Medical professionals collect reimbursement payments from a variety of sources. Known as payers, they encompass commercial insurance companies, third-party administrators and government-funded programs.

In part 1 of this revealing article, Nitin Chhoda identifies the major commercial payers and third-party administrators, and what clinicians need to know to obtain reimbursements.

A wealth of commercial insurance plans payer exists to help individuals pay for medical expenses. That includes preferred provider, point of service, health maintenance, and discount plans.

To ensure that services are paid for, practitioners must verify the client’s coverage each time they visit the office and ascertain any limitations as it will have a direct bearing on treatment options.

When contracting with a payer, it’s important for clinicians to know if the insurance company is the entity that actually sets the amount that medical professionals are reimbursed. Some participate in a payer network that determines how much practitioners are reimbursed for their services. Some networks pay better than others and clinicians should exercise due diligence in researching payers.

Commercial insurers
The most common form of insurance practitioners will encounter is the commercial policy, typically offered through the patient’s or spouse’s employer. This type of coverage will fall under one of the following:

•    PPO – A preferred provider network is a group of healthcare professionals and facilities that have agreed to provide services at reduced rates.
•    HMO – Health maintenance organizations rely on a network of healthcare providers, but clients are assigned a primary care physician and care must be accessed through that physician.
•    POS – Point of service coverage is a hybrid blend of a PPO and HMO payer. Patients who visit an HMO medical provider are covered under HMO benefits. If they see a PPO provider, they receive coverage through the PPO.

•    EPO – An exclusive payer or provider organization plan requires patients to select a primary care physician and obtain a referral before seeing a specialist.
•    High deductible plans – These offer patients low monthly premiums and deductibles that can begin at $4,000 or more.
•    Discount plans – These plans require patients to pay a monthly fee to obtain access to participating providers. They’re not true healthcare insurance plans.
•    COBRA – Coverage under a Consolidated Omnibus Budget Reconciliation Act plan is a payer that is dependent upon patients making their monthly payments on time. If a payment is late, claims will be rejected or the coverage cancelled.

A COBRA plan is interim coverage when an employee loses or leaves their job.

Third-party administrators
A third party administrator (TPA) or payer is the middleman of healthcare. TPAs are operated as an independent network, or price claims by accessing other networks.

They handle claims for employers who insure their own employees rather than participating in a commercial group program.

Reimbursement problems can arise for clinicians if the TPA prices the claim incorrectly or the claim isn’t paid according to the individual TPA agreement.

Before contracting with a payer, it’s essential for practitioners to determine which entity sets the cost of services and what those payments will be to the practice.

Different networks and commercial insurers for medical billing have their own set of rates and reimbursement requirements that must be met for clinicians to be paid and practitioners must conduct sufficient research to ensure they’ll be reimbursed appropriately.

A structured medical practice is essential to ensure that reimbursement claims are submitted in a timely manner.

Missing, lost, misplaced or improperly filed patient records creates unnecessary medical billing delays and interrupts the flow of funds into the practice.

Organization is the key to a well-run practice that treats as many patients as possible and generates a steady stream of reimbursement claims for medical billing and coding specialists to process.

In the absence of clear cut rules, direction and procedures, waste and chaos results. Distracted billers can make costly mistakes.

Filing practices
Maintaining accurate and easy to access patient records is essential if a biller is to do his/her job. The information contained within the patient’s record is the basis upon which reimbursement claims are filed.

Incomplete, inaccurate or illegible records cause delays in medical billing and can easily result in a payment denial or rejection. The information needed to obtain payment must be maintained in a manner that allows billers to quickly access the information they need to submit claims.

Each to his own task
In smaller practices, staff members may be required to wear a variety of hats, including the clinic’s medical billing and coding specialist. While it’s possible for a clinic’s healthcare staff to multi-task by answering phones, looking up records, scheduling appointments and communicating with other healthcare facilities and pharmacies, it’s not conducive to medical billing practices.

Each team member should have set responsibilities and clear cut job descriptions to avoid wasted effort. That’s not to say that personnel shouldn’t be cross trained to handle other duties should the need arise. Clinicians need to plan for such contingencies and ensure staff has a clear understanding of what to do in specific circumstances.

Set office hours
Setting regular office hours allows patients to know exactly when the clinician is available and keeps practitioners from being pulled in too many directions at once. Scheduling appointments to see clients allows providers to best utilize their time and provides medical billing specialists with a steady stream of claims to submit throughout the day.

Some healthcare professionals prefer the walk-in method of seeing clients with no appointment necessary.

It eliminates the problems of cancellations and no-shows, but there’s no way to ascertain how many patients may or may not arrive.

Clinicians could find their medical billing specialists have few reimbursements to submit.

A well-structured office is one that operates efficiently and where every detail of a patient’s visit is carefully documented and filed for retrieval by the practice’s medical billing specialist.

Careful organization and an eye for detail ensures that billers have the information needed to process reimbursement claims to maintain a steady cash flow into the clinic.

The way healthcare insurance is viewed and paid for has evolved significantly over the last century and the law of supply and demand is the rule of the day.

The business of selling insurance is a multi-million dollar industry, the sole purpose of which is to make money for the company providing the services.

Patients no longer visit their local insurance provider to obtain coverage. Insurance is packaged and sold like cars and the latest deodorant through state-of-the art advertising agencies.

Supply and demand dictates that if there’s a consumer need for a service or product, someone will provide that product or fill that need.

The Law of Supply And Demand

Consumers mistakenly believe that as more customers enter the market and purchase insurance, the cost will eventually go down. In a capitalistic system, that’s not necessarily true. If the revenues to be made are great enough, the cost will continue to increase as insurance providers strive to make ever greater profits.

Healthcare insurance providers charge the maximum amount that the market will allow for premiums.

The result is that consumers pay more for their healthcare insurance and malpractice insurance continues to skyrocket for medical professionals. Practitioners must charge sufficiently for their services to cover these costs and make a profit, while remaining competitive enough to attract new clients.

Payments versus Actual Costs

Healthcare insurance typically pays hospitals, labs and medical providers a set fee for services. In many instances, that payment doesn’t cover the actual costs involved.

Medical professionals must then decide if they will accept the insurance reimbursement as full payment, bill the difference to patients and face additional costs involved in collecting the debt, or if they want to offer the service at all.

To offset costs, medical providers need to create multiple revenue streams. Depending upon factors that include geographic location, clientele, patient load and availability, clinicians can do this through a wide variety of means. They can charge parking fees, write a book, schedule speaking engagements, add new services or develop new products.

Playing the Money Game

The primary way practitioners are paid is through reimbursement claims, which is normally prepared by medical billing professionals, to insurance companies, but there’s a dirty little secret lurking in the shadows. Insurance companies invest the funds they collect from clients to make more money. Each month that the firm can retain those funds, the company makes more on its investments.

That means healthcare providers are often forced to wait for up to three months to be reimbursed for their services. Insurance providers have teams of specialists whose job it is to calculate the fair market price for medications, office procedures and surgical interventions.

Insurance companies say these teams are eliminating waste, but the truth is that their job is to identify ways to reduce reimbursements paid to medical professionals.

Clinicians who choose not to offer specific services run the risk of losing clients to competitors who do.

If they accept insurance company reimbursements as the total payment for services rendered, they lose money.

Increasing patient numbers is one way to grow a clinic’s revenues, but creating multiple revenue streams is the most desirable. Funds coming in from a wide variety of sources will benefit practices in times of feast or famine.