Healthcare Training: Understand Out Of Network Reimbursement


One of the reasons that more providers are considering taking the step to remove themselves from their contracted status is the reimbursement that's being paid as a contracted provider at this time. The insurers are giving providers a smaller piece of the pie while they're collecting record profits. Read this expert healthcare training article for more.
When providers were initially going out-of-network, providers were generally paid at 100% of their billed charges which was quite wonderful.

Over the last few years, there's been a significant decrease in out-of-network reimbursement to providers to the point where they're getting to 70% to 80% of the reasonable and customary charges or what is considered to be reasonable and customary for your geographic area.

One of the main players in the determination of reasonable and customary determinations was Ingenix. A couple of years ago, there was a suit filed by the Attorney General of New York in which he charged United Healthcare's Ingenix program with underpaying out-of-network providers and with actual fraudulent activity as per the established medical billing rules.

The American Medical Association and several state medical associations, including the Medical Society of New Jersey, joined with individual physicians in filing separate class action lawsuits against Aetna, CIGNA and Wellpoint for this very reason. In addition to that, ambulatory surgical centers in New Jersey and California especially began to also file suit based on the reimbursement that they were receiving as out-of-network providers.

The reason that a lot of those suits ended up involving Ingenix is because Aetna, CIGNA, Wellpoint, United Healthcare – most of your major payers – use Ingenix or some form of their database when it came to determining reasonable and customary charges that would be paid to out-of-network providers.

What was found as the lawsuit went on was that Ingenix was manipulating the databases so that they can underreimburse providers for out-of-network services. Because out-of-network providers have the option of billing the patient for the balance or balance billing the patient for the charges, patients were assuming an unfair responsibility in paying for services that were rendered to them by out-of-network providers as per the medical billing guidelines.

So it was determined that the illegal acts were harming not only the healthcare providers but the patients as well.
Our expert mentioned it in a medical billing conference that it's important to know how Ingenix was rigging their methodology in order to produce consistently lower reimbursement than what would have actually been considered reasonable and customary for a geographic region.

It's important to refer specifically to some of the issues that may be involved in your underpayment. Let us talk about how Ingenix was coming up with their reasonable and customary methodology.

They were excluding information that would have increased the reasonable and customary rate in a specific geographic area.

The intention of reasonable and customary was to take all of the charges for a specific procedure and put them together based on region and determine what was the reasonable charge based on the average of all of the charges for that particular procedure within that region.

Then they would take that and they would say, “Okay, well, at the 50th percentile, this is 50% of it; 60%, 70%, 80%, 90%, up to 100% of it.”

So what Ingenix did was decided that they would be able to exclude charges if they decided that they were out-of-date based on an arbitrary method; if they said that they were incomplete because certain data fields were missing without making an effort to obtain the additional data if it conveyed an invalid zip code or procedure code which is a reasonable reason to throw out data; and if it was billed in amounts that fell outside of certain high and low charges set by Ingenix.

So the fact that Ingenix set charges that would determine the high and the low that could be included in the database is a key in seeing that they were artificially reducing the actual reasonable and customary charge within a region as per healthcare rules.

Because if they have determined that $500 was going to be the high end of a charge for a colonoscopy even though most of the physicians in that region were billing $800, none of the charges between $500 and $800 would be added to the database in order to come up with a true average charge for that particular procedure.

And then they also decided that they would throw out any charges that they just decided were unreliable based on their own methodology. And that one, obviously, still remains a mystery.

So the bottom line was that it was quite easy to determine that Ingenix was falsely deflating the charges that were being received in order to come up with an underrepresentation of a reasonable and customary charge for a particular area.

And as result, they did reach a settlement, $350 million, which was used to pay providers additional payments for the underpayments that they have received and they also agreed to set aside a fund that would begin to create a database that would be independent of payers.

So instead of having the reasonable and customary database that was used by most payers created and owned by United Healthcare which is a clear conflict of interest, they agreed that an independent third party would be created that would determine what was reasonable and customary for regions and that would be used as the source data for determining those charges and payments in the future.

When you become an out-of-network facility, your staff does have to become more savvy and they're going to have to be more aware of where they need to look and the questions they need to ask to make sure that they understand what reimbursement will be and what database the determination for your reimbursement will come from and they must have medical billing training for the same.

This is going to impact how you will appeal claims and whether or not an appeal is actually necessary or valid.

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