Managed care tactics are changing these days and healthcare institutions need to be vigilant when dealing with denied claims, said an industry expert at the Maine Chapter of the Healthcare Financial Management Association's annual meeting on Thursday.
"We could recover money for providers every day, but we want to teach you to fish on your own," said Linda LiCalsi, senior vice president of Managed Care Services at Med Assets.
Only about 20 percent of Preferred Provider Organizations, or PPOs, are learning to "fish" for denied claims, and about 50 percent of hospitals with denials are "fishing," she said.
LiCalsi discussed the case of a state hospital association that reviewed three years of historic payments across 20 hospitals, which revealed that the effective rate of reimbursement averaged 90.1 percent of contracted/expected rates (excluding patient liability and time value of money).
The revenue was well below projections and the hospitals incurred the added expense of challenging each denial.
According to LiCalsi, payers can employ split billing and rebilling to deny and delay payment. She said language should be written into contracts in order to prevent such instances. MedAssets recommends that hospitals manage contracts better in order to avoid the "hidden denials" part of the payment game.
LiCalsi also indicated that "Silent PPO" syndrome can also be an income killer. PPO members lack financial incentives to visit "preferred providers" and may not even be aware that they are part of a network.
"The only thing worse than a denial is a denial you don't know you have," LiCalsi said.
In order to start catching "sneaky denials," LiCalsi said hospitals should employ a cross-functional "contract review" team to discover and understand the relevant issues.
Hospitals also should not use patient accounting systems for denials tracking. "It's not what they're made for," LiCalsi said.
Microsoft Excel is cost effective, but it is prone to errors, and integration is not an option. MedAssets recommends access systems over Excel, because they are cost effective. LiCalsi said building a custom system or buying a system is the best way to avoid denials.
"If you don't have a way to track, how are you going to know you have denials?" she asked. "Contracts are an essential part of how reimbursements are done. Be careful to use proper language that is enforceable."