By Jane Ehrhardt

Change Healthcare found that 86 percent of claims denials are likely avoidable, according to their 2020 Revenue Cycle Denials Index. It also found that providers do not resubmit 65 percent of denied claims.

“The biggest problem with most groups we see is the follow-up after the payment comes in from insurance company,” says Bill Cockrell with Medical Billing and Consulting Services (MBCS). “The payer might only deny a portion of the claim, rather than the whole thing; or maybe they didn’t pay the claim in full. Just because they say it’s not payable, doesn’t mean it isn’t something fixable.”

With the claim, the insurer includes an explanation of benefits that states the doctor’s fee schedule for the services, the payer’s fee schedule, what the patient is responsible for, and then the contractual adjustment because of the billing agreements between the provider and the payer. For instance, a doctor may charge $100 for an office visit, but the fee schedule with the payer is $75.

“So if the claim was filed correctly, the physician should get $75 minus the patient copay,” Cockrell says. “If the payer doesn’t pay that full amount, there has to be a reason, and that shows on the explanation of benefits as a rejection code. Some groups always write off that unpaid difference rather than refiling.

“But that write-off could be lost revenue from something as simple as resubmitting with a corrected or missing modifier that would rectify the insurer’s fee. Or it may only need the submission of a missing piece of documentation.”

The contractual adjustment — the difference between what the healthcare provider charges and the agreed-upon amount the payer will reimburse — are an unavoidable write-off. Some practices staff a clerk to review claims and write off these contractual adjustments. “What we see happen is some groups just write off everything the insurance company didn’t pay,” Cockrell says. No reviews, no refiling.

Sometimes the write off happens simply because the clean claim window closed, which generally allows a minimum of 90 days up to a full year, depending on the insurer. “We see that more often than you could believe,” Cockrell says.

The unchecked write-offs often become the norm rather than a stopgap. “The group becomes comfortable doing that because sometimes they don’t have time to deal with it,” Cockrell says. “If you don’t write it off and don’t do anything else with it, your accounts receivable isn’t realistic. It’s not reflective of how well your business is doing.”

The solution is a new layer to the review process. “Someone on staff needs to go through and match the electronic payments with the explanation of benefits to make sure the payer is covering all they should be,” Cockrell says.

Use the adjusted collections rate to assess the efficacy of collected reimbursements. Divide payments (the net of credits) by charges (net of approved contractual agreements) during a specific time frame. Then multiply by 100 to get the percentage. That number reflects how much of every fee allowable is being collected.

“Typically, you should be collecting 97 percent,” Cockrell says, leaving 3 percent bad debt, which allows for things such as patients not paying. “If that number is 100 percent, I know from the start they have problems, because the only way to do that is to write off everything—what the insurance didn’t pay and what the patient did not pay you.”

The amount of revenue lost can be staggering. “It’s not unusual to cover our fees in what we’re able to do to help groups by doing a better job on follow-up,” Cockrell says. For one group, the follow-ups improved their gross collections by 5 percent. Even increasing gross collections by 2 percent in a million-dollar-a-month practice would add another $240,000 revenue a year.

Yet physicians usually balk at hiring additional office staff or outsource the billing in order to right the reimbursement process to generate the most revenue. “They see it as costing them money, rather than looking at it as this is going to improve my bottom line,” Cockrell says.

They also tend to not fire those staff responsible for the ongoing and often notable loss of revenue over significant time. “They don’t chop off people’s heads. They say, we gotta fix that and not let it happen again,” Cockrell says.

“You don’t know you lost it, if you never see it,” Cockrell says. But once that lost revenue comes to light, move quickly to realign the claims-handling processes. Because time results in actual money, when it comes to refiling claims.