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Make Your Payers Pay


We know you don’t like insurance companies. They’re bureaucratic, inefficient, faceless. But to get paid better and faster, you’ll have to learn to work together. And they have a few ideas on how to make that happen.

Physicians love to hate payers. They pay doctors too little, their CEOs too much, and are all in a conspiracy to drive physicians crazy or out of business, whichever comes first.

We know. We hear you.

But however valid the criticisms - however real the injustices - physicians and payers need to work together. Want to get paid more and faster? Well, to do it, you’ll have to learn to get along with your payers. It’s time to stop pointing fingers and get to work.

So in the spirit of harmony, we asked payers what physicians can do to make things work better between them. (The opposite of our usual story in which physicians talk about what payers are doing wrong.)

Their simple request? Use more of the tools they’ve given you to make your office more efficient. “The most effective thing [physicians] can do is have themselves and their office staff really understand and use the tools that are available,” says Allen Karp, vice president of healthcare delivery for Aetna.

Not such bad advice.

Payers win too

“There has been a long history of [physicians and payers] pointing fingers at each other. Payers say, ‘We’ve given physicians what they need; they just don’t take advantage of [those things],’” says Nancy Brown, senior vice president of new product line development for athenahealth, a revenue cycle management company that works with practices around the country. But payers and practices don’t have to work at cross purposes. You have more in common than you may realize.

Melissa Lukowski spends her days talking to payers as athenahealth’s director of payer outreach. She says the “overarching theme” of many conversations is that payers “feel that they are always demonized by the providers, no matter what they do. Forward-thinking payers actually are trying to make things easier,” she insists.

Payers aren’t watching out for you simply out of affection, of course. If you work smarter and cheaper, their operations are smarter and cheaper, too.

Consider this: It costs you $8, at least, every time your biller gets on the phone to check on the status of a claim. She’s paid well and hourly. It takes her time to gather the information she needs, find the number, sort through the phone tree, and wait on hold. After all that, she’s worn out. So she walks down the hall for a cup of coffee before making the next call.

That’s bad for you.

But what’s happening at the other end? The insurer is paying plenty of employees whose job is to sit around waiting for your biller to call. They have to look up the claims, juggle calls, and deal with angry people all day long. They need a place to sit, a desk, a phone, a computer… You get the idea.

You see this situation isn’t ideal for payers either.

But what if your biller went online to check claim status, as most major payers allow her to do? It’s faster for her, cheaper for you, and cheaper for the payer. Everybody wins.

Here’s another great example: Many physicians think payers flood them with denials and delay payments because they are “working the float” - trying to keep their money a few precious days longer so their investments earn a little bit more.

But think about it. How much does it cost them to send you a denial, only to have to handle your resubmission or your angry phone call?

“Contrary to popular belief, the payer is not incentivized to deny claims,” says Bruce Korman, CEO of Claim-Remedi Services, a Southern California firm that develops software aimed at reducing denials. “Depending on which industry report you want to believe, they pay something like $7 to $10 each for every claim they adjudicate.

The problem is that the payers don’t have a solution. They just keep getting junk traffic all the time.”

Korman used to work in the financial industry, and says he was at first astounded by the denial rates in healthcare. “The first thing you notice coming from the outside is that [about] 30 percent of claims are denied at first pass,” he says. “No other industry has a collection problem of that magnitude. No other industry expects a 30 percent problem because forms are filled out wrong.”

It’s a big problem for your practice, of course. But payers aren’t part of a plot to slow down reimbursements. Often claim forms simply don’t meet their standards - as arcane as they might be. Claim forms are “complex little animals,” as Korman puts it. Some denial-triggering mistakes involve just simple errors. Others involve bundling errors, or lack of medical necessity, or a diagnosis code that doesn’t match the procedural code - the list is endless. “To make matters worse, the payers each have their own rules, and they don’t even always publish the rules,” Korman says. It’s an information management problem - not a conspiracy.

“Anyone who is trying to slow down the claims process is probably adding a lot more costs,” agrees Mark Smithson, vice president of provider process and network operations for Humana, one of the nation’s largest payers. In fact, he reports that Humana now handles more than 75 percent of claims through auto-adjudication. That means a computer processes the claims; they are dispensed with in a day or two. Humana wants it done fast, too.

