Lines of Defense in Reimbursement
Practical Steps to Collect Out-of-Network Money
Most of our service agreements stipulate we will receive a percentage fee based on monies actually collected on behalf of our clients, whether that money is from copayments, deductibles, cash payments, or insurance reimbursements. We make plans based on our anticipated right to payment. We hire employees. We sign corporate leases. We purchase equipment. We buy insurance. We pay for our kids’ education and book vacations. We also feel comfortable and confident in our company’s ability to continue operating. When we sign that new client we sat down with who showed us a huge gross collections number, we start making our plans. Do I need that second or third new hire for this account? We consider the number of claims and anticipated amounts to be received from our efforts.
When considering the many factors that converge in running our business, one factor we have less control over is the protections our clients have in place enabling us to better protect ourselves from the total collected number equaling a low return rate of total billed. The purpose of this article is to discuss steps we can take to recover a higher return rate of total billed, specifically as to out-of-network reimbursement benefits patients may be reluctant to turn over to the client, or us on behalf of the client.
A known risk that both practitioners and billing companies must deal with when the practitioner is out of network is patients pocketing reimbursement checks. How do we, as the billing company, protect ourselves and our revenue stream from patients stealing insurance checks? We are not the treating practitioner. We are not contracted with the insurance company. Our client is not contracted with the insurance company. We, the billing company, are two steps removed (billing company—client/practitioner—patient/insurance check) from a one-step removed process (client/practitioner—patient/insurance check).
First Line of Defense
The first line of defense to collecting out-of-network reimbursement starts with your client having proper patient policies. The most important document you will want to see in place between your client and the patient is a valid and enforceable assignment of benefits, clearly delineating that the patient is turning over any reimbursement payable by an insurer to the client/practitioner. In addition to, or as a part of, the assignment of benefits form, the client/practitioner should have in place with each patient a comprehensive patient financial responsibility agreement, whereby the patient agrees to be financially responsible for any amounts not covered by insurance, for whatever reason. For those of us walking into a potential client’s office, where the client is out of network and the client does not have either of these policies, be forewarned: You have just had your first major red flag. Now, this red flag may be the reason you are being called in—maybe the client has a terrible collection rate and needs your help. If the client is not willing to begin implementing a valid assignment of benefits form and patient financial responsibility agreement, you may want to seriously consider whether or not to take the client on. The last thing you want is to rely on a revenue stream from a potential client only to find that revenue stream does not materialize, for whatever reason.
If the client is willing to implement an assignment of benefits form and a patient financial responsibility agreement, you may face another quagmire: Should you provide those documents to the client? You have them, you have tons of other clients who have them on file, and you see all the time in the records sent over. It is so easy to just swap out the names and send it to this new potential client, so why not? While the path of least resistance is tempting, providing patient agreements and compliance forms to clients is an easy way to open your company up to liability. If the client were to have a patient issue or dispute based on a payment obligation or otherwise, would your service agreement protect you against a claim related to provision of patient materials? Depending on your services agreement, the answer may be no. Most billing companies, smartly, try to stay out of the policy-generating business and stick to revenue cycle management. Unfortunately, sometimes policy generating is required to maximize revenue generation, which is why the healthcare attorneys stay in business.
Once our clients are actively utilizing assignment-of-benefits forms, we have additional concerns that may arise. One we see often is where the patient is not the primary insured and the check for treatment goes to the primary, who then deposits the check. Some of our clients handle this situation by requiring patients have a payment guarantor when the patient is not the primary insured. This policy is tough to enforce and tough to confirm, especially when the “guarantor” is not present at the time of the appointment and is not signing personally as a guarantor for payment. Some of our clients have adopted proactive approaches and have taken deposits on file to be refunded once payment is received. I see a host of concerns here, and oftentimes, once implemented, I have seen this strategy discontinued. Similar, but more to the point then an escrow concept, some of our clients have begun to abandon assignment of benefits altogether and now demand payment at time of visit. Certainly, I prefer to see a cash practice structure for the provider, but when that transition is made, oftentimes the billing company is terminated or severely negotiated down in rates. Thankfully for the revenue cycle management industry, insurance does not seem to be phasing out any time soon.
Many states have begun to enact legislation to require insurance carriers to comply with the assignment of benefits forms. For example, in New Jersey, at the urging of providers, the legislature enacted a law requiring insurance carriers to honor assignment of benefits forms completed by patients. However, the legislation also permits insurance carriers to require that the checks be endorsed by both the patient and provider, thus creating a new set of challenges for providers to actually receive payment. In some cases, the member’s insurance contract may have an anti-assignment clause, which directs that payments go to the member and brings us back to the original issue of solutions to protect the revenue of billing companies. When evaluating a potential client for your billing company, we recommend performing a comprehensive assessment of the patient base to establish expectations on reimbursement rate.
