Hospitals in the United States find themselves with billions of dollars of uncompensated care every year. Studies show underpayments and uncompensated care is rising for several reasons and there are not many resources for hospitals or patients to collect or have these amounts covered by health insurance companies.
What are Health Insurance Claim Underpayments?
Health insurance claim underpayments are just what they sound like- claims that are not being fully paid by healthcare insurance companies. When you've gone to the doctor or had a procedure performed at the hospital, these facilities send a bill to your insurance company.
When the bill, or claim, is received, the billing department within your insurance company examines the bill, and instead of sending the full amount listed as 'due,' they only send a portion of the amount. This underpayment of health insurance claims is quite common and is said to happen in as many as one in four bills sent to insurance companies who return them underpaid.
These underpayments result in financial issues for hospitals and clinics who generally operate on thin economic margins. The billing process in these institutions requires money to pay their employees, and when health insurance companies issue underpayments for claims, it cuts into their revenue. Underpayments cause downward spirals in the finances of hospitals and clinics and have even caused some to be forced to close.
Common Reasons Health Insurance Claims are Underpaid
Underpayment of claims occurs for many of the same reasons as unpaid health insurance claims. Some of these reasons include:
- Contract issues
- Payer miscalculations
- Billing errors
- Missing paperwork
- Billed for an incorrect amount
Hospitals and clinics have a contract with health insurance companies, and whenever part of the terms involved with those contracts becomes misinterpreted, it can result in an underpayment of claims.
Billing errors can be the cause for an underpayment for one of two reasons. Either your health insurance company did not receive the correct paperwork when the claim was submitted, or they think the billing was not presented with the right amount. There are times the insurance company feels a lesser amount was agreed on, even if there is no proof of this agreement.
If you find yourself in a conflict with your healthcare insurance provider and feel they are not living up to their responsibility of paying your healthcare costs, contact an attorney. An experienced attorney understands the policies implemented with commercial healthcare insurance companies and will help you cut through the process to ensure your expenses are paid.
The terms of the contract your physician's clinic or hospital have with your health insurance provider are important as well. Each hospital or doctor's clinic has a contract with a commercial healthcare insurance provider. In these contracts, it lists the billable amounts for each procedure that will be performed at the facility. These contracts are renewed or revised on a schedule which can result in incorrect submission of claims.
If a new contract has recently been put into place, and a claim is submitted for an amount on the previous contract, this could result in an underpayment situation. This situation can fall as blame on both ends; the insurance billing department might refer to an old contract and pay a past, or underpayment, of the billed claim, or the medical facility might enter an old or removed code for a procedure.
Contracts can also be interpreted differently between what the healthcare care facility feels is correct and how the healthcare insurance provider intended it to mean. It will have to be determined which interpretation is correct and which amount is acceptable; the amount paid by the insurance or the amount billed by the healthcare provider. An attorney is your best solution for help in understanding the wording of a contract. If your medical costs are being underpaid due to a misunderstanding of a contract, contact your attorney for help in determining which amount is the legal responsibility.
There are times when the billing department of a hospital miscalculates amounts which result in the insurance provider sending an underpayment. This type of mistake can be on either side; the insurance billing department can also miscalculate what cost is expected to be paid for a claim. It is more common on the end of the insurance provider as healthcare facilities have a stringent billing practice.
Filing a Claim for Underpayments
Once your healthcare insurance provider sends out an underpayment, the process to collect the remaining balance begins. Hospitals are allowed a three state-level appeal process. These appeals take time, and the billing department within the hospital or clinic has to handle the appeal. While the appeal is being filed and followed, bills still have to be sent out for new procedures that are being performed. It takes a lot of personnel to make sure accurate statements are sent, and the appeal paperwork is done correctly.
If your hospital or medical clinic has found itself involved with appealing underpayments from healthcare insurance providers, contact an attorney. An attorney can file and follow your appeal process allowing your employees to continue with their day-to-day billing procedures. Attorney's know and understand the law and how insurance provider works. They can ensure your appeal is processed in a timely fashion and help you to receive a positive outcome.
At a state-level appeal, your underpayment claim is either partially paid, or the unpaid balance will get ignored. It is a frustrating situation for a healthcare provider to find themselves having to find new ways to increase revenue. A hospital or medical clinic cannot support itself; it relies on medical costs being reimbursed by patients or their healthcare insurance company. Underpayments or unpaid medical costs have caused many facilities to close their doors.
An Option if State-Level Appeal Fails
If after a state-level appeal the underpayment is not recovered there is still an option for healthcare facilities. The United States government has a program called the Federal ERISA. This program is a process for hospital administrators to collect on underpayments. This process can be complicated and may require the services of an attorney who understands how it works.
What is ERISA?
ERISA is the abbreviation for Employee Retirement Income Security Act which is a federal law allowing hospitals and clinics to collect on underpayments. This act states that commercial healthcare insurance providers have to pay underpayments. Hospitals and healthcare clinics have been known to ignore this option as medical billing, and coding courses don't cover ERISA.
If your state-level appeal for recovering underpayments has failed, contact an attorney. Understanding the aspects of ERISA will ensure your unpaid claims are paid and your facility receives the balance of your underpaid healthcare claims. Your attorney will be able to turn your underpayments into revenue to secure the future of your facility. An attorney can also take the paperwork burden off your employees and allow them to continue their normal billing routines.
