Beyond the Codes

May 15, 2002

How to make sure payers send the right amount

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.

Make a list

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.

How to appeal


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;
  • the date of service;
  • the CPT and ICD-9 codes; and
  • 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
rtwelter@physicianspractice.com.

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