STERLING, IL – Hospitals leave too much money on the table in their dealings with payers, and need to get better at collecting what they’re owed.
Kenny Koerner, director of patient accounts at CGH Medical Center in Sterling, Ill., says one effective way to do this is by tracking underpayment variances – determining whether payers are paying in accord with their contracts.
“We track underpayment variances from month to month and so far we’ve averaged about $40,000 a month in savings on managed care contracts,” Koerner said. He noted that CGH, a 99-bed medical center, has net revenues of approximately $140 million annually.
Koerner’s office has automated its claims analysis process. His team in Patient Accounts uses ReCon software from Nebo Systems, Inc., to find discrepancies between claims as billed and payments received. He said CGH intends to expand its search for underpayment variances from commercial payers to Medicare and Medicaid.
“I’m not surprised with the savings we’ve realized on the commercial side, but I don’t really know what to expect from public payers,” Koerner said. “I’m not as confident we’ll get savings from Medicare, but these are complex payment systems, so it will be interesting to see what we can identify.”
Underpayments are a big problem for hospitals and large physician practices, said Jocelyn Piccone, chief operating officer at Wright State Physicians in Dayton, Ohio. The large multi-specialty practice is affiliated with Wright State University’s Boonshoft School of Medicine and uses technology from Austin, Texas-based Medical Present Value (MPV) to manage payer contracts.
“There is a huge problem with underpayments,” Piccone acknowledged. “It can run into the hundreds of thousands of dollars. I actually find that we have more problems with Medicare HMOs than with the commercial payers.”
Rick Derer, senior project manager at Nebo Systems, says using technology to deal with underpayments will grow increasingly important in coming years as healthcare providers face cuts in reimbursement.
“It’s more cost-effective to use revenue cycle management technology than to rely on consultants,” Derer said. “Hospitals are not just looking for a one-time windfall, but want a way to permanently monitor their systems. A lot of these problems really are curable.”