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How do you know if you’re getting paid correctly by insurance companies? In other words, are they underpaying you? Many data sets show that insurance companies, some in particular like Anthem, tend to underpay frequently. Some of them – as high as 20% or 30% of the time. These are significant amounts of money. Continue reading to learn more.

Can you manage contracts without breaking your budget?

If you’re trying to figure out, “Is somebody underpaying you?” and you want to catch it, you’ve got a couple of different options. One is you can use software from somewhere else. That software is quite expensive. It’s sometimes called contract compliance software or contract management software. They work well, they’re just extraordinarily expensive. 

So they’re essentially cost-prohibitive to all outside of enterprise organizations or exceptionally profitable large organizations. For most, that’s off the table.

Manual calculations are too time-consuming and error prone

Option two is don’t calculate it, and wing it. Option three is to calculate it yourself. If you’re going to calculate yourself, you can do it in Excel, although it’s pretty challenging and time-consuming. One of the things we often see in consulting courses, in presentations, webinars, various places, and even books that are related to practice analysis will suggest that you look up the rate in Excel and match it (it’s the equivalent of a VLOOKUP) and say, “Okay, we should’ve gotten paid $100 for this particular CPT code. Did we get paid $100 or not for that insurance company?” That sounds great, except that it’s rarely that simple. It’s rarely ever that simple.

First of all, you have to build up a vast database of contracted rates for all of your payers. This can be difficult because even getting contracted rates is quite hard. I can’t tell you how many times we’ve walked into practice and said, “Tell us all of your contracted rates,” and they say, “We don’t have it,” or they give us a binder. 

Are your records organized?

If it’s in a binder, you’re already in deep trouble. They hand us a binder, and the binder is from five years ago, or seven years ago, or something like that. Of course, the rates in there are not current, and it doesn’t even have the majority of their contracted payers. It just has a few of them. Or they have Medicare and Medicaid and one or two commercial contracts. Okay, how is that helpful? So that’s one problem.

Another issue is that you have to build up a giant rules database to figure out how to get paid and get paid appropriately. That includes discounts like sequestration when specific payers aren’t paying. They’ve decided to put something on hold. They don’t pay particular CPT codes. They’ve got payer policies that say, “This is not payable” or “This is only payable under these conditions.” Or they have multiple procedure discounts, or there are bundling, or the payment rate changes based on modifiers, all kinds of things. It becomes extremely complex to calculate those unless you’ve got a simple sort of situation. 

Even then, still having all of those payer contracted rates is a nightmare in part because they change, and they change frequently. Suppose you had something like 120% of the Medicare rate, it sounds simple except that frequently, it’s not, especially once you get past the first year. So is that 120% of the year in which you contracted the Medicare rate? You contracted with them five years ago. Is it 120% of the Medicare for 2016 rate, or is that 120% of the current year because it is indexed to the current year? It may not even say in your contract. Now, you’ve got to figure all those things out. You’re calculating it effectively every year and then trying to make sure that that’s accurate.

What about the rates?

Another big caveat is that not only is it hard to get a hold of the rates, but the payers often don’t even tell you that it’s changed. They don’t announce it, or they don’t give you the rates. Of course, legally, they’re required to provide you with these things. It’s just that it is a nightmare. It’s such a fight to get this out of them. Often, you have to spend so much time, make multiple calls, and they will eventually fax it to you or do something ridiculous. Or they send you three pages at a time or all these dumb things that make it hard to get all of the data.

Key Takeaway: There is a solution

The point is that it is possible to calculate this, but it is challenging for many different reasons. In another podcast in the future, we’ll tell you about another issue. Even if you’re able to overcome all of these issues that we’ve discussed here, there’s another one that’s going to cause you even more significant problems when you hit it. I can tell you that we ran into it because we built this for ourselves once upon a time.