Summer 1998 VOL 3, No. 1
THE MEDICAL REIMBURSEMENT NEWS LETTER
Billing, Accounts Receivable, and Writeoffs
Summer 1998 VOL 3, No. 1
THE MEDICAL REIMBURSEMENT NEWS LETTER
Billing, Accounts Receivable, and Writeoffs
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For various reasons we have found that companies lose control over their billing, with results that can be devastating. For instance, if a bill for drugs comes to $1,000.00, and the
insurance carrier pays only $500.00, the financial officer is faced with some choices, if it indeed comes to his attention. The payment is shown as either paid in full, or on account. If
it is shown as paid in full it must be explained by a case management agreement, or a managed care agreement. If there is no such agreement, then it cannot be shown as paid in full, and
the $500 shortfall must be shown as an accounts receivable. An effort should be made to collect it, either from the insurer or the patient, and on failure, it must be written off. If it
is only one bill the problem is not a serious one. But if the treatment is for Lyme Disease, or AIDS, the problem can become a big one. That same bill may be repeated many times over a
period of a year..or more. Thus, if the total treatment amounted to about $200,000, as it could in the case of AIDS or Lyme Disease, and only $100,000 is paid, then you have sustained a
$100,000 loss, unless you do something about it.
But the problem really becomes serious when you're billing people, seeing that you have sent out many bills at $1,000.00, and only $500.00 is paid, decide that it is useless to keep sending out bills for $1,000.00, and send out bills for $500.00 instead. If you look at the pattern of activity you may find that after sending out a series of bills for $500.00, the insurance company may start to send out only $250.00 in payment. If they paid only 50% when the bill was $1, 000.00, then they might very well pay 50% no matter what the bill is. This series of invoices could then threaten the life of the company. This could happen if the account is case managed, or there is a managed care agreement. It could also happen if there is neither. The CEO is too busy trying to raise money, the CFO is too busy trying to file reports, and the COO is too busy trying to get more business, or seeing to it that the patients are all being taken care of. If there is any turnover in the billing or in the reimbursement sections the new people possibly came from a company that went out of business because of a similar pattern of events. Why does this sequence occur? Every insurance company proclaims that they pay according to their "usual and customary" rates, have the case returned to you immediately. We have collected additional moneys in about 90% of these cases. The difficulty with these cases is that the collection agency reports to the provider that no money is owed. That is what the insurer or the ERISA plan stated because they paid according to their "usual and customary" rates. But the collection agency is not aware, and perhaps you are not, that "usual and customary" is an ambiguous term, but it does have a meaning in court. Thus, the courts, and indeed some insurance policies, define it as follows: "Usual" means the usual charge that you the provider makes for this type of treatment. "Customary" means the usual charge that other providers in that locality charge for that type of treatment. Insurers or ERISA plans seldom survey the locality to discover what others charge. Thus, they must accept your charges, unless they can prove that your charges are unreasonable, which is never the case. Collection agencies cannot be expected to make such a determination, and in many cases they will simply tell you that the insurance company paid "their" usual and customary, and expect you to close your file except as to the patient. DO NOT ACCEPT THAT from the collection agency. Take the case back. Find an attorney who understands the meaning of "usual and customary", and start suit. DO NOT CLOSE THAT FILE. YOU CAN COLLECT MORE MONEY. Above all, if you send out a bill to an insurer, and they have paid an unreasonable amount, claiming that that is their "usual and customary" rate, start suit immediately. Do not send these cases to a collection agency - they are not equipped to handle it. DO NOT ACCEPT THE INSURER'S "USUAL AND CUSTOMARY" For instance, if CIGNA, for example, pays 1/2 or 1/3 of your bill, deposit the money and find an attorney with knowledge, or call this office. We know of one case where CIGNA paid 100%, 28%, 65%, 55%, and ZERO, for the same treatment for the same patient, during a period of 2 months. That case is in litigation. These are some of the rules you should follow. Above all, keep a tight rein on your collection agency. |