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Claims-checking showdown: Fighting back

Insurers have special software to determine how you should be paid. Should you have it too?

By Leigh Page, amednews staff. May 14, 2001.

Health plans use powerful computer systems to bundle, downcode and reject physician claims -- often without much explanation to those physicians affected. In part, that's because plans consider their rules and systems proprietary knowledge, not to be revealed to anyone.

But practices can fight back with an increasing array of sophisticated computer systems that try to mimic these systems and beat them at their own game.

Software sources

Makers of the physician products say they ensure claims are error-free and coded properly and that the plans are paying the contracted amount. And they say they are persuading health plans to share the secrets of their claims systems so physicians have the most up-to-date and accurate information in their own systems.

These systems can be expensive -- costing a small practice tens of thousands of dollars, plus thousands more in monthly rental fees. But makers claim that savings generated offset the cost within a year, and billing experts seem to agree.

"I encourage physician groups not to get hung up on the money side, because these systems are going to more than pay for themselves," said Ken Beasley, president and CEO of Healthcare Network, a Memphis billing management company for practices. He uses a system made by VantageMed Corp. of Rancho Cordova, Calif.

The products, however, vary widely in price and quality, and some companies are just getting off the ground. While many large practices already have signed up, makers concede that few small- and medium-sized ones have jumped in yet.

Savings generated by software systems can offset the startup and rental costs within a year.

One start-up company is Medical Present Value of San Antonio, which began marketing last fall after testing its product for three years at several practices. MPV has a staff of 50 but only 16 clients, mostly in Texas, and is losing money as it builds its business.

But MPV officials say they have adequate investments from two venture capital funds, are starting to sell the product in California and Illinois, and expect to turn a profit next year.

John Osberg, president of Informed Partners LLC, a health care technology consultant in Marietta, Ga., predicts the market for these sorts of products will expand at compounded annual growth rates of 30% to 40%. Billing is just getting too complicated to do by hand, he said.

In recent years, for example, plans have established global surgical fees, linked payment codes with specific ICD-9 diagnosis codes and found new ways to downcode evaluation and management codes for office visits, billing experts report.

There is so much information that "you can't keep it all in your head," said Anil Sitole, chief operating officer of Athenahealth Inc., based in Waltham, Mass., which has been marketing a computer product for four years. The company says it has installed its product in 40 practices and has 40 more signed up.

When Sitole visits practices to discuss his product, he says he can tell where the billing managers sit. Their desks are covered with sticky notes scribbled with reminders of specific payment rules. But there many more rules than sticky notes, he said.

Practices buy these computer systems to battle the big health plans and what seems to be their overwhelming computer superiority. But the sellers see themselves as peacemakers who are trying to make billing more user-friendly, and they are far from awed by health plans' computers.

MPV President and CEO James M.O. Rubin, MD, an anesthesiologist who said he became fascinated with the claims-payment process five years ago, said plans would love to reduce billing staffs. One site had 50 people doing nothing but processing disputed claims. But he said these companies have old mainframes and other outdated systems, which explains why MPV claims it can uncover dozens of billing errors each week for a practice.

Sitole at Athenahealth said health plans have to spend $6 to $7 processing a contested claim, so "it's to their benefit to work with us."

Despite plans' concerns that releasing data will make them less competitive, both men say plans usually provide their companies with the payment data they need. Getting the information takes more perseverance than an average billing manager can afford, and the companies must promise to use the data only for the specific client.

If plans still resist, the companies must piece together payment from other sources, such as explanation of benefit statements that plans send with their payments.

In the billing wars between physicians and plans, these firms sit on neutral territory where expertise can be shared. For example, both Sitole and one of MPV's top staffers came from Cigna HealthCare and can use its inside knowledge.

Moreover, makers of some popular payment programs for health plans -- such as Ingenix Health Intelligence of Salt Lake City, owned by UnitedHealth Group and McKesson HBOC of San Francisco -- also market coding and payment systems for physicians.

Claudia Market, vice president for provider sales for Ingenix, said that for the physician product, "we put a slightly different twist on the software."

For example, "the payer wants to make sure that he is not paying over and above what he's billed for," she said. "But the doctor wants to know that when a certain code is submitted, he should probably submit a companion code. The payers' software will not mention that."

How it works

Computer programs that help with billing vary widely in degree of sophistication and price, consultants say.

For example, many offices have practice management systems that help them keep track of appointments and budgets. Some of these systems or stand-alone versions have simple software packages that make sure all the information on a HCFA 1500 form is filled in so that the claims can be paid. Some also help identify the correct current procedural terminology code.

"The problem with off-the-shelf software is that it isn't designed very well to do accurate tracking," said Dennis Brush, co-owner of Physicians Resource Team, a billing service in Denver that has developed its own in-house payment management system for clients.

