It has happened again… another reimbursement check and Explanation of Benefits (EOB) has arrived from a Managed Care Organization (MCO) with an amount less than what you believe is due to you under your MCO agreement. What do you do now?
Start by asking yourself elementary questions similar to those questions used by service repairmen when you call with a problem with your TV set. You know the dumb questions such as, “Is your TV set plugged in?” Your response to the repairman is usually, “Of course, it is plugged in!” But as you peer behind your TV set, you sheepishly reply, “Well actually it is unplugged”. The repairman’s elementary question has saved you time and money on a service call.
DETERMINE BASIS FOR REDUCTION
You should ask yourself some simple questions each time you receive a reimbursement check for less than the expected amount. Begin with the following:
Was the specific benefit amount under the patient’s policy verified?
Did you mistakenly bill the MCO the contracted rates instead of your billed charges?
Was the claim submitted in the time frame required by the contract?
What are the deductibles, co-insurance, or co-payment requirements for this particular procedure? Remember, the policy may have general deductibles, co-insurance, and co-payment amounts but certain procedures may have additional requirements.
Did the provider comply with all of the requirements of utilization management and pre-certification?
Did the claim involve coordination of benefits?
If these questions do not solve the mystery of the missing funds, review the MCO agreement to see if there is something you have missed that allows the MCO to reimburse you a lesser amount. Were the reimbursement amounts for the CPT codes you used in your practice attached as part of the agreement? Many times the MCO simply indicates in the agreement that the provider will be reimbursed according to the MCO Fee Schedule. You naturally assume the MCO Fee Schedule is the sample fees the MCO sent to you. Think again. There is usually a clause that states “This is the Entire Agreement and nothing outside of this Agreement is a part of this Agreement whether written or oral.” The only thing that is part of the agreement is the term “MCO Fee Schedule” and that can be whatever the MCO wishes. Lesson One: always have the CPT codes with reimbursement amounts attached to the agreement.
BEWARE OF AMENDMENT CLAUSES
Is there a clause that indicates that the MCO has a right to amend the agreement without the written permission of the provider? Even if your CPT codes with reimbursement amounts are attached to the agreement, the MCO may have the right to lower these amounts if the amendment clause permits. Also, the agreement may include a clause that gives the MCO the right to amend the agreement by notifying the provider in a written notice within a specified number of days. Lesson two and three: make sure the agreement can only be amended by written agreement of both parties. At the very least, request that a clause be included in the agreement that you are notified of any amendment by certified mail return requested or courier with written receipt of delivery. It is too easy for an MCO to indicate they have notified you of a change in the MCO Fee Schedule months ago by regular mail-which you of course never received. When you receive a notice of change in the MCO Fee Schedule do not ignore it. If you feel the reimbursement amount is unfair, appeal the decision to lower your reimbursement amounts.
PENALTIES FOR INCORRECT REIMBURSEMENTS
Many providers have sought penalty clauses for incorrect reimbursements. Few MCOs are willing to add such clauses to their agreements, due to the possibility of future mergers. The transition of MCO mergers has not always gone smoothly. The merging MCOs claim processing departments do not always receive the data necessary to pay claims correctly. This is not a justification for incorrect payments but it does explain many of today’s payments. Hence, MCOs are unwilling to add penalty clauses. It is worth the effort to ask the MCO to add a financial penalty, such as a loss of the discount if there is a pattern of repeated failures of the MCO to reimburse the claims correctly. If the penalty is not agreed upon, you may want to track incorrect payments in an effort to address the issue in future negotiations.
INFORM MCO IN WRITING OF ISSUES
If you continue to have a problem with poor reimbursements from a specific MCO and the problem is not associated with contract compliance, send a written letter to the MCO. The letter should be sent by certified mail or courier with a written receipt of delivery. Address the letter to the attention of the individual who is indicated in the agreement as responsible for receiving notices. In the letter, include the specific reasons you feel you have been reimbursed incorrectly. Specify any sections of the agreement which are applicable. Also, include copies of all of the EOBs. You may wish to send a copy of the letter to your local State Insurance Department(SID) or Commissioner if the MCO is an insurance company or is owned by an insurance company. Remember though, many State Insurance Departments do not regulate Preferred Provider Organizations(PPO) that are not owned by insurance companies. A letter sent to the SID in reference to this type of PPO will not be beneficial to you.
These ideas are merely suggestions and not intended as legal advise. In reference to issues of law, you should seek legal counsel.
This article was written by Marilyn Bourdene, of Bourdene Consulting. Marilyn has nearly 20 years experience in the healthcare industry and assists PHOs, IPAs and hospitals and physicians in managed care contracting, marketing and business development.
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