R. Todd Welter

In past years, we've all hibernated through the winter, not worrying much about the latest CPT codes. Everyone knew the payers weren't really expecting to see them until spring.  This gave us time to update our superbills, add codes to the fee schedules, check and compare coding techniques, and generally get ready in a somewhat leisurely way.

Well, that's all about to change. Consider it another side effect of HIPAA.

There will be no grace period in 2005 -- at least from Medicare -- for coding changes. All practices needed to start using the new, changed, or deleted codes on January 1. And the 2005 ICD-9 already went into effect back on October 1, 2004. 

It is not entirely clear if the commercial payers will follow Medicare's lead. Surely, many will not be ready and won't be able to process the new 2005 codes. That means you may need to code one way (the old way) for some payers and a different way (the new way) for Medicare. But over the first quarter of 2005, payers will switch to the new codes, and you need to be ready.  

A sudden shift by commercial payers will certainly cause old codes to be denied as invalid. Watch your EOBs very carefully. Often they will come back with a cryptic message like "Unable to process claim due to lack of information" or "Invalid or incomplete coding." Don't count on too many payers to clearly state "You used the wrong code, update your system." Look for denied codes; then recode with the correct, new code and resubmit immediately.

And beware of bogus timely-filing denials -- the coder's death sentence. I fear for practices that are not paying attention and will allow denials to "time-out" into timely-filing denials.

As with all changes, I see opportunity. In this case, it's an opportunity to see who is prepared. This is the chance for seasoned, savvy coders to shine, a season when the teamwork between coders, billers, and payment posters will be evident. (It will also be abundantly clear when your practice's reimbursement team is not working together.)  

As you do every year, be sure to order -- and read -- the new CPT and ICD-9 books, if you haven't already. Changes are noted in special colors (check the key of the version you have for the right color or typeface to look for); new codes are indicated in the CPT with a big dot. Be sure you understand what has changed for the codes you use the most and update your billing procedures and paperwork accordingly.

Train your staff so that all Medicare claims are sent using the new code set. Do your best to get information from your main payers about when they expect to shift their requirements.

There is no rest for the weary this winter. But at least by spring things should be easier than usual.

This article originally appeared in the January 2005 issue of 

Articles

Practices need to implement new code set by January 1

2005 Codes? Use 'Em Now

The OB/GYN who came to my consulting firm was simultaneously frightened and angry. He had in hand a letter from one of the regional HMOs that made a very thinly veiled threat to terminate him from the network if he did not immediately sign a new contract amendment. 

The new contract wording allowed his reimbursement to "float" on utilization standards set by the health plan. In other words, the physician would get a low, Medicare-based reimbursement -- a percent of Medicare. He would get additional payment only if his "pool" -- a payer-defined group of physicians -- met or exceeded the standards the health plan set for how many and what types of services the pool should be providing. However, he would receive less if the utilization standard was not met (that is, if he and the rest of the pool provided more services than the health plan expected).

As I interpreted the terms, the health plan was giving itself license to drop reimbursement to below the Medicare fee schedule the minute it had an opportunity to do so -- not to mention torturing physicians who were more concerned with doing what patients needed than what the plan forecast. It was basically a "take-it-or-leave-it" contract. 

I advised the physician not to sign the amendment. But the situation turned out to be about more than one physician. After much discussion and research, I found out that this letter was sent to all the OB/GYN physicians in this market. Suddenly, it was a whole new ballgame.

Every specialty, every practice, has leverage to negotiate -- though most need a little help finding it and using it. It may be market timing, it may be a unique service or location, but leverage is everywhere. It just has to be used the right way. 

Few specialties have as much leverage as obstetrics, gynecology, and pediatrics. Why? Women pick health plans. Health plans are marketed to women (watch their commercials). Health plans need OB/GYNs and pediatricians. This is not meant to be sexist; it is simply a statement about how the system works now -- women take care of the healthcare in most families. And, to ask the time-honored question, what do women want? The OB/GYN and pediatrician of their choice. Quality and selection come first when women think about care for themselves and their children. Price generally comes second. 

Bottom line? It's very foolish for a payer to annoy all their OB/GYNs -- or pediatricians. They can't afford to lose them. A health plan that sends a threatening letter to every OB/GYN -- and every OB/GYN (or even a large number of them) says no to the demands -- is a health plan with a huge problem. It would lose out on one of the main things its female customers want: their OB/GYN of choice. In fact, after the president of this particular health plan found out what sort of letter his director of network operations had sent out, that director was outta there.

But a bigger storm was already brewing. One after another, OB/GYNs across the region refused to give in to the threat. They were turning the new contract terms down flat-out. A crisis was looming.

