thus, health insurers may choose different percentiles of billed charges as the basis for their ucr values. they may also calculate the actual percentiles differently. for example, a health insurer might define percentiles in one of the following ways. 1. the 80th percentile as the lowest billed charge that is greater than 80% of all the reported billed charges of that geographic region (e.g., if the billed charges are $210, $179, $106, and $60, and 80% of all reported billed charges of that geographic region are under $100, then $106 would be the payment rate because it is the lowest billed charge that is greater than $100). 2. the 80th percentile as the lowest billed charge that is greater than or equal to the 80th percentile of the billed charges (e.g., if the billed charges are $210, $179, $106, and $60, and the 80th percentile is $168, then $179 would be the payment rate because it is the lowest billed charge greater than or equal to $168). 3. the 50th percentile – conveniently – as the median, or middle number, applying a weighted average of the billed charges that they determine by the first two definitions (e.g., if $100 is equal to the 80th percentile, and $106 is the lowest billed charge greater than the 80th percentile, then $103 – the median – would be the payment rate). furthermore, none of these definitions are explicit about how to handle the rounding of a whole number (e.g., a third-party payor could translate 4.5 as 4 or 5, depending on the methodology they apply). this variation is why it is important for physicians to request both the data and the methodology applied to compute its ucr value from the health insurer. in some cases, the health insurer may send a letter to a patient that states that he or she may have been charged more for the service than the ucr amount that the health insurer determined. it is crucial that a physician who believes that the health insurer inappropriately calculated their ucr payment address the issue with the health insurer and provide a defense 30 hbma billing • may. june.2013 Figure 1: Sample Letter for Reference of his or her fee schedule. if a patient contacts the physician or the practice staff regarding either an eob or a letter from the health insurer that states that the physician charged the patient more than what the health insurer considers the ucr value for the geographic area, the physician might consider sending the payor a letter to obtain additional information. health insurers process millions of claims every day, and the overwhelming majority of these claims are processed by computer systems that utilize rule-based logic. in those cases in which a health insurer inappropriately withholds or reduces payment, physicians may challenge the health insurer by sending a letter like the one above that requests additional information. many times, this process identifies problems within the health insurer’s model, allowing them to correct these problems so they do not occur again. holding health insurers accountable to fair payment is crucial to maintaining a financially viable practice. in addition to a calling, a physician practice is a business. like any other business entity, the ability to operate without a financial loss should be an expectation. Physicians’ ability to provide their communities with quality care is dependent on their ability to keep their practice financially viable. the ama encourages physicians to pursue appropriate and fair payment that is consistent with legal and community standards for legitimate services provided. AMA Practice Management Center Resource Tip Visit www.ama-assn.org/go/out-of-network to access the flyer “out-of-network payment challenges for the physician practice” (for ama members) for additional information about out-of-network payment issues. dear health insurer or administrator, it has come to our attention that you recently contacted one of our patients (your subscriber), informing them that you considered our charge for their recent visit to be above the usual, customary, and reasonable charge level you have determined for our geographic area. We respectfully request that you provide us with the database and methodology you use to calculate the ucr levels that you referred to in your letter to our patient within 10 business days. if you fail to do so, we demand that you immediately cease and desist from what we consider to be an intentional breach of the physician-patient relationship. sincerely, Practice administrator cc: Patient +
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