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Seven to over ten percent of your practice’s revenue is being lost if your medical billing service is not systematically comparing your insurance payments to the amounts allowed in your payer contracts. Any competent medical insurance billing service should offer this feature as part of their standard service.

If you make the decision to outsource medical billing or are currently outsourcing, then there are a number of critical tasks and process steps that your medical billing service should provide. These include scrubbing claims before they are submitted, systematic follow-up on submitted claims, posting denials, pursuing underpayments, using patient expected payment scores just to name a few.

Pursuing underpayments is the focus of today’s article. This pursuit begins first and foremost with comparing the payment information from EOBs to the allowables outlined in the practice’s payer contracts. This comparison must be done in an automated manner and cannot rely upon payment posters catching the underpayments on their own.

Payers have adopted underpayment techniques that are too difficult for a payment poster to spot on their own. Medical billing companies can design their process to battle payers underpayment techniques because they have an advantage over individual practices - they see EOBs for a given payer across multiple practices and multiple states. The enhanced scope allows medical billing companies that pay attention to identify patterns that might be overlooked by individual medical practices.

As billing companies look across multiple clients they will frequently see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all of their clients. The following month they will see the same payer switch to underpaying a different set of CPTs.

These underpayments are not huge (5 to 10 percent) but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount “under the radar” can make the underpayments difficult for an individual practice to spot.

Needless to say, it would be difficult for a payment poster to remember enough about the allowed amounts across a practice’s tens of payers and dozens of CPTs to spot the underpayment strategy described above. This is why it is critical that automated comparisons be performed by your medical billing service.

Identifying and pursuing underpayments can yield big returns for a medical practice (the average practice can increase collections by 7%). Therefore, it is imperative that your billing service is aggressively pursuing these underpayments on your behalf.

After the underpayment has been noticed it must be relentlessly pursued - this is what actually leads to top line improvement for your practice. Even the small underpayments cannot be ignored - to do so will invite larger and more frequent underpayments. Payers are constantly testing their boundaries. If they see that you respond at the first sign of stepping across the boundary they will quickly fall in line and pursue less vigilant targets.

Copyright 2008 by Carl Mays II