Out-of-Network Billing Done Right

William H. Wendt, CEO, Castlerock Management Corp., Denville, New Jersey

William H. Wendt, CEO, Castlerock Management Corp., Denville, New Jersey

Electrophysiologists are lucky. There are not enough of them in the market to allow the insurance companies to foist their typical tactics of participation or else upon them. In addition, with ever-increasing numbers of patients with heart rhythm abnormalities, this probably won't change, so most electrophysiologists find themselves able to bill many carriers on an out-of-network basis if so desired. While insurance carriers gyrate with different schemes to not pay, they do pay for services out-of-network if the right conditions are met. With respect toward balancing ethics and business objectives, here are nine steps to improve your out-of-network billing.

First, you need to understand the difference between the terms Accept Assignment and Out-of-network claims. Accept Assignment refers to the way individual claims are submitted, while Out-of-network refers to the provider's non-participating relationship with the payor network. When a physician Accepts Assignment, he/she is designating claim data that the insurance carrier usually interprets as an agreement to accept the insurance carrier s allowable charges, less any beneficiary cost-shares, co-payments or deductibles, as the full fee for care. This is like partial participation. Most billers think that Accept Assignment simply means that the check is supposed to go to the provider. Not true! We've seen physicians who are out-of-network and who submit all claims as Accept Assignment - YES [Check Box 27 on CMS1500 Forms and similarly on electronic submissions]. They never reviewed their billing software, or the software technicians who set up their system never bothered to ask if the physician wants to Accept Assignment in all cases. Think of Accept Assignment as a switch that on a claim-by-claim basis can give the out-of-network insurance company a mini version of participation. To truly bill on an out-of-network basis, one typically bills without checking off Accept Assignment. Second, you need to know if the patient has out-of-network benefits, and if so, if there are strings attached. For example, you may need to get prior approval from the carrier (i.e., precertification). Many employers cannot afford to purchase plans with out-of-network benefits, so many people have HMO-only coverage. This means that unless there is no provider within 50 miles by car, the HMO will not pay under any circumstances. While you can ask your patients to check with their insurance plan, it is best for your office to make the call or go on-line to confirm out-of-network status and to attain any precertifications.

Third, have established, written guidelines that become part of your compliance documents. Specifically, you will need to inform your patients about their responsibilities when you bill out-of-network, so providing a Financial Policy flier is very useful when the time comes to collect. We recommend that the Financial Policy flier address both in- and out-of-network plans. Also, we provide our clientele with legal language that is included on the very first paperwork that the patient/guarantor signs on their first encounter. If the patient arrives to the hospital (emergency department, inpatient admission, etc.) and initial documents are not immediately signed, we recommend doing so at the very first opportunity. If the patient is not able to sign, at least have the spouse or legal guardian sign your initial paperwork; this includes necessary language that clearly indicates financial responsibilities such as turning over insurance payments to the providing physicians. This step is crucial, because with most out-of-network payment processing, the insurance company will send the check to the patient/subscriber. If the patient pockets any check larger than $500 ($1,000 in some states) and you have clearly worded documents that say the payment is your property, then you have significant leverage to collect. Why? Because in most states it is considered grand theft for any person to illicitly take property greater than $500/$1,000 from another party. That's right it is a felony crime, and the law is on the side of the physician.

Fourth, you need to maintain compliance with all laws. While having a uniform written policy and adhering to it can be a lifesaver later on, please remember basic billing guidelines: bill all patients and insurance companies with the same fee per CPT code, and be careful about all fee reductions. Unless you have a special contract with a third party (such as a large, local employer who acts as a Third-Party Administrator [TPA] who has a contracted rate), you must treat all entities that you bill exactly the same. This also means that your billing statements to patients must show the full amount of charges. It is illegal to discount bill or otherwise discriminate between different patients and insurance carriers. Frequently, when physicians bill out-of-network, they are tempted to reduce the patient s liability by writing off all or a portion of the patient's bill prior to sending a statement. Don't do it! Instead, bill the patient for the full amount of charges, and then ask the patient to request in writing the consideration of his/her situation in a financial reduction. Specifically, the law requires the written request from the patient and an ad hoc treatment of each case with the physician's sign-off on each ad hoc arrangement. Normally, physicians set aside some time each week to review their billing and sign off on these requests at that time.

