Netting the A/R
What are the advantages or disadvantages to billing a commercial insurance company our negotiated rate according to our fee schedule with them, as opposed to billing our regular, higher rate?
Question: What are the advantages or disadvantages to billing a commercial insurance company our negotiated rate according to our fee schedule with them, as opposed to billing our regular, higher rate?
Answer: Charging the payer only its allowable is called "netting the A/R" or "netting the charges" and it creates three problems:
- It misrepresents your usual and customary fee, meaning the insurance carriers will start loading in lower fees.
- It might cause you to miss an opportunity for a higher payment if you guess at the allowable or if the carrier has changed it.
- Your gross charges become meaningless, so reporting on this data point is difficult.
Some practices do indeed net the charge, but it's rare.
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