As Medicare's impending national competitive bidding rollout approaches, many providers have veered away from Medicare in favor of a more diversified third-party and private payer mix. Where providers once had 40 to 50 percent of their revenue coming from Medicare, many providers without competitive bidding contracts have decidedly fewer Medicare revenue dollars—closer to 10 to 15 percent of their total revenue. For most, the transition from relying upon Medicare to creating a more varied mode of business has been a healthy and cleansing mission. If anything, it has caused providers to take stock of their businesses and find alternative ways to drive trade. As a result, many are relying more heavily on third-party payers such as Medicare Advantage, Medicaid managed care and other commercial third-party payers.
Of course, it has always been prudent to expand into third-party insurance arenas. Now, after contending with competitive bidding, audits and the 25 percent increase in delay time for appeals at the ALJ (administrative law judge), it has become imperative. In fact, reports from CMS stating that processing time has improved are unconvincing when the average processing time was 725 days in June 2015, according to AAHomecare. How can HME providers with significant claims awaiting ALJ appeals hope to stay in business?
Fickle Third-Party Behavior
It seems like a practical option to turn to third-party payers to split the HME revenue stream. As much as mixing up the revenue cocktail is pragmatic, it comes with its own set of challenges. In a seeming domino effect, third-party payers have begun to mimic Medicare's requirements. In fact, the way third-party payers process claims is so fickle, the rules are next to impossible to follow from one month to the next. For example, one month a payer will pay a claim for a patient, and the next month the claim for the identical item for the same patient is denied. Rules change in a blink, and often the third-party payer's staff cannot keep up with these variations. Even with the best staff at the HME provider\'92s disposal, it requires a designated savvy and experienced person with a plan to address the myriad of denials. Under careful scrutiny, some of the denials are erroneous, and they often cause unnecessary delays in accounts receivable (A/R) collections in addition to the countless extra hours of work to resolve the issues.
What trends are providers experiencing when dealing with third-party payers? The fickle behavior, mentioned above, causes the most problems. For example, it was once typical to receive six or 12 months of authorization for a patient's rental item; however, it is now not uncommon to receive only a one-month authorization for a patient with a lifetime need. This means that in less than a month's time, you will be required to reauthorize the same item to avoid billing delays. This may continue monthly for as long as the patient needs the item.
Not only are authorizations and claims unpredictable, but also coding and quantity requirements are employed inconsistently. Third-party payers will cover certain HCPCS codes when you make one claim, and then deny the same codes at other times. There is no apparent rhyme or reason to the way payments are made, and even the appeal rights of suppliers and patients seem to change on a dime. This means that each denial must be examined independently. In one case I am aware of, there was a computer glitch on the payer's end that changed the patient's date of birth, causing sporadic denials. The payer continued to deny the claims erroneously until the provider and the patient learned that not only was there a glitch in the payer's software, but also the payer was 90 days behind in processing claims. No notice was given and the payer felt no remorse.
Action Items
What can be done about denials? The first thing to do is create an internal escalation plan. Who in the organization should know about the variability among third-party payers? Who in the company should be notified when erroneous or seemingly subjective denials are received? I suggest designating a supervisor, lead team member or manager whose responsibility it is to escalate the matter with the payer. Create a spreadsheet of the outstanding receivables that would otherwise have been paid had the payer approved them. Work to find the appropriate person at the payer level to receive the spreadsheet and expedite the overdue payment.
Secondly, create a rapport between you and the payer. The best bet is for your billing department leaders to develop a rapport with the payer long before it is necessary. As you can see from the variety of issues that erupt, having a go-to person at the payer level is strategic. Of course, it always helps to have an in with more than one person on the payer side, because many third-party payers experience frequent turnover.
Not only is it important to develop a rapport with one or two of the payer staff, but also it is crucial to get involved with your state and national associations, because they have a larger voice that is more likely to be heard. This will allow you to be part of a collective group with multiple examples to illustrate a credible and legitimate payer issue. Moreover, it is always important to be part of an association that dedicates its time and effort to the longevity and viability of the HME industry.
As a last resort, work directly with your state insurance commissioner and legislators when you cannot resolve the issue through any other means. After a valid complaint and multiple attempts to resolve the matter to no avail, work with the insurance commissioner to correct the error. If this does not work, explain your complaint to your congressperson. Often, working with your legislators usually resolves the matter.
Final Steps
Is it worth your financial while to maintain a contract with a third-party payer, even if you are able to resolve denial issues? To answer this question, create a spreadsheet of all of your costs, and weigh them against your net revenue. After an objective analysis, make a decision about your ability to continue working with the payer. Although you may not be able to sever a contract mid-term, prepare to end the contract at the end of the term if you determine that it is not financially viable.
While not all third-party payers are causing HME providers\'92 financial woes, it is wise to pay attention to each payer's behavior. Hone in on outstanding A/R before it becomes an exponentially greater undertaking. Although third-party payers\'92 behavior may still be fickle, it is imperative to maintain diversified billing options and work with those payers who are willing to be reasonable partners. Do not lose sight of the fact that you have to make money to stay in business and work to find a balanced payer mix going forward.
