-Contractual Underpayments- WHAT YOU DONT KNOW COULD BE HURTING YOU
Presented by: Marilyn Happold-Latham, MBA, FACMPE
Educate managers about contractual underpaymentsImprove knowledge of health plan contractsShare experience regarding payment auditsProvide tools to perform payment auditsUse audit information in contracting process
Contractual Underpayments What are they???Medical group contracts with a health plan to pay a specific amount for a specific servicePayments usually based on a conversion factor multiplied by a RBRVS Relative Value Unit (RVU)Tracked by reviewing Allowables or Contractual Adjustments when payments are received.When health plan pays LESS than what was contractually agreed upon = contractual underpayment
Understanding the PayersDifferent types of payersHealth plan that is a single payerProvidence Health Plan, Great West, Healthnet, LifewisePPOs, many with multiple payers (100+)Providence Preferred, MHN, MultiPlan, First Choice Health Network, Coventry, First HealthSet up practice management system to allow you to track charges by payer contractsInsurance Groups = set up at contract levelInsurance Carriers = set up at payer level
Understanding the PayersUnderstand WHO PAYS THE CLAIMPPOs are the middle man and only price the claim and dont pay itClaims sent from PPO to the Payer who sends the check and EOB to the providerSome PPO payers price their own claimsSome payers contract with 3 or more different PPOs in the Portland areaNeed to track these as separate carriers in the PM system
Same Payer with Different PPOs
ASSURANT HEALTH / MULTIPLANASSURANT HEALTH/ COVENTRYASSURANT HEALTH/ MHNASSURANT HEALTH/ FIRSTCHOICE HEALTHASSURANT HEALTH/ PROV PREFERRED
BENEFIT PLANNERS/ FIRST CHOICE HEALTHBENEFIT PLANNERS INC/ MULTIPLANBENEFIT PLANNERS / MHNBENEFIT PLANNERS/ PROV PREF
A & I BENEFIT PLAN/ FIRST CHOICE HEALTHA & I BENEFIT TRUST/ PROV PREFA & I BENEFITS TRUST/ MHN
HEALTH COMP /COVENTRYHEALTH COMP / PROV PREFHEALTH COMP / MHNHEALTH COMP/ FIRST CHOICE HEALTH
Contracts Improve your UnderstandingInventory ALL of your contracts keep copiesImportant to READ your contractsLook for information needed for operations:Type of Fee Schedule proposed and the amount (request a Conversion Factor and RBRVS RVU year)Start date and end date of the contract Number of days to file a claimRe-coupment rights for overpayment by the Plan (days/months to recoup payments)List of payers if it is a PPO
Contracts Improve your UnderstandingLook for payment based on site of serviceFacility versus Non-facility RVUMake sure contract does not note the lower ratePayment for drugs and vaccines (codes without RVU)Use of AWP versus ASPCompare cost to reimbursement annuallyIdentify the insurance ID cards for each health planRequest samples of ID cards from the health plan or collect copies at the front deskBe able to identify cards from plan products that the practice does not participate withUnited Healthcare/Pacificare productsSecure Horizon HMO versus Secure Horizon Direct PFFS products
Contract negotiationsSTAY ORGANIZED develop a filing system for all contract related information.Original contracts, amendments, Fee schedule attachments, etc.Document all communications with health plansKeep a record of email exchanges, letters, etc.Make notes from phone calls Keep the negotiation process moving forwardUse timelines to remind you when contracts are nearing time for re-negotiation throughout the yearUse a tickler file or task list to keep track of what is needed next
Reimbursement Rates How they WorkMost are based on RBRVS Relative Value Units (RVU)Originally developed for Medicare in early 1990sRVU change annuallyBe aware of transitioned vs fully implemented RVU (2007 2010)Published in Federal Register annuallyhttp://www.gpoaccess.gov/fr/browse.htmlAvailable from CMS website http://www.cms.hhs.gov/PhysicianFeeSched/PFSRVF/list.asp#TopOfPage
Conversion FactorsHealth plans make offers to providersNegotiable Conversion Factor x RVU = Allowable $$$$$
Fee Schedule Language-BNWA2007 CMS Relative Value Scale of RBRVS, fully implemented (available as of December 31, 2006). The RVUs will be adjusted for budget neutrality by applying the work adjustor. RVUs will be based on place of service and will not be geographically adjusted.