How Your Hospital or Clinic can Minimize Health Insurance Claim Underpayments
In the medical industry today, there are complex reimbursement and coding systems. These systems cause inaccuracy rates to rise to result in more and more underpayment of claims. The National Health Insurer Report put out by the American Medical Association shows alarming results for the payer's allowed amounts for medical claims not equaling the contracted fee schedule amounts. No longer are healthcare insurance providers paying a flat percentage of the charges.
Understand what amount your facility should be receiving. You cannot identify underpayments if you don't know amounts you should be receiving. Request a fee schedule from the healthcare insurance provider. These requests are not always met with approval but insist you have a list of at least your top 50 CPT codes and modifiers. This list should include the insurance provider’s fees for each code.
Strategize before signing with a new insurance provider. When you are working with a new healthcare insurance provider for the first time, ask that they provide you with a list of rates for your facility's top services. Ask that the list of rates include by volume before signing a contract.
If you are already signed up with a payer, you should contact their medical director to request the list of rates. Each attempt at communication with the payer should be documented as well as each point of contact. If your phone request does not provide the list of rates, you should make a request in writing.
Using the services of an attorney who understands these requests and the fact that the insurance providers are required to present these fee schedules according to the law will help you obtain this information much quicker and with less difficulty.
Create a review process to ensure correct payments are received. Knowing what the rates are per procedure is just the first step in minimizing underpayment issues. Create a computer program that will store your payer's rate schedule that is able to perform an automatic cross-check on every line of your claims. This comparison of the EOB (Explanation of Benefits) rates will allow you to know immediately if there are any variances between what you should be paid against what you are paid.
Create practice management systems which will automatically cross-check EOBs on electronic remittances as they come in for posting. You can set your practice management system to kick out 'exceptions' which will show your underpayments right away.
Check your staff motivation and determine if you have mistakenly led them to believe it is alright not to ensure payments are always the correct amount. Measure your employee performance through key indicators such as in days in receivables outstanding. The tricky part of this system in order to reduce your underpayments comes into play with contractual adjustments.
A healthcare insurance provider may send you a payment under your full charge. This underpayment, or difference, is called a contractual adjustment. You may or may not be able to collect this difference direct from the patient, and it is often written off. When the payment is posted, and the contractual adjustment is made, it removes the invoice from your receivables. This process of removing the invoice from your receivables is acceptable if the payment is for the right amount, but some employees write off the underpayment amount and call it even.
Employees are often under the impression of writing off the difference neatly wraps up their work. When a medical facility stresses they want 100 percent completion rates in billing and rewards employees for high-volume production, they are creating a policy of adjustment amounts being ignored. You want to express the importance of accuracy and cash flow to your employees and inform them where their paychecks are paid from.
Understand all underpayments are not necessarily from the insurance provider. The fee schedule you received from the healthcare insurance company represents the total of what you are allowed to collect from both the insurer and the patient. The insurance company generally owes a more significant portion of the claim; however, this practice is changing.
High deductible health plans along with the growing number of employers who now select plans with higher copayments and coinsurance, patients are now ending up owing and paying more of their health costs. If your underpayments are increasing, and you find your revenue falling more than usual, don't overlook the uncollected coinsurance amounts and unmet deductibles from your patients.
Hospitals and health clinics may have to begin paying closer attention to collecting cash more effectively from patients as well as the insurance providers. Underpayments are not a minor issue, and if you take steps in advance to prevent them, it will serve your facility far better in the long run.
How Can an Attorney Help with Health Insurance Claim Underpayments?
Whether a health insurance claim has been underpaid or denied, you should have an attorney analyze the reason behind this action. Healthcare insurance providers use a range of tactics to underpay claims. These providers are after all a business, and as a business, it is their goal to make money.
As the victim or patient, you have to be wary of insurance agents offering you an instant offer to pay for your illness or injuries. It may appear as though the insurance is actively helping to pay; however, you are not aware of the total cost your medical treatments will amount to and by accepting an early offer may leave a lot of medical expenses unpaid.
Speak with an attorney if you or someone you know has been involved in an accident or seriously ill and an insurance agent makes you an offer for an early insurance settlement. Lawyers work closely with a large number of medical professionals and are able to find an accurate assessment of what your medical needs and expenses will add up to, so you do not end up with an underpayment of your claim.
If you are a hospital or medical clinic and have found a healthcare insurance provider has been underpaying your claims, you can take these payers to court. When you contact an attorney and pursue a legal challenge against the insurance provider, you can see a faster and fairer reimbursement. Talk to a legal representative to know when you should sue and how to build a strong case to ensure a legal success.
Check the terms of your contract your facility signed with the healthcare insurance provider to make sure there is no clause written to restrict you from filing court actions. There are some arbitration clauses written into contracts which preclude you from resolving insurance provider disputes through the courts. You may be required to settle the dispute through arbitration which will result in a final decision. Speak with your attorney; have them look through your contract signed with the provider to determine which your best course of action will be to settle the underpayment amounts.
Exercising your legal options when dealing with healthcare insurance underpayment claims could make a much-needed change in how these providers deal with medical claims. Actively enlisting the help of an attorney to litigate against payers who underpay medical claims could force a revision in the payment system to lean more in everybody's favor.
Where Can I find an Attorney Near Me to Handle a Health Insurance Claim Underpayment?
If you or someone you know has been denied health insurance coverage, contact Stop Health Insurance Denial today. We accept cases nationwide and are here to listen to your insurance claim issues. Call 310-695-5241 and talk with an experienced attorney who will stand behind you and help you through this stressful situation. You call to discuss your options and find out how this situation can be resolved. You can also browse our website to see all the services we have to offer you.