BUSINESS

Playing hardball with claim collection

Personal Finance. By David Marcus, PhD, AMNews contributor. July 22, 2002.

Perhaps it's a deliberate strategy. Perhaps it's incompetence. Perhaps it's the health plans' realization that fixing the problem would cost them big-time money.

Specialties whose income depends on a high volume of low-priced claims -- and that certainly includes the overwhelming majority of primary care practices -- often find that the high cost of following up those claims forces them into a choice between two unacceptable alternatives: Either abandon the pursuit of payment in order to limit their collection expenses or pursue the claims even if the collection expenses wind up erasing their profit margin.

The surgical specialist whose staff has to make several phone calls and submit an operative report in pursuing a $2,000 surgical experience is also experiencing costly and unconscionable manipulation by the payer, but the rational economic decision is to continue the pursuit of payment.

The primary care practice that has to make multiple calls and/or submit medical records in support of a claim for a $65 claim is generating red ink.

Data suggest that these delaying tactics can be very cost-effective for health plans. Several years ago, a manager at a Texas Medicare carrier expressed concern because of low response rates during a federal initiative in that state to assess the accuracy of physician documentation of evaluation and management services. The carrier requested that practices submit in advance of payment documentation for randomly selected claims for those services; if the carrier received no documentation, the claim was denied. Only 38% of the physicians responded with the requested documentation. [...]

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