When a group of irate OBs asked me to come and speak at their meetings, we decided to form a messenger-model IPA. This is a contracting vehicle that allows physicians who have different tax ID numbers to communicate with the health plans through a messenger. The messenger does not negotiate, per se; he simply represents the physicians and their independent wishes. 

We were ultimately successful in getting the HMO to send a more palatable agreement to the OB/GYNs. Some took the new agreement; some did not. 

The physicians, thrilled to see results, wanted to turn to the next HMO and the next. We started working our way through many of the local health plans to try to get better contracts. 

Things were progressing nicely until a year or so after the initial agreement, when somebody called the Federal Trade Commission (FTC) about our activities.

At the time, the FTC was researching two other local IPAs, suspicious of how they were organized. Both focused on primary care. Both were having great success assisting their membership in obtaining, scrutinizing, and signing more favorable agreements with the local HMOs. Our little group of OB/GYNs got caught up in the same scrutiny. 


We went through some very agonizing times. We sought the assistance of legal counsel and complied with the FTC's request for documents. After lots of back and forth, the FTC sent us an order to stop. We did. 

Understand that our group was very careful to follow the guidelines available at the time. We did not, at the time we started working together, seek legal advice, as the group was not intended to be organized as a formal collection. My firm simply was charging by the hour for its services and dividing the cost among the physicians involved, amounting to a few dollars an hour per member. There was no Board of Directors, there were no dues, there was no legal entity at all. The co-op had no structure at all (legal or otherwise), but was held together by the will of a few physicians who were the local leaders in the specialty. 

We were all very diligent about following the messenger model. No individual physician knew what another physician did on any agreement. Each agreement had lots of variation. I think we actually saved the health plans a lot of work and aggravation by getting contracts out to the individual physicians and providing much of the provider relations functions needed to make a network work seamlessly. 

Nonetheless, we had developed too much leverage with the health plans. We made them nervous and set off all kinds of alarm bells. The FTC sees groups like ours -- even very loosely organized groups -- as unfair competition for health plans, which are perceived as extensions of the actual members. Even very loosely organized efforts to create leverage, by physicians who do not have the same tax ID number, appear as an unfair effort to fix prices. 

Since the FTC told us to stop, we did. The physicians are still seeing patients, as far as I know the health plans continued to keep in place most of the contracts we had worked on, and everybody left the process a bit wiser -- if not with a few more gray hairs. 

Since then, the market has continued to evolve. Most contracts in our market now are written on a discount, fee-for-service basis. 

But the odd thing is that most of the contracts I see as I work with physician clients -- regardless of the payer -- offer nearly the exact same discounted reimbursement. I know this has to be a fluke, a coincidence, or the effect of random chance. What else could explain the odd consistency? The only other possible explanation is that the payer employees get together at their local monthly educational forum and discuss rates -- but they surely would never do that. 

This article originally appeared in the January 2004 issue of

A consultant gets a letter from the FTC saying he is fixing physician prices

I Was Investigated by the FTC

You rely on commercial payers to make ends meet. But the physician-payer relationship is often stormy, thanks to what physicians commonly view as annoying payer antics. From an operational standpoint, these are often related to coding, payment accuracy, and bundling. Administrative antics are much more sinister, including the systematic and purposeful delay of reimbursement. 

In either case, it's worth knowing that you are not alone in your frustration with these tactics. Better, there are some relatively easy ways to turn their games into your gains.

 It's hard enough for the physician who was in the exam room and intimately knows what went on to get coding right every time. It defies reason that an insurance company employee miles away -- someone who probably has little or no medical training --could feel confident overruling a physician's code. Nevertheless, payers routinely change coding, fitting it to their own ideas about what the patient needed or what the physician did. 

The practice of changing codes is certainly foolish, but it's easy enough to stop it in its tracks. How? Document in full, including a complete explanation of medical necessity, so that the payer has no room to imagine alternatives. Some practices go so far as to routinely attach relevant pieces of the chart. 

 This is another area in which payers often play fast and loose with what's right. Many physicians and other healthcare providers do not know if they are paid correctly. While this can and should be avoided, it is not license for the health plans to pay whatever they want -- although many do. 

For example, I was recently auditing payments for an internal medicine practice and got stuck on some numbers from one particular HMO; the payments seemed low. I reviewed the contract and the payments several times, convinced that I had done the math wrong. In fact, the HMO was reimbursing incorrectly on every single code. The higher the level of service, the more off-track the payment was. 

The only way to put an end to this before it takes a major bite out of your bottom line is to match every payment to your contracted rates. It may seem like a nuisance, but so is lost reimbursement. You simply can't rely on the payer to get it right.

