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 July 2007
When "Paid in Full" Isn't
Providers nationwide are being bombarded with the latest wave of pricing companies, discount brokerages and bill audit firms that are setting up shop. A large number of non-contracted payors are no longer seeking to push their claims through the contract of a more well-known, contracted payor, but are instead employing the services of these "audit" firms to lower their costs on members' visits.
A recent encounter at one of our clients' facilities involved a patient that presented with a card from a non-contracted payor, but was assigned to a PPO network that our client had been contracted with for many years. However, the contract pays a straight percentage of charges, a percentage that was apparently too high for this payor. The claim was sent by the insurer to an "audit firm," who offered the facility what they considered to be a fair amount for the claim. When Health Check contacted the firm to request the payment in full on the claim, we were told that due to the cashing of their check, which contained a restrictive endorsement, no monies were due on the claim.
The check contained an endorsement that stated that the acceptance and endorsement of the check was acceptance of the amount as payment in full on the claim in question. While that may appear to be a legally binding document, often times it is not. The Uniform Commercial Code (UCC) offers providers the necessary tools to both deposit the check and continue to seek payment in full on the claim. Statutes clearly state that a payor cannot use a restrictively endorsed check to discharge a claim if the payee is an organization, which nullifies the argument when a healthcare facility is involved.
The code goes on to state that in order for a restrictive endorsement to be binding on a check, both parties must have agreed on the debt in order to prove an accord and satisfaction. As long as your business office has not agreed to the payor's lowered reimbursement, this accord and satisfaction has not been established and the endorsement bears no legal merit. Employees in your business office cannot be required to evaluate the legitimacy or merit of a restrictively endorsed check. If the check was received at a lock-box, then certainly no agreement is indicated by cashing the check. However, if the check is sent to a person with the authority to determine such legitimacy, the endorsement may hold up in court.
If a provider can prove that a payor is regularly endorsing checks with these types of restrictions, they may be able to place that payor in violation of UCC. The code makes the practice of consistently printing such language on checks a lack of good faith on the part of the payor and once again nullifies any ramifications of depositing the endorsed check.
What can you do to avoid such tactics? The first, and most time-consuming, is to notify all payors that your facility does not accept restrictive endorsements as legally binding. Alerting payors to this fact immediately annuls any language on checks you may receive from that payor in the future that contains such restrictions. Another option is to alert your business office to the on-going problem. Any check you receive with such an endorsement should be a flag to generate a notice to the payor that while you will be depositing the check, accord and satisfaction has not been established and you will be seeking full payment on the claim.
New Quarterly Client Reports
If you are a Health Check client, you have already seen the new Quarterly Report format that uses easy-to-read charts and graphs to convey key underpayment and payor information that is important to you and your staff.
The reformatting of our Quarterly Reports is just one example of Health Check's  constant pursuit to provide its clients with not just the highest level of managed care auditing and recovery services, but also to be an effective partner with its client by providing key performance information that the facility can use to capture more underpayments up-front and to more effectively negotiate beneficial contract rates and terms.
While the Quarterly Reports are intended to quickly update clients on the latest trends, underpayments, and recoveries- all by payor and issue- our Annual Reports to clients go much deeper. These reports not only inform our clients which payors are consistently underpaying them, but how they are doing it and how the hospital can avoid the underpayments in the future. We even include case studies from your hospital that can be used as a training tool for your staff.
In addition to sharing information regarding our auditing services, Health Check also conducts a thorough analysis of all managed care accounts from the year. Our report includes reimbursement analysis by payor, by service type, and even by DRG. Using CMS rates and hospital cost data, our financial analysts highlight services being performed at your facility that are being underpaid, and should be addressed in the next contract renegotiation.
To learn more about Health Check's client reporting as well as our managed care auditing services, please contact Charles Fullet at 800.633.2055.
Collection Staff Training
At a client's request, Health Check has recently developed a training program designed to enhance a facility's managed care collection efforts. The session combines valuable information with case studies and role playing to provide your staff with the tools and skills to more effectively recover underpaid or denied accounts.
Topics include:
- Identifying Silent PPO activity
- Making effective benefit calls
- Calling insurance companies to get claims reprocessed
- Writing appeal letters
- Timely filing/ timely appeal issues
- ERISA claims
- Medical Appeals
To learn more about this training program, or other ways that Health Check helps providers recover all of the money due to them, please contact Christy Gainous, Director of Revenue Recovery at 800.633.2055.
Hospitals Cannot Compete with Large Insurers' Profits
According to the American Hospital Association (AHA), 25% of hospitals lost money during 2005. In their Treadwatch Chartbook 2007, the AHA reported that the average operating margin for American hospitals was 3.6% during 2005. This margin included revenue from non-medical services, as well.
Large insurance companies, on the other hand, are experiencing much higher profits. The top four insurance companies (Aetna, WellPoint, United HealthCare, and Cigna) had an average operating margin of 10.75% during 2005. UHC alone made almost $4B during 2005- and more than $5B during 2006.
If these numbers weren't distressing enough, reports indicate that between 3% and 15% of commercial revenue goes uncollected by hospitals each year. This represents between $6.8B and $32B that is due to hospitals each year.
In response, many hospitals have invested in software to identify underpayments, or have developed internal recovery units within their Patient Financial Services departments. To find out how Health Check can help compliment the initiatives you already have in place, please contact Marc Mertz at 800.633.2055.
Who's Running the Show?
Today, almost everyone understands that private computer networks must be protected from perils posed by the public internet. Workforces have become increasingly mobile, carrying corporate laptops, BlackBerries, and more, from work to home to hotspot, and back to work. Most offices are now visited daily by guests, vendors, contractors, and other users who require some degree of public or private network access. Hundreds of regulations now exist worldwide that require organizations to not only secure affected networks, systems, and/or data, but to prove they have done so through logs and audits.
These changes, events, and regulations have caused many organizations to reconsider internal network security policies, implementations, and practices- in many cases, following C-level mandates ordering IT executives to beef up security and eliminate risk.
The result? Organizations begin to align business processes with information security initiatives, when in fact, the role of Information Technology is to enable the business processes and empower the organization. Guests, vendors, contractors, and others that contribute to the organization's bottom line begin to be shut out. Subsequently, the struggle begins to minimize the effects on an organization's capital and earnings.
When considering new system strategies and security implementations, decision-makers should not only consider risks associated with information loss and network breaches, but financial, strategic, operational, and other risks, as well.
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