Medicare Payment for 99213-UnadjustedUNADJUSTED FOR THE BUDGET NEUTRALITY WORK ADJUSTOR
Using the 2007 Transitioned Non-Facility RVU in Portland Oregon Work Practice Expense Malpractice Total99213 0.92 0.71 0.03GPCI 1.002 1.059 0.434GPCI Adj 0.9218 + 0.7519 + 0.0130 =1.6867
[(wRVU *wGPCI)+(peRVU *peGPCI) +(mRVU*mGPCI)] * CF = 1.6867 * $37.8975 = $63.92
Medicare Payment for 99213-AdjustedUsing the 2007 Transitioned Non-Facility RVU in Portland Oregon Work Practice Expense Malpractice Total99213 0.92x0.8994* 0.71 0.03GPCI 1.002 1.059 0.434GPCI Adj 0.83166 + 0.7519 + 0.0130 =1.59657
[(wRVU *wGPCI)+(peRVU *peGPCI) +(mRVU*mGPCI)] * CF = 1.59657 * $37.8975 = $60.512007 Budget Neutrality Work Adjustor. When applying to the RVU, you must round the product to two decimal places before continuing the calculations!
$3.41 or 5.6% less than the unadjusted fee
BNWA Effect on ReimbursementSample health plan conversion factor increased from $63 to $65 (3%) from 2006 to 2007.Reimbursement increased only 1% from 2006 to 2007 when the BNWA was used to decrease the value of the work component of the RVU.The practices volume of each CPT code determined gains or losses for the practice.Use of the BNWA by (commercial) health plans reduced the value of every RVU by 5% to 6%.
Budget Neutrality AdjustorThe Good NewsAs of 2009 RVU year Medicare no longer used the Budget Neutrality WORK Adjustor.Commercial plans no longer could use a BNWAThe Bad NewsAs of 2009 RVU year Medicare used the Budget Neutrality Adjustor to adjust the CONVERSION FACTOR and not the work component of the RVU.
[(wRVU *wGPCI)+(peRVU *peGPCI) +(mRVU*mGPCI)] * (CF * BNA) = Fee
Contract NegotiationsDont hesitate to ASK for contract changes and/or clarificationType of fee schedule AND reimbursement rateElimination of the BNWA or a GPCIDays to file a claimConsider using the date when the patient provides the correct insurance information rather than the date of serviceContract start dateSpecific list of codes that will be bundledWording of specific contract clausesUtilize information from payment audit in negotiations
Allowables and Contractual AdjustmentsAllowables = what the health plan agrees to pay for a specific service.e.g. 99213 = $100 allowableContractual Adjustment = the difference between your fee and the allowable.Fee = $120Allowable = $100Contractual adjustment = $ 20( aka a write-off)
How to know if Health Plans are Paying according to Contract???AUDIT YOUR PAYMENTS
Payment Audit MethodsSpecialized payment audit softwareSpecial functions/features within a practice management systemManual audit process
Payment Audit SoftwareDifferent software packages designed for different sized medical groupsMedical Present Value (MPV) 50+ doctorsPremier Data Plus 50 or fewer doctorsOthersSoftware for larger practices may take a percent of dollars recovered.Software may pay for itself in 1-2 years in dollars recovered
Payment Audit SoftwareAdvantagesAllows a practice to audit virtually 100% of paymentsShows patterns of underpaymentGenerates correspondence to send to payerCan pay for itself in 1-2 years with revenue recoveredOften includes other capabilities e.g. data mining and reporting, contract managementDisadvantagesHave to pay up-front for the software or serviceRequires considerable amount of initial set up time to make it work with the PM system
Practice Management SystemMany practice management systems allow loading of contract allowables.Allowable must be posted when payment is postedSystem identifies an underpayment by comparing allowable posted to expected allowable.Monthly reports show expected allowed versus allowed per the EOB payment.
Practice Management SystemAdvantagesCurrent PMS may already have the capabilityGives good idea of extent of the problemDisadvantagesTakes considerable set-up time in PM SystemProvides no correspondence for health plansReporting capabilities may be very minimal
Manual Payment AuditAdvantagesIf done with a random sample of payments, allows extrapolation to a larger sample of all claimsProvides excellent opportunity to learn more about payers, contracts and the process of reimbursementHelps determine if underpayments are a problemDisadvantagesVery labor intensive and time consumingRequires knowledge of use of spreadsheetsMay only provide anecdotal information about underpayments if random sample is not usedHave to develop correspondence to health plans
Tools for a Manual Payment AuditOrganized contract informationContract NamesContract start and end datesReimbursement rate (CF x RVU year)Table of Allowables by Health plan ContractUse the 80/20 Rule for most frequently performed CPTsRVU for each CPT code by RVU yearSelect a sample to audit (random sample can be used)Copies of patient insurance ID card for each sampleSp