 Many surgical practices today say it is the bane of their existence. Every time they submit a claim, the payer insists on "bundling" all the charges. But is this bundling by the book? Not exactly. Most health plans have taken the formal rules for bundling laid out by the Correct Coding Initiative and added on their own proprietary bundling edits. In other words, they pay for only one or two services and claim the rest are covered by those payments. In billing offices coast-to-cost, frustrated surgeons ponder the unthinkable: returning patients to surgery so they can get paid in full. 

That, clearly, is not a right or viable solution. What you can do is debate the issue with your payers and get them to put their rules in writing. 

In the investment world, time is money: The longer funds remain in the market, the greater their potential to grow in value. 

Depending on their medical-loss ratio, insurance companies may pay out as much as 95 percent of what they take in, which clearly has an impact on their ability to hire people, lease office space and equipment, perform marketing, and other necessary business activities. 

So payers get ahead based on the amount of time they get to keep your money, invest it, and gain on the interest it earns. In a good investment period -- like the strong bull market of late -- payers make lots of money simply investing the premiums for as long as possible. 

It stands to reason, then, that payers are looking for ways to pay physicians as slowly as possible. Insurers vehemently deny this, but there are certainly plenty of barriers to speedy payment. Watch for these:

 Payers routinely deny payment because a claim isn't "clean," or contains minor errors. There are certainly legitimate reasons to send a claim back if the information it contains is wrong, but valid instances of this are rare. I have seen claims denied because the place of service or the sex of the patient was incorrect. In short, the denial is usually for some minor problem that could easily be corrected by conscientious office personnel. 

Unfortunately, minor errors are easy to make on claim forms. Nevertheless, your office staff fills out the current HCFA 1500 billing form -- or has the computer do it -- hundreds of times a day, depending on how big and busy your practice is. Rarely does staff have time to actually scan through the forms to be sure they are always correct. 

Once a claim is denied for some minor error, the real chaos begins. Your staff has to find the right form on the right date of service for the right procedure. It takes time, and it inevitably becomes a bottom-of-the-pile task that gets delayed, again and again. In the meantime, the payer is sitting on your money.

I can offer only two solutions to the clean claim conundrum. First, try to define what a clean claim is in your payer contracts. Better yet, try to limit the definition. The fewer items they are allowed to deny, the better. Second, take the time to review forms before they go out. It is a time-consuming task, but it's easier than dealing with the appeal once the mistake-laden claim inevitably comes back a month later. This is time well spent to get your money back faster. 

 When I hear that a claim has been denied for lack of medical necessity, I wonder how it is that a medical assistant is telling our nation's best and brightest, fellowship-trained and board-certified physicians, that a patient does not need to be admitted to the hospital for right lower quadrant abdominal pain, but can instead follow up in the office the next day. 

The best option for dealing with these denials is to come out swinging with all the force of your fellowship-trained and board-certified opinion. Keep copies of medical journal articles on file supporting your medical decisions that are routinely denied. Send them with your appeal, along with letters from respected colleagues, pieces of the medical record, and whatever else will support your well-founded opinion. If the payer gets fed up with your "informative" packages, it will stop denying your claims.

 I have seen statistics that show requests for pre-authorization are granted upwards of 95 percent of the time. Pre-authorization can be a legitimate process of investigation and approval designed to be sure that patients get the proper care at the right place and time. But it can and should be eliminated for all but the more obscure services.

We have had success applying "gold card" status to the services of well-established and well-respected physicians. The payer's medical director can often be convinced these excellent physicians should not need to get pre-authorization for routine services. It helps to point out that this saves the payer staffing costs, too. 

In short, it's awfully easy to rage against payers and their games, but it can be more productive to recognize that they, like physicians, are in a very competitive marketplace and under pressure from sometimes-contradictory federal and state regulations. Indeed, physicians can be their own worst enemies by not understanding their rights and responsibilities in the payer relationship. There is no time like the present to set things straight. 

Todd Welter is president of R.T. Welter & Associates, a Denver-based consulting firm specializing in coding and reimbursement. He can be reached at 

This article originally appeared in the July/August 2002 issue of 

How to handle the physician-payer relationship

Tricks of The Payer Trade

The truth sometimes hurts, but here it is: Simply improving your code selection isn't enough. Putting the right coding number on the claim is only the first step on the road to higher revenue. Yes, the code tells payers what they should reimburse. The next step is making sure they actually send you the check -- and for the right amount. That's where many practices lose out. 

I lecture to physician groups all over the county, and at virtually every stop I ask, "Do you know -- really know, for certain --  if you are paid right?" 

The crowd goes quiet. Faces drop in shame. Some mutter to themselves.

