In recent months, the topic of out-of-network charges has gained extra attention in the medical community. America’s Health Insurance Plans (AHIP) issued a report in February 2013 comparing how much physicians charge out-of-network patients and how much Medicare reimburses a physician for performing that service within the same geographic area. The findings showed large discrepancies between the two-dollar amounts, which led to discussions on how both physicians and insurance companies manage out-of-network charges.
The issue also came up in Aetna’s recent class action lawsuit and subsequent $120 million settlement. In most out-of-network cases, insurers typically cover a "usual, customary, and reasonable" (UCR) portion of the charge, and then physicians bill the patient for the remaining balance. However, the plaintiffs accused Aetna of lowering UCR rates for out-of-network cases. By skewing the data used to determine UCR fees, Aetna allegedly underpaid claims and transferred a larger portion of the charges to the patient. In some cases, like when the patient couldn’t afford to pay that remaining dollar amount, the physicians were left unpaid.
To help manage out-of-network payments within your practice, start with these four best practices:
1. Be Strategic about Contracting with Insurance Networks
Take a look at your revenue mix, including how much money you receive from insurance payments and how much comes from your patients. Would it make sense to contract with additional insurance networks or, on the other hand, drop the ones that don’t bring in a high volume of patients or payments? Re-evaluate these relationships and determine which ones bring the most benefit to your practice.
2. Look for Efficiencies in the Payment Collection Process
Collecting payments can often bog down your office billing staff. Take the time to evaluate the current process, any administrative challenges your staff experiences, outstanding payments, and reimbursement rates. You may find an opportunity to streamline and create further efficiencies by outsourcing some responsibilities to a third-party billing company. And in some cases, there may also be room to negotiate reimbursement rates with payers.
3. Set a Fair Fee Structure
Building a fair and accurate fee structure starts by examining the costs involved in providing various medical services. Regardless of how much money third-party payers determine is fair, your practice’s fee structure should be based on your unique costs and the value added by your services. If you’re searching for help with this process, the AMA has published a 12-step guide and spreadsheet to help you create your own fee structure.
4. Establish Transparency with Your Patients
To pave the way for success in all three of the best practices listed above, focus on patient education and clear communication regarding out-of-network payments. If patients have an upfront understanding of your fee structure, the cost implications of out-of-network claims, and the billing process, then your practice won’t encounter as many difficulties in collecting payments later on.
Overall, managing out-of-network charges requires a big-picture perspective as well as more attention to detail. Through the use of these four best practices, you’ll address all levels of this complex process — from network contracts and reimbursement rates to your practice’s fee structure and billing staff methods — which will ultimately yield increased efficiencies and ensure the receipt of timely, complete payments.
In light of AHIP’s report and the Aetna settlement, physicians are looking for better ways to manage out-of-network charges. Though many practices have to deal with only a small number of these cases, putting specific policies in place will help prevent uncollected payments and other sticky situations down the road.