“When we don’t have to have a person looking at it, it’s a lot less expensive, obviously, and the results are much more consistent as far as quality goes, which reduces phone calls and work on the back end,” says Smithson. (Full disclosure: Physicians Practice’s parent company, MedIQ, publishes a custom magazine on behalf of Humana.)

And let’s be honest. Sometimes physicians do make mistakes and are subsequently at fault when things go wrong. It may seem like a conspiracy when a specific claim is repeatedly denied, but if you forget to tell the payer about your new address, or if you don’t indicate that you are submitting a corrected version of a prior claim, it’s actually your fault.

So payers and physicians do share some common ground.

Here’s how you can take advantage of these shared goals.

Try electronic billing

Since HIPAA took effect a few years ago, every payer has offered electronic billing, but not every physician takes advantage. Humana receives 80 percent of its claims this way, according to Smithson. Aetna receives about 74 percent of its claims electronically, says Allen Karp, its vice president. That means at least 20 percent of physicians are still using paper.

What’s wrong with that? You get paid slower. You have to wait for the post office to deliver the claim, for the payer to sort it, and so on. Electronic claims hit the payer almost the moment you press “send.”

Payers encourage electronic claims because the process also reduces costs for them. So much so that Humana has 30 staff people devoted to just helping physicians set up electronic billing, says Smithson.

He urges physicians who love paper too much to give it up to at least make claims forms legible. “If you have to send paper claims, it really needs to be crisp and clean,” says Smithson. “Write in the right blocks. Don’t spread across boxes; if you sign [your name] over your tax ID number, we can’t read it.”

Get techie

“Payers feel they are investing a lot in technology,” reports Lukowski. “They feel providers aren’t changing with the times.” Of course, physicians counter that sending weekly bulletins with new lists of rules only serves to make their lives more complex - not easier.

But there are some tools that truly can benefit practices - and payers.

For example, says Lukowski, “Payers receive a lot of questions regarding, ‘I submitted my claim; what happened to it? Did you deny it? Did you submit payment? What’s going on?’ All of these pieces of information that people use a telephone for are actually online. You can go to a Web portal and look it up.”

The same goes for remittance questions. If your practice is missing an EOB, you should be able to find it online. Do your eligibility checks while you’re there. Aetna even allows physicians to pre-certify referrals online.

“Physicians can get more information than they think,” Karp says.

There is even a true push for real-time adjudication. Humana offers this service now on a very limited basis. Aetna says its service is coming soon. Keep an eye out for more payers to get on board over the next few years. With real-time adjudication, when patients with high deductibles or other “consumer-directed plans” check in, your front-desk staff can already know whether they still owe money on their deductibles and can collect from them then and there. The alternative? Bill the payer, wait for an EOB saying the patient owes, and then go after the patient. Good luck. It’s hard enough to collect when a patient is standing right in front of you.

Many - although certainly not all - payers also post their claims guidelines. Poke around, and you can determine in advance what the payer routinely bundles, what it won’t pay for, and everything else you need to understand how to submit a “clean” claim and get paid faster. It’s important to keep up to date with these things; athenahealth has estimated that a single payer’s rule base can easily change 30 percent in a 12-month period.

Granted, having information online doesn’t automatically make the process seamless. You still have to go figure it out. And not every payer follows its own rules all the time either. Clerical and processing errors happen on the payers’ side just as they happen on yours. But having at least some of the information online is better than not having it at all.

“It’s a one-to-many relationship,” explains Lukowski. “From the payers’ perspective, the information is out there electronically. From the providers’ perspective, they’re not going to go out to all their payer Web sites on a daily basis.”

Of course not. But you could focus on just your top five payers. Or, if, as in many offices, each member of your billing staff works only on certain payers, it’s not too much to ask them to become absolute gurus on what their specific payer sites offer.

Certainly, many practices get entirely bent out of shape over a specific denial or bundling pattern. Stop. Breathe. Take a look online - just for those making-you-crazy issues - and find out if it’s a payer rule you are violating or if you are making some sort of error. That’s better than grinding your teeth in frustration or throwing your hands in the air and giving up.

In the longer view, at least some payers are beginning to realize that they can’t expect physician offices to master 300 rules from each of their 200 different plans. “Most of the changes we’ve made are in relaxing edits rather than in tightening them up,” says Humana’s Smithson.

