Managed Care Contract Negotiations
Aug 31

Are you monitoring managed care reimbursements?

How does a practice really know for sure it is receiving the correct reimbursement from its managed care payors? According to an informal polling of practitioners at a recent health care conference, over 50% of the participants indicated errors have been  found with regard to what the medical practice was contracted to receive as payment and what the managed care company actually paid for the service. For example, the practice was contracted to receive $44 for visit code 99213 from ABC Managed Care Company but the Explanation of Benefit (EOB) indicated only $38 was paid. This type of situation seems to be occurring with increasing frequency.


Managed care companies do make mistakes and it is up to the practice to catch these mistakes and file an appeal for the additional reimbursement. Catching reimbursement errors can be extremely difficult for many practices, especially smaller ones. Small practices often do not have the time nor the personnel to pay attention to this type of activity, as important as it is. A software system such as the one described above can help.


At a minimum, a practice should have a system in place to spot check managed care reimbursements. The easiest is a manual system whereby each week a sample of managed care reimbursements are reviewed. Here is the process for a manual system:


1.    Obtain reimbursement rates for the top 25 revenue producing CPT codes of the practice. Place them in a spreadsheet for easy access. These should be obtained from the top 10 to 15 managed care plans the practice generates revenues from.

2.    Each week, take a sample of reimbursements from these plans (the practice can decide which ones) and compare the reimbursement per the EOB to the spreadsheet.

3.    If an error is found, file an appeal immediately.

4.    If errors continue to be consistent for a particular payor, meet with payor representatives if possible to discuss why such mistakes are occurring and how they can get corrected.


A manual system of this type can be cumbersome so each practice will decide how to implement such a system. The point to be made is that managed care payors are making mistakes and practices must have a way to detect the errors so as to get paid correctly. Hopefully instead of a manual system, the practice's computer system will be able to detect the errors.


About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →