by Robin J. Moody
Portland Business Journal
November 3, 2006
Fewer than 20 percent of medical practices nationwide — probably even fewer in Oregon due to the preponderance of small medical groups — conduct comprehensive reviews of payments.
By failing to audit bills, clinics are leaving money on the table.
Clinics that do conduct audits — including a handful that recently completed a pilot project to gather data on the underpayment problem — have identified clear patterns in billing errors.
Preferred Provider Organizations are the worst offenders, administrators said, especially those that lease their networks to out-of-state health plans.
Under PPOs, a network of medical providers charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.
A notable finding was the volume of underpayments with sums under $10, which are hard to spot without billing-audit software.
When Portland-based Women’s Clinic PC Administrator Marilyn Happold-Latham used such software, she was surprised to find consistent, albeit small, discrepancies in sums less than $10.
“There were underpayments of a few dollars, over and over again, for the same types of procedures or office visits,” said Happold-Latham.
Happold-Latham’s experience with underpayments prompted her to organize other administrators to perform manual audits. Three companies that completed the audits found numerous small discrepancies.
“Our personnel find the large mistakes, but without payment audit software you won’t find the $2 underpayments that come up time and time again and really add up,” said MaryKaye Brady, administrator for Metropolitan Pediatrics, which learned that the practice was underpaid by $77,000 in one year.
Because 65 percent of Oregon’s doctors practice in groups with fewer than 10 doctors, the cost of a billing-audit system many seem out of reach for many groups. As income levels decline for primary care doctors and stagnate for specialists, however, physician advocates say that auditing bills is an increasingly important business practice.
http://www.bizjournals.com/portland/stories/2006/11/06/story7.html?page=2&b=1162789200^1371308
Comment:
By Don McCanne, M.D.
The physicians signed these PPO contracts in good faith, assuming that they would be paid at the contracted rates. Apparently the PPOs feel that they are not constrained by good faith contractual terms. This policy of chiseling down the rates is particularly egregious when considering that overhead expenses are relatively fixed and that these reductions come directly out of the physicians’ paychecks. A two dollar reduction is a twenty-five percent reduction when the net income would have been eight dollars for the service provided.
If a government-run single payer program reduced compensation by two dollars, it would have done so, by design, only after negotiating and reaching an agreement with the providers. Apparently private insurers use market arguments to operate on a different ethical plane. If you are caught violating the terms of a contract, then the marketplace will take care of that. Or will it?
As long as we leave the private insurers in charge, we can expect the amoral or immoral ethics of whatever the market will bear. A public system would be held to a much higher ethical standard. Let’s go public!
