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Managing Payer Contracts: Is Your Practice Being Paid Correctly?

Jul 25, 2023
Annette Wirkus

Verifying the accuracy of each health insurance claim payment can be a challenge for busy providers. But as the cost of doing business continues to rise, it’s one your practice can’t afford to ignore.

In 2013, the American Medical Association estimated that 7 out of every 100 health insurance claims were paid incorrectly. Despite industry-wide efforts aimed at improving these statistics, claims payment errors continue to be an issue for medical practices nationwide.

How do you know if this is happening within your practice? With multiple payer contracts outlining varying levels of reimbursement, verifying the accuracy of each payment can be a challenge, as it typically involves analyzing large amounts of data from your practice management system. But as the cost of doing business continues to rise, it’s a challenge your practice can’t afford to ignore.

Here are a few tips for ensuring your practice is paid correctly for the care it provides.

Understanding Your Insurance Payer Contracts

Depending on the payer, your contract may stipulate a set fee for each service charge—i.e., Current Procedural Terminology® code—or it may reference a conversation factor. Some payers may include a clause that requires them to pay only a percentage of certain billed charges. Understanding the terms each payer follows will help you identify what to look for when verifying a payment.

Start With Your Big Fish

You may spend a substantial amount of time and effort determining whether or not a payer is making accurate payments. For this reason, start with your “big fish”—i.e., the insurance carrier that represents your largest book of business.

Charge At Least As High As Your Highest-Paying Payer

It’s not unheard of for a practice to charge less than what a payer has agreed to reimburse. For instance, if your best-paying payer will pay $100 for a service visit, but you only charge $90, you’re leaving money on the table. Or, if a payer will only pay, say, 80 percent of the billed charge, and your billed charge isn’t sufficiently covering the bills, you could be jeopardizing the financial health of your practice

Don’t Forget About Modifiers and Relative Value Units

Reviewing payments for each CPT code is a good place to start, but it’s important to account for modiers and RVUs, too. Are your payers accounting for modifiers attached to your CPT codes? Are they referencing accurate and up-to-date RVUs? Is their conversion factor in line with your contract?


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