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Are you sure your insurance companies are paying you according to your contracts? You may be surprised to know that it’s unlikely that they are. The average medical practice loses approximately five to ten percent of their collections because most insurance underpayments are never pursued or even identified.

A recent National Health Insurer Report Card compiled by the American Medical Association measured payment accuracy of seven major payers: Aetna, Anthem BCBS, Cigna, Coventry, Human, United Healthcare and Medicare. All of these payers to some degree strayed from contracted payment rate.

The worst of the lot was United Healthcare, which failed to pay contracted rates in 38.4% of their cases. Cigna was the second-worst performer, underpaying 33.8% of their cases. Aetna followed at third place (29.2%), then Anthem BCBS (27.9%), Humana (15.8%), and then Coventry (13.3%). Even Medicare underpaid 2% of their cases.

Tracking these underpayments is tricky. If you watch many different medical practices, you’ll find the same CPTs receiving underpayments, at around the same deficiency, from the same payer, and around the same period of time. But after a month, you may find the payer playing the game with different groups of CPTs to avoid being spotted.

These under payments are not huge but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount “under the radar” can make this difficult for an individual practice to spot.

It’s also hard for medical billing services to find when they don’t compare your payments to your contracted rates (as well as properly dealing with multiple procedure complexities). Properly maintaining and using more than one complex allowable table is difficult at best.

Billing services (and medical practices with their own in-house billing solutions) need to get and utilize industry technology to identify and correct underpayments. Most systems today are incapable of providing a workable solution.

Despite the challenge, it’s still imperative to find ways to rectify the problem. Simply comparing payments to allowables can increase your monthly receivables by 5-10%. You’ll need a solid process, the latest in reporting technology, and a systematic way to track these procedures. Keep at it, and you’ll be adding thousands of dollars to your practice’s cash flow over time.

2009 copyright by Carl Mays II

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