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Revenue Leaks and Payer Issues

By Featured article

Practices need to identify and minimize their financial risk in order to stay viable. One of the biggest concerns are the issues with payers. Patients are dealing with rising costs for premiums and deductibles, and they may be paying more out­of­pocket for medications and co­pays, often with a cap or limit to their out­of­pocket costs. Practices are being required to get an increasing number of prior authorizations on treatments and contend with tiered or step therapies. In addition, more and more insurers are requiring the patient to use a specific specialty pharmacy. Each of these issues complicate the process between payers and patients, allowing financial mistakes to be made and opportunities missed.


Depending on your practice, office managers or the billing manager should be reviewing contracts consistently and verifying that payers are submitting payments for the contracted allowable. Questions to ask include: Does your practice know what services should be paid? Are there services like laboratory tests which are not payable to your office? Does a particular patient need to go through a specialty pharmacy for treatment medications?

Practices also need to know their contracted allowable for each service, and at least the larger payers should have their allowable amounts loaded into the practice billing program. This will make it easier to monitor payments that differ from the contract price. Software programs can be set up to flag electronic payments as they post so that staff can check to see payments are accurate.

The payer contract details play an important role in plugging revenue leaks. Practices needs to understand:

• The appeals rights and process with each individual payer
• Who determines medical necessity for the patient
• The state regulations by payer for late payments
• The process for audits and reviews, including the limitations on retrospective audits. This last detail is very important to be included in the contract.

Recently, some payers have issued a “credit card” to providers as payment for their services, but could include a transaction fee as high as 5% per transaction, resulting in a decrease off the negotiated payment rate. The AMA released an FAQ on the payer cards, but recommends that practices review payer contracts to see if they are required to accept the cards as a method of payment.