The truth is, most medical practices don't know if payers reimburse them correctly. They have so many patients, offer so many services, and contract with so many payers, it just seems impossible to sort it all out and tell if a given payer correctly matched the contracted payment for this specific service and that particular patient.

Depending on where a practice is located, it might have fee-for-service, discounted fee-for-service, soft capitation, or hard capitation --  sometimes all from the same payer. Combine this with up to 30 or 40 different payers in a market and toss in various IPA, PHO, and other affiliations, and you have the makings of a very confusing situation that would tax the organizational and business skills of any seasoned administrator --  let alone the average physician who has little or no business background. Luckily, there are some ways to make it easier to be sure you are paid accurately.

No matter what the level of sophistication of your practice, here is a simple, step-by-step method of tracking whether you get paid for what you code.

Make a list of your top 30 codes. Practices like to think they offer an endless array of services. In reality, most make their bread and butter off of 30 to 40 services represented by 30 or 40 CPT codes --  yes, that's true even of specialty practices. Typically, about 20 of those CPT codes are E&M services. The rest are procedures -- radiology, pathology, immunizations, injections, and so forth. You may do one or two out-of-the ordinary procedures during a given year, but simplify and forget about those for the purpose of this exercise. List only the codes that make up the bulk of your service --  no more than 40.

List your biggest payers. In any major market there are the big HMOs such as Aetna, Blue Cross and Blue Shield, CIGNA, and United Healthcare; the small, regional HMO plans; and the PPOs, both the self-funded PPOs and larger, national PPOs or networks. 

Put all of your payers in order according to which one represents the largest amount of business to your practice. Most practices measure this by the number of patients covered by the plan, but other measurements can be just as effective, and possibly more relevant. Consider, for example, the total monthly billings, the amount of revenue or payments generated, or the amount of covered lives in your area.

Calculate the hard dollar reimbursement for your most-used CPT codes. Some managed-care contracts come with a fee schedule attached, but most don't. Even contracts that do not include a fee schedule do typically include a calculation for figuring out the fee schedule. 

Take that calculation --  which usually amounts to simple algebra -- and figure how much the payer will reimburse you for each CPT code. Be careful: the devil is in the details. Most HMO and PPO agreements use the resource-based relative value scale (RBRVS) or a percentage of the Medicare fee schedule. That seems simple enough, but do they use regional adjustments, otherwise known as the geographic practice cost index or GPCI? What year of the RBRVS are they using? What year of the Medicare fee schedule are they using? 

Before you sign any agreement, make sure you either have access to or can reproduce the fee schedule. If you can't, ask how you can. Even in the most tightly controlled and physician-unfriendly market, health plans should be willing to explain how the fee schedule is calculated.

Verify payments. When you have a list of CPT codes and know what your major payers will pay you for each one, you are ready to dig in. Assign each payer a month --  say, Cigna in May, Blue Cross/Blue Shield in June, and so on --  and have your staff verify every payment made in that month by that payer. It may sound like a lot to ask, but since they'll have an entire month and the fee schedule at their fingertips, they should be able to finish all their usual day-to-day functions as well. By the end of the month, you should have a good picture of your contractual arrangement and know if that payer is living up to it. 


If you discover that a payer isn't reimbursing you correctly, don't just complain --  appeal. 

An appeal letter for proper reimbursement should be like a collection letter. Don't write a long letter; don't sit on hold for 20 minutes hoping someone will pay attention to your complaint; don't write an angry letter devoid of useful facts. 

Lots of appeal letters go straight into the trash. To keep yours out of the  circular file; make sure it contains the following:

patient name and demographics, including insurance account numbers and employer information;

a very short explanation of what is being appealed (improper payment, a denial) and why (you paid us $100; you should have paid $160; therefore, you owe us $60).

Be sure you are absolutely correct before you appeal a claim. If you miscoded the claim, or did not send the right information originally, that is not the payer's fault. Write an appeal only after you have critically examined the claim and know it was correctly submitted. 

Tell the payer what to do and how to fix it --  nicely. Yelling will not get you anywhere.

Appeals are also like collections in that they require follow-up. Create a system for reminding staff and knowing where a claim is in the appeal process. Let payers know that you are serious: If you need to send a copy of your original appeal 20 times, do it. 

Over time, a good appeal system with routine follow-up reduces the overall need to appeal. The payers learn that if a claim or an appeal comes from your office, they had better pay it properly. The squeaky wheel gets the grease.

Remember, though, you can't squeak if you don't know you've been wronged. Don't believe that good coding is enough. Take the time to make sure your payments reflect your coding and your contracts. 

Todd Welter is president of R.T. Welter & Associates, a Denver-based consulting firm specializing in coding and reimbursement. He can be reached at 


This article originally appeared in the May/June 2002 issue of 

How to make sure payers send the right amount