Collections Basics – Part 1: Know Your Payers

In a traditional healthcare setting, the revenue cycle begins with the insurance companies who pay the majority of the bill. There are multitudes of payers and each payer can have many plans.  How can a healthcare organization catalog this information, keep this information updated and make this information easily accessible to staff so they can discuss payments with patients in an informed and confident way?

Start by breaking your payers into five main categories as a logical way to organize the data.

  1. Payers with whom you have a contract
  2. Payers with whom you do not have a contract
  3. State and Federal government payers (Medicare, Medicaid, TriCare)
  4. Medicare Advantage payers
  5. Patients

Payers with whom you have a contract

Your organization has signed a contract with a payer and you have agreed to accept a discounted fee called an allowable, and to abide by their rules.  What is the information you need to collect?

  • A copy of the contract
  • A detailed fee schedule, or a basis for the fees, such as “150% of the 2008 Medicare fee schedule.”
  • Any information about the fees being increased periodically based on economic indicators, or rules (notification, timeline, appeals) on how the payer can change the fee schedule.
  • The process and a contact name for appealing incorrect payments.
  • Information on what can be collected at time of service.  Hopefully your contract does not have any language that prohibits collections at time of service, but you must know what the contract states.
  • Process for checking on patients’ eligibility and benefits: representative by phone, interactive voice response (IVR), website or third-party access.

The contract allowables should be loaded into your practice management system so you can calculate the patient’s responsibility at check-out and you can identify incorrect payments at the time of check-posting.  If your practice management system does not have this feature, you will need a cheat sheet for each contracted payer, showing the most common services, the allowables, and the percentages of the allowables for fast calculation of the patient’s portion at check-out.  The same or a modified cheat sheet will work for the check posters so they can verify the payer is reimbursing according to the contract.

Your cheat sheet should look like this:

Plan A
Service Allowable 20% 40% 50% 60% 80% 90%
99213 75.00 15.00 30.00 37.50 45.00 60.00 67.50

The check-out staff will write the patient’s portion on the encounter form (you may call it a charge ticket, fee ticket, rounding slip, or superbill), add the numbers together and give the patient the total.  Alternately, the computer system will total the patient’s portion based on the payer and the plan for the check-out person.

The balance of the information collected will be used to develop a payer matrix that might look something like this:

 

Payer

 

Employers

Collectible 

At TOS

Elig/Benefit 

Verification

Plan Year Contract 

Dates

How to Notify
XYZ WalMart Deductible & Co-Pay website July-June – Exp Dec 2013, must neg. <Aug1, 2012 Call June Jones at 1-800-555-1212
State Employees Deductible & Co-Ins. Website 

 

Jan –Dec 

 

same same

Another excellent way your organization can catalog payer and plan information is electronically in a document management system such as FileConnect, which I use and recommend.

FileConnect is an electronic filing cabinet with many great attributes, one of which is particularly helpful in this scenario. Every time there is a change in a payer contract, or a new plan is added by a local employer, you can update the staff’s spreadsheet tools simultaneously and the newest version will be instantly available on their desktops.

Payers with whom you do not have a contract

Your primary payers in your community or region will most likely offer you a contract.  Payers with less covered lives will not find it worthwhile to contract with healthcare providers, so you must decide how you will work with these companies and with these patients.

You are not required to file claims with payers that you are not contracted with.  Most healthcare providers do file claims with non-contracted payers to ensure patient satisfaction.   Where providers may differ, however, is whether or not they will ask patients with non-contracted payers to pay in full at time of service, and assign the payment to the patient OR ask the patient to pay only the expected patient portion at time of service and assign the payment to the provider.  This decision will be made as part of your Financial Policy (covered in Part 2.)

State and Federal government payers (Medicare, Medicaid, TriCare)

There has been a tremendous discussion in healthcare for the last several years about physicians limiting how many Medicare patients they will see, or even discontinuing to see Medicare patients completely.  The rate at which Medicare pays is not enough to support the provision of services in most ambulatory practices, so some physicians do not participate in the Medicare program but still see Medicare patients (the fee they can charge Medicare patients is federally controlled and is called the “limiting” charge) or have opted out of the Medicare program altogether and will see Medicare patients on a cash basis only.

If a practice does accept Medicare patients, whether participating or not, there are set amounts to be collected from patients with Medicare – deductibles and co-insurance, as well as services that are never covered by Medicare.

Make sure that current Medicare allowables for your locality are loaded into your computer to do the math for you.  You can use the same type of spreadsheet shown above to develop a cheat sheet of 80% of the Medicare allowable.

Service Medicare Allowable 20% Owed by Patient
99213 66.74 13.34

What is confusing to most providers is what an insurance that is secondary to Medicare will pay.  Many providers do not collect any fees at time of service for Medicare patients with a secondary payer, as there may or may not be any balance left that is the patient’s responsibility.

Medicaid pays less than Medicare does, and based on the very low fee schedule, many ambulatory providers will not accept Medicaid patients.  Many Medicaid patients must depend on health departments, hospital clinics, federally-qualified health centers (FQHCs) and rural health clinics (RHCs) for care.

Tricare may be accepted on a case-by-case basis.  A healthcare provider does not need to accept the health insurance for retired military across the board, and may decide individually whether to accept a Tricare patient or not.

Medicare Advantage

Medicare Advantage Plans, formerly called Medicare Choice + and now called Medicare replacement plans or Medicare Part C, are plans offered by non-government payers which replicate Medicare benefits for seniors, sometimes offering enhanced benefits as part of the package.  There are several types of Medicare Advantage Plans, but the main types are local or regional HMO plans which require you to sign a contract, and the Private Fee For Service Plans (PFFS), for which no contract is required.  If you see a Medicare Advantage PFFS patient, you have in essence agreed to accept their terms.  The one thing you should ask prior to accepting a Medicare Advantage PFFS plan/patient, is what percentage and what year of Medicare rates are they paying.

Patients

So we finally arrive at the payer with whom most healthcare entities have the most difficulties – the patient.  Why is it so difficult to collect from patients?

First, as we have seen throughout this article, insurance can be very confusing.  Without a plan for organizing and sharing information, a healthcare provider may have significant difficulty assessing the patient’s payment responsibility.

Second, it has been a cultural norm until recently that patients do not have to pay at time of service, with the exception of their co-pay, and will be billed for their portion after insurance pays.

We know now that we must collect the correct payment at time of service.  This is the only way to reduce the administrative expense of billing the patient for the balance and/or refunding the patient if too much has been collected.  This is also the only way to maintain adequate cash flow as much of what used to be paid to the providers from insurance companies has now become the responsibility of the patient.  Higher co-pays, higher co-insurance and most of all, extremely high deductible plans have left patients owing much more out-of-pocket and largely being unprepared to pay it at time of service.

In the next part of this series, Collections Basics Part 2: Develop Your Financial Policy, we will discuss setting up your financial policy so both patients and your staff can understand it, and how to collect from patients according to your policy.