Both Humana and Aetna participated in efforts to make credentialing standards uniform - so you can fill out one form and send it to every payer. The same group that pushed for credentialing simplification, the Council for Affordable Quality Healthcare, is now working on a project to make payer rules more consistent - to come up with a common set of operating rules, much as the financial services industry did with ATMs. That’s not here yet, but at least someone besides physicians is looking at the problem.

“Payers are turning from ‘If we build it, they will come’ to seeing they need to partner with people to get rules into the practice work flow somewhere, somehow,” summarizes Lukowski. “Some are going straight to providers, some are partnering with third parties, but they are realizing that they can’t presume to make more work for the practice. Payers are finally realizing it’s costing them money, and they just have to solve the issue.”

Services such as those offered by athenahealth or Claim-Remedi Services strive to put all the disparate payer rules behind the scene. Their software does the detective work.

As Lukowski puts it, payers have long asked, “‘How do you teach the doctors to follow the rules?’ They are missing the point. You have to fit the rules into the work flow, and that’s what the payers are starting to learn.”

Keep up to date

Here’s a streamlining solution you can take advantage of right now: Just let payers know when there is a change in your practice. “If you have new physicians, physicians retiring, a new address, or changes to your tax ID, it’s better to let us know now than retrospectively,” says Smithson. “Otherwise, they end up doing a lot of work to make sure the claim isn’t fraudulent.”

For example, keeping your payers abreast of changes to phone numbers is mutually beneficial. Payers print physician phone numbers in their guides for members; you want that marketing. And payers want to keep members happy by giving them the right information. You can request such changes online often, Smithson notes.

Keeping CPT codes up to date is another great suggestion from Aetna. CPT codes change each year. Changes take effect Jan. 1. But many practices never update their superbills, never change their billing (or don’t do it until well after the first of the year), or never educate physicians about the changes. If a payer gets a claim including a code that no longer exists, it has to deny it.

Get a new CPT book every year, and review the changes to every code you may use. Many published editions come with helpful appendices that list new codes and those that have been deleted.

Go ahead, negotiate

Physicians and payers may simply need to agree to disagree when it comes to the contracting process. Most physicians, of course, feel as if they are offered contracts but have little real negotiating power. Here’s a typical story that Physicians Practice recently received from an internist:

“One of my managed-care plans now informs me that unless I start doing workman’s compensation, they will not contract with me. I have little experience in workman’s compensation, and none of my other payers requires this. … When I tried to protest, they said, ‘Take it or leave it,’ and then never returned my calls.”

Physicians truly believe that they are peering into a void when they attempt to discuss contracting terms with their payers. We realize it makes little sense to suggest negotiating and speaking up to people who won’t return your calls.

But the payers, while recognizing standard contracts are the norm, say they do have staff on the ground ready to talk if you want to.

“We engage with our physicians,” says Karp. “We do have standard contracts. However, we do have teams of people in each market who spend the bulk of their time with physician partners. Physicians should reach out to the payers if they have questions or issues and have the dialogue. There are physician groups that are very active in reaching out to us, but there are groups who just believe they don’t have any say.”

Asked about Humana’s negotiations with physicians, Smithson says, “We do use mailed-out contracts and hope physicians will send them back, but nobody makes them do it. They certainly can call.” He adds that the company has 200 contractors and about 100 provider reps.

That’s not quite enough, in our view, for a company whose Web site says it has more than 400,000 providers. On the other hand, physicians certainly can be a little stronger in insisting on having contracting conversations. According to data from America’s Health Insurance Plans (AHIP), a trade association for insurance companies, only 6 percent of its physician networks turned over in 2002 (the most recent data available) due to voluntary terminations (that is, physicians dropped the plan).

Really, if physicians hate the contracting process so much, it’s time for them to speak up and move on.

Now, let’s get real: No matter how much negotiation, technology advancement, and mutual cooperation take place, 2007 won’t be the year payers and physicians suddenly become best friends. But given how screwy healthcare management is, it would be great - and feasible - for physicians and payers to make the most of opportunities for better cooperation when their interests merge.

Pamela L. Moore, PhD, is senior editor, practice management, for Physicians Practice. She can be reached at

This article originally appeared in the March 2007 issue of Physicians Practice.

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