Fifth, most carriers initially pay out-of-network claims at their in-network rate. The patient must call their carrier to reprocess the claim(s) out-of-network because the patient, not the practice, has the relationship with the carrier. When the patient requests reprocessing, the carrier typically pays considerably more in some cases, the entire bill. Billing statements to your patients must instruct the patients to make these calls.

Sixth, have clear guidelines that your billing staff can use to balance ethics with business considerations. Because each patient's insurance plan will have different deductible amounts and cost-sharing arrangements, it is important to have uniform and ethical guidelines for dealing with patients ad hoc requests to adjust their bills. While it is perfectly legal to collect every penny of your total charges out-of-network (except Medicare s limiting charge constraints), most physicians don't push to collect 100% of charges because most patients would never return to their practice for future treatment and many hospitals would not renew their affiliations/exclusive contracts with these practices. Instead, you may implement the following: whenever a patient responds to your bill with a written request for consideration, you may elect to collect an amount that is approximately: A. X% of the balance owed (typically 25-50%, depending on your charge level). - OR – B. Y% of the amount you would receive from Medicare (typically 100-150%). - OR – C. The same amount you would receive if you were in-network (typically applied to requests from low-income patients). When adjusting balances for ad hoc requests, write-off descriptions are typically for Financial Hardship and not listed as Professional Courtesy. In fact, we never use Professional Courtesy since it is a red-flag item for auditors.

Seventh, don't make deals with third-party negotiation companies. You may be familiar with those negotiation companies that call up your billing office offering deals to quickly settle out-of-network claims for less than the billed amount. Should you accept their offers to pay quickly, but at reduced rates? We recommend not doing so, because you will lose income that is rightfully yours and you may also set a precedent for future claims. Typically, these negotiation companies receive a percentage of the savings (i.e., money that the doctor did not receive). Sadly, most physicians don't know that the Uniform Commerce Commission (UCC) laws state that once a bona fide representative of the insurance company acknowledges the bill and demonstrates their ability to pay within a certain time frame, then that insurance company must also apply the same standard for paying the entire bill. In other words, no deals! The only reason the insurance company brought in a third-party negotiation company is that they have no other way to wiggle out from paying the whole bill; therefore, they devised this tactic to reduce their payout. Sometimes, the negotiation company will imply that if the provider doesn't accept this offer, then the patient will be forced to pay out of pocket. Don't believe that for a second! If the patient does have significant out-of-pocket costs, remember that the patient can always write a request for consideration and the provider can, on an ad hoc basis, make a special arrangement based on the patient's financial situation.

The eighth step is to be aware that some carriers try to force physicians into accepting assignment by claiming that if the physician is out of network and admits the patient to a participating hospital for surgery/treatment, then both will be treated as out-of-network claims. This is not true, and in some states is flat-out illegal. Before going further on this issue, please check your state laws for this topic and a related issue termed any willing provider laws. Frequently, the two are linked.

Lastly, remember that your relationship is with the patient and not the carrier. If all out-of-network conditions are met and the carrier does not properly pay the claim(s) and then the patient appeals to their insurance carrier and still gets nowhere, you may have to enjoin the patient in a lawsuit to force the issue. In this case, the patient should institute a legal action against his or her insurance carrier, which in turn will recover the money. We have seen this with TPA organizations that initially promise payment to our clients, but then don't pay. Usually, a lawsuit is not needed, but a well-worded complaint to the state insurance commissioner with a copy to the offending carrier will produce payment. Billing out-of-network is foreign territory for some practices that are constrained by their hospital's participation policies, but when it's possible, follow these guidelines and you will see a marked improvement in payment.