Whether your medical business is big or small, your bottom line is affected by payment variance in a major way. But by shifting your approach and partnering with our RCM Brain ninjas, you can dramatically reduce the disparity between what you were contracted to be paid for services and the dollar amount you actually receive.
This blog is part of a three-part series. Later, we’ll cover how you can identify payment variance, what you can do about it when you find it, and how to negotiate with a payer, but first we’ll discuss why it’s such a problem and how it happens in the first place.
When a payer includes your medical business in their network, your practice negotiates the contracted rate a payer will pay for a given service. But frequently, when you render a service, you’ll receive less than the contracted rate. That’s payment variance.
Are Payers Trying to Pull a Fast One?
It may sound like payers simply aren’t holding up their end of the bargain, but the circumstances that lead to payment variance are more complex than you might think. Providers face an unfair deal when payment variance occurs, but calling foul on the payer won’t solve the problem.
When your medical business negotiates rates with a payer, you agree upon a fee schedule and a corresponding code for each of the services you provide and want covered. But, for a variety of reasons, when you begin combining those codes for multiple services on one bill, some of those codes will pay, and some won’t.
Billing Codes Can Get Complicated
For example, let’s say your medical business submits a claim that includes a $100 charge for an office visit and a $250 charge for a procedure. But when you submit the claim with both of those codes, the payer only covers the procedure itself, because the office visit is assumed to be a component of that service (you can’t get the procedure without the office visit, after all).
But, unbeknownst to the payer, your team may have prepared the claim this way for good reason. Perhaps a patient visited for a particular service and, while there, also had you examine an unrelated malady. To reflect these two separate and uniquely identifiable “visits,” your team intentionally submitted both codes in the claim to paid.
In a situation like this, your accounts receivable department could append the claim with a modifier that denotes the visit that took place because of the planned procedure and the “visit” code used for the additional care received. But frequently, these nuances go overlooked. Whether due to factors related to coding, payment, or responsibility, 80% of all medical claims have an error associated with them.
You may be wondering how coding errors that lead to denials and other issues can occur on such a large scale. But perhaps you should be wondering how to prevent them from occurring at such high rates.
It’s Kind of Like a School of Fish…
Consider this extended metaphor. If you envision claim submissions and payments as a school of fish, ensuring an individual claim gets processed as it should is like trying to watch one fish in the school. It’s very easy to lose track of that one fish, that one payment. But that’s not all. Individual codes within claims are kind of like scales on that one fish. If you can’t keep track of the fish, how are you supposed to keep an eye on each of its scales? And how is your team supposed to do this for all the scales and all the fish, at once?
This is how errors occur. And this is how we solve them.
Reduce Payment Variance, Bolster Your Medical Business
Stay tuned and check out our next blog posts where we’ll dig deeper into identifying and solving the problem of payment variance. While you wait, why not setup your free consultation with RCM Brain Team? Beth and the RCM Brain ninjas have the resources and expertise to help you grow your medical business. We’re ready when you are.