Failure to keep a close eye on payment variances can result in the loss of hard-earned revenue. Unfortunately, it has become one of the major reasons that healthcare providers lose millions of dollars annually.
Are you successfully analyzing the payment variances to keep your healthcare business afloat? If not then what are the major hurdles that hold you back from doing so? The answers may be different. But the majority of the medical care providers have said that: lack of complete understanding including causes and solutions for payment variances is the major reason behind unpredicted revenue loss. However, for the convenience of the physicians, I have compiled the complete information. That can help them to tackle the financial challenges efficiently.
Payment variances are also known as healthcare underpayments have become a silent revenue killer for healthcare practices of all sizes. It occurs when medical practitioners fail to get complete reimbursements from the insurance companies due to certain reasons. However, it has been observed that the majority of the healthcare providers are still underpaid despite delivering the standard medical aid to the patients. That negatively impacts the revenue cycle management and sustainability of a healthcare practice.
According to a report, in 2017, just Medicare & Medicaid reimbursements for the healthcare services rendered fell $76.8 billion short. As compared to the actual costs of the particular medical procedures. Unfortunately, the statistics are worsening day by day. As the growing complexities in managing the physician billing services has added fuel to the fire. Because of the inefficient management of medical claims
and payor contracts. Physicians aren’t collecting what they’re actually owed.
It can be very overwhelming for healthcare practitioners to end up with partial payments. It leads to significant revenue loss and cash flow disruption. So, healthcare providers can’t afford to lose even a single penny. Particularly those who are already on a tight budget. One can’t deny the fact that without consistent cash flow, the healthcare business can’t survive for a long time period.
Root Cause Analysis
So, instead of pushing your medical practice towards risks. Physicians should pay special attention to identify the root causes for payment variances. Then they should implement smart medical billing solutions to eliminate the red flags and elevate the profit margins.
The causes of payment variances land in two major categories. The first type of variances takes place when insurance companies update their payment systems due to certain reasons. Such as: new schedule for a new contract. On the other hand, the second major reason is the unsuccessful configuration of the payment systems, changed by the payers.
The most common reasons for underpayment are included:
- Wrong interpretation of contract terms as compared to the insurance companies.
- Invalid pricing of medical claims
- Submission of incorrect medical claims.
- Incorrectly calculating allowed amounts
- Insufficient documents that support medical necessity.
- Wrong interpretation or implementation of the contract as compared to the healthcare providers.
- Failure to identify and address the billing errors in a timely manner.
- Not catching underpayment early.
How Can You Analyze Payment Variances?
In this challenging era, where physicians are struggling to get out of the economic downturn. Collecting every single dollar either from patients or insurance agencies has become the primary objective of every healthcare provider. Here’s a question that arises: how can physicians analyze the payment variances in their medical billing systems? To get the answer, read the article carefully. I have mentioned some proven ways to figure out payment variances.
Modifiers play a crucial role in getting reimbursements from insurance companies. They are being used to describe the additional medical procedures performed. Modifiers indicate the rendered healthcare services were altered by some specific circumstances. They are used to improve the specificity of the medical care services in order to get complete payments from the insurance companies.
Nevertheless, using incorrect modifiers eventually results in claim denials
and sometimes partial payments. For instance, it might be possible for some additional medical procedures or surgeries reimbursed at different rates. Such rates are highly dependent on whether it is the first procedure or the fifth. So, if the collected payments are less than the actual treatment costs. Then you should recheck the modifiers and make sure that they are clearly describing the situation.
The best way to enhance the accuracy of medical coding and modifiers. It is the responsibility of the healthcare providers to ensure the accuracy of the medical documentation first. Because medical coders and billers extract the information about patients’ diagnoses, treatments, medical equipment and services through physician notes or medical transcriptions. Accurate clinical documentation and modifiers increase the chances of reimbursements.
2. Fee Schedules & Contract Compliance Policies:
In order to uncover the payment variances. Medical practitioners should analyze that whether or, not they remain current with contract compliance policies
and fee schedules. They must have a complete understanding of the payer-provider contract and the fee schedule of insurance companies too. If the concerned payer isn’t paying according to the negotiated rates, that was mentioned in the contracts. Then it’s a clear reason that you are underpaid.
In this way, you will become able to take action against the payers and streamline your reimbursements as well. You must have a well-trained team that can handle the underpayments in an efficient manner. If they found any violation of the contract, they should immediately come into action. And prepare themselves to negotiate with the payers to drive positive financial outcomes.
Furthermore, the best thing you can do is keep your practice management systems updated with the latest fee schedules and contract compliant policies. Which enables billing staff to make a quick comparison of actual costs and received payments.
3. Conduct Regular Medical Billing Audits:
Conducting regular medical billing & coding audits help providers to know the level of accuracy of all health records & billing data. Careful analysis of the audit reports will uncover the areas of improvement in physician revenue cycle management. And healthcare providers will also get to know the main factors resulting in underpayments. As a result, you can implement the best solutions to address the underpayments and collect every single dollar for the medical care services provided.
How Does Outsourcing Reduce the Risk of Underpayments?
Successful analysis and management of payment variances require a considerable amount of time and more importantly expertise. Without the help of industry experts, healthcare providers cannot execute the above-mentioned tasks effectively. So, instead of investing time and money in hiring and training an in-house team. Physicians, particularly in the United States are moving towards outsourcing their medical billing services to professional physician billing companies.
In this way, they get rid of the excessive administrative and financial burden associated with managing the complicated tasks of billing, coding and payment variances. Meanwhile, outsourced physician billing experts manage the revenue cycle management efficiently with:
Experience & Expertise:
Off-shore medical billing companies hold highly trained and experienced teams. They have a proven track record of managing healthcare RCM services competently. Which ultimately ensures the accuracy and efficiency of the entire physician billing system.
Purchasing and maintaining cutting edge billing software isn’t pocket friendly for many healthcare providers. However, by acquiring the assistance of reliable physician billing service providers, you don’t need to invest in technology. Outsourced billing and coding experts provide technology-driven solutions to upgrade your medical billing system from manual to automated. Which ultimately helps healthcare providers to catch and fix the loopholes that lead to payment variances.
Have you decided to outsource your revenue collections management? Then hiring Physician Billing Company
will be the best solution for all your medical billing & financial challenges. It’s a multi-specialty RCM company that provides transparent and custom-tailored medical billing solutions to enhance your financial sustainability. Get in touch with our experts to witness improved productivity and profitability.