Companies like MPV, Athenahealth, Ingenix and McKesson HBOC claim to have more sophisticated products than off-the-shelf practice management systems. MPV, for example, installs proprietary hardware with millions of bits of information, which is connected to its San Antonio headquarters through a secure firewall over the Internet.

MPV's basic system took years to develop and is based on the payers' logic with codes, modifiers, bundling, downcoding and other practices. It also contains Medicare payments rules, which many commercial payers rely on. The Medicare rules are updated quarterly and are lengthier than the U.S. Tax Code, according to Dr. Rubin.

Rules that seem straightforward are rife with complexities, said Kathy Beck, a billing administrator at Cornerstone Healthcare, a multispecialty practice with 96 doctors in High Point, N.C., that uses the Ingenix correct-coding product.

For example, Medicare rules actually allow bundling in many instances. Also, Medicare rules may allow practices to bill separately for a surgical tray in some cases or require it to be bundled into the surgery fee in other cases. And some plans don't recognize CPT modifiers while others do, she said.

All these complexities add up. Beck said the Ingenix system reduced Cornerstone's Medicare denial rate by 75% when it was installed in 1998.

While Beck's system focuses on proper coding, another Ingenix system and the MPV and Athenahealth systems also examine payments, which adds another level of complication. The same insurer's reimbursement levels can vary by practice and may also differ for self-insured products, experts say.

In MPV's start-up phase with a new customer, staff take weeks to collect billing and coding data for the customer and load it into their system. All payment and billing rules must then be kept up-to-date or the system will not be accurate. Some companies expect practices to do the updating, but they often fall behind, MPV officials said. So MPV insists on doing the updating itself, which adds to the price.

MPV trains the staff that are trained to use the system, which generates a series of detailed prompts as staff load in claims information and process bills.

Practices that piloted MPV's product during the past three years give rave reviews.

"It really empowers us," said Linda Prestegard, business office manager at 11-physician Neurosurgical Associates of San Antonio. "It gives us the confidence to go to the plans and say, 'that's not right.' "

Confronted with MPV's documentation, Prestegard said health plans -- and in one case, Medicare officials -- conceded an error and agreed to pay a denied claim. This usually leads to changes for future payments, she added.

Philip Berry, MD, part of a four-member orthopedics group in Dallas, said before MPV's system was installed, "if we submitted a bill for, let's say, $5,000 and we get paid $842, we thought that was pretty good."

With MPV, he said, "we find out that we should have been paid $927. By the end of the year that's a lot of money."

ADDITIONAL INFORMATION:

Software sources

Some companies that sell computerized claims-processing programs to help practices check what insurers are reimbursing them:

ATHENAHEALTH INC.

Waltham, Mass.
www.athenahealth.com
Product: AthenaNet checks eligibility, checks claim to make sure it is error-free, calculates correct fee and co-pay.
Price: Rental fee is 5% of collections.
Savings claimed: About $10,000 per physician in the first year.
Other: Company started in 1997; now 40 practices have system and 40 more have ordered it.

IDX SYSTEMS CORP.

Burlington, Vt.
www.idx.com
Products: Transaction Editing System checks claims to make sure codes are accurate and error-free; Billing and Accounts Receivable System determines carrier's payment.
Price: Company won't release.
Savings claimed: Company won't release.
Other: Transaction Editing System has more than 1,200 customers.

INGENIX HEALTH INTELLIGENCE

Salt Lake City
www.ingenix.com
Product: ClaimsManager checks to make sure billing codes are accurate and claim is error-free.
Price: $25,000 to $150,000 a year for large practices.
Savings claimed: 10 times the price.
Other: Company is owned by UnitedHealth Group and sells a payer product, ClaimsEdit.

MCKESSON HBOC

San Francisco
www.mckhboc.com
Products: Pathways Compliance Advisor prepares bill to meet payer's coding and bundling edits; Pathways Contract Manager checks for over- and underpayments based on the contract.
Price: Compliance Advisor costs $125,000 per client (practices of 50 doctors or more). No information was available on Contract Manager.
Savings claimed: Compliance Advisor increases revenues by 1% to 5%.
Other: Company sells a payer product, ClaimCheck, which has 450 customers that manage 70% of all covered lives in managed care.

MEDICAL PRESENT VALUE

San Antonio
www.mpv.com
Product: Phynance reviews claim form and coding, compares codes with contracted rules and checks accuracy of payments.
Price: Company won't release initial cost, but monthly "rental" fee is 1% to 2% of net collected revenues.
Savings claimed: It increases net collected revenue by 5%, which is almost three times the cost.
Other: After three years of testing at a few practices, marketing began in the fall. Eight practices have the product and eight more will start soon.