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Second Line of Defense
The second line of defense to collecting out-of-network reimbursement starts with your client having transparent fees. One of the biggest challenges to out-of-network reimbursement is the lack of understanding by patients of what their services cost, and who will be responsible for payment. Certainly your provider clients are not interested in spending visit time explaining fee structures, insurance benefits, lack of insurance benefits, and financial responsibility; however, your clients are running businesses, and you are running a business helping them get paid. Getting paid starts with basic disclosures of fees. It seems pretty straightforward—a patient is coming for a service; who is paying, and what will be owed? While it may seem simple, we all know, as members of the revenue cycle management community and patients ourselves, the majority of providers just do not disclose fees. There are many reasons why they would not, but we also know a primary reason is the amount the provider expects the patient to pay is not the number the provider will agree to put on the bill to the insurance company. And therein lies the crux of the billing issue: the double fee conundrum. Certain state lawmakers have attempted to rectify the double fee conundrum by proposing and enacting legislation that aims to make provider fees more transparent. For example, in New York, the “Surprise Bill Law” that went into effect on March 31, 2015, requires that medical practices disclose to patients or prospective patients in writing the healthcare plans in which the practice and each healthcare practitioner is a participating provider. In addition, the practice is required to maintain an accurate and available list of fees for all services, and is required upon receipt of a request from a patient or prospective patient to disclose to the patient in writing the amount or estimated amount that the practice will bill the patient for anticipated healthcare services. The Surprise Bill Law requires that a practice obtain explicit written consent of the insured, acknowledging that services rendered by a non-participating provider may result in costs not covered by their healthcare plans for each patient referred to a non-participating provider. Simply put: If a “Surprise Bill” is rendered, the Provider did not comply with the notice requirements, so the patient can bring the claim to arbitration and fight the bill.
For those of us in the revenue cycle management business, we have a similar issue with fee setting as we did with policy generation: We may have more knowledge and experience then our clients do—we see a cross section, potentially, of providers rendering similar services and know what they are charging. We also know about FairHealth.org, which maybe our clients do not. Depending on the protections built into your services agreement, you may be opening yourself and your business up to liability by involving yourself or your company in fee-setting discussions with your client. When in doubt of your protections and the scope of services you are offering, always review your services agreement to determine if you are within the bounds of protected action.
Third Line of Defense
Assuming our client has a valid assignment of benefits form—a signed and enforceable patient financial responsibility agreement that complies with local, state, and federal laws (or not), our third line of defense to collecting out-of-network reimbursement starts with a good faith effort to collect. In the majority of states, laws exist requiring providers (and those working on their behalf) to make a good faith effort to collect. Typically, this means companies attempt to collect monies owed up to three times. Our firm recommends transmitting to the patient (in a compliant manner) at least three invoices. Should a good faith effort to collect not work, providers may consider and may proceed to litigation as a resolution. Many of our clients establish systems to send aged accounts receivable to collection companies, or establish internal processes to bring patients to small claims, or send to a law firm like ours to initiate lawsuits to recover funds received by patients, or funds owed by patients. For such instances where a patient keeps an insurance reimbursement check, the decision to sue may be easier—the individual is committing insurance fraud. This person seems to have other obligations that see their provider be paid, and in turn, the revenue cycle management company loses. In other circumstances, the decision to sue may be tougher, and may also lead to no reimbursement. We recommend maintaining the optionality to sue—which, in our eyes, means the patient forms and agreements that specify the cost of collection (including attorney’s fees) will be borne by the patient if you are forced to engage in collection efforts. You may also want to adopt arbitration as an option to collect patient fees—by specifying a cost-effective and efficient arbitration company, you may save time and money in your collection efforts.
A theme emerging you may have noticed is, as the billing company in the collection scenario, you will likely find yourself at the mercy of your client, the provider. The protections you have are to properly evaluate the client/provider prior to commencing your services, and protect your company from taking on a non-compliant client with poor patient forms and a poor collection rate. In addition, you have the opportunity before the relationship begins to detail with specificity the collection efforts to be taken when you have a client with a patient base that may be absconding with insurance checks, or not paying as required. Detail from the start whether requiring your client consent to collections or the litigation process is necessary to you taking the client on. Remember, your obligations, and your rights, start and end with your services agreement. Signing up new clients is a great feeling, but realizing those new clients are costing you money instead of the other way around greatly counteracts the “new client buzz.”
Jennifer Kirschenbaum, Esq., is the managing partner of Kirschenbaum & Kirschenbaum, P.C.’s healthcare department. Michael Foster, Esq. is an associate in the Kirschenbaum healthcare department. Kirschenbaum regularly works with HBMA members on client contracts and relations, HIPAA compliance, employee matters, and client/employee disputes. HBMA members receive free initial consultations, discounted legal fees, and a 10-percent discount on all compliance documents available at www.billingcontracts.com as an HBMA member benefit. For more information about K&K, visit www.kirschenbaumesq.com. To join K&K’s free healthcare newsletter, visit www.kknewslettersignup.com. Kirschenbaum can be reached at Jennifer@Kirschenbaumesq.com or (516) 747-6700 x. 302. For K&K’s customizable form billing contracts and business associate agreements, visit www.billingcontracts.com.
3 NY Fin Serv L § 603 (2014)