costs dollars and cents; it saves an
arm and a leg.
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.
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