The hidden opportunity to significantly increase profits: Maximizing out-of-network reimbursements

In a webinar hosted by Becker's Hospital Review and Rockville, Md.-based Collect Rx, John Bartos, JD, CEO of Collect Rx, highlighted the importance of out-of-network reimbursements for hospital leaders looking to improve profitability.

In the current hospital environment, many organizations are taking a financial hit on the reimbursement front. With few opportunities to increase reimbursement rates on managed care contracts and no opportunities to increases rate on Medicare and Medicaid cases, hospital leaders need to begin looking elsewhere to improve their bottom line.

Additionally, hospitals are hurting due to thin margins and, for many, having to pay back Medicare reimbursement for readmissions. This year alone, roughly 2,610 hospitals had to pay up to three percent of their Medicare reimbursements — a collective total of $428 million — as a penalty for high readmission rates.

Given the recent shift in reimbursement rates, learning how to maximize out-of-network reimbursements to increase profitability and combat insurance companies' efforts to reduce out-of-network reimbursements has become essential, according to Mr. Bartos.

For hospital leaders, the out-of-network market presents a huge area of opportunity. Annually, roughly $60 billion of claims made are out-of-network. Continued enrollment through the PPACA, growth in PPO enrollment and an increase in the number of people demanding insurance policies with out-of-network benefits means there exists a demand that hospitals can meet.

Mr. Bartos outlined three processes payers use to reduce out-of-network payments to hospitals and three strategies for how Collect Rx combats insurance companies' tricks.

Payer process: Pre-payment negotiations. Often times, the vendors who work for insurance companies receive more than 10 million out-of-network bills each year. Every time a new bill is received, the vendors use computer algorithms to determine which bill reduction tactic will yield the lowest possible payment to the provider.

The first tactic is for insurance companies to contact providers directly and negotiate a large discount after services have already been provided but before any payment has been made. Frequently, these are initiated by the vendor faxing the settlement proposal to the provider with a short turnaround period for response and the condition that a lack of response will result in the bill being repriced at a much lower amount.

Collect Rx strategy: Collect Rx can negotiate settlements for providers. In fact, on eight out of 10 bills sent to Collect Rx, a negotiation for 90 percent to 100 percent of bill charges was settled.


Payer process: Post-payment repricing.
The second tactic of insurance companies or their vendors is to reprice out-of-network bills down to what is considered reasonable and customary, which is typically close to the Medicare rate at around 50 percent or less of bill charges. Sometimes the bill isn't paid at all because the bill is denied or unreasonably delayed.  

Collect Rx strategy: The Collect Rx post-payment strategy is to appeal. On 50 to 100 percent of cases, Collect Rx is able to get the insurance companies to increase the payment and send the providers a second check.

To successfully win appeals, providers need to have resources to dedicate to the appeal and audit process as well as the expertise to translate explanation of benefits documents and document all calls with the payer.

Payer process: Third party rental network contracts (silent PPOs). Third party rental network agreements are agreements signed, not with an individual payer, but with a third party that contracts with a lot of payers. Typically, these contracts are not favorable to providers or patients since the insurance companies are actually the customers of the third party.

Collect Rx strategy: Although tempting since they are easy to implement, Collect Rx does not recommend providers agree to third party contracts.


 

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