Tracking contracts could pay off in long run

The prospect of keeping track of the fee schedules from your many insurers is enough to make you, or the staff member you assign it to, cry. But as tedious as contract management might be, consultants say the practice that does not keep track of what it should be paid stands to lose a lot of hard-earned cash.

"The bottom line is it's probably going to cost you money," said Bob Priddy, a Denver physician practice consultant and executive director of the Physician Career Network, an affiliate of CareerLab, a career strategy and leadership development firm. "It's difficult to see where the charges are being denied categorically."

One managed care firm might pay at 120% of the 2000 Medicare schedule, while the next pays at 115% of the 2002 schedule. The possibilities are many, and the confusion quotient increases with every agreement.

Add to that the miscommunication -- or some may say neglect -- on the insurer's end, which could produce lower-than-contracted payments, and it could be a formula for lost income.

If a practice doesn't follow its reimbursements, it might never know which insurers are not paying the contracted amount. Or, an aggressive billing department could be challenging the wrong payments, wasting office staff time and contributing to a contentious relationship with a payer.

"What we're finding is many offices can't even find a copy of the last contract they signed," said George Chapman, senior health care consultant with Dermody, Burke & Brown in Syracuse, N.Y. "Sometimes you have someone else negotiate contracts, like an IPA, and you're supposed to get 115%. But because of a lack of communication, you keep cashing checks that are for only 110%."

Consultants suggest conducting a regular audit of charges and reimbursements, especially in the months after a new contract. Requesting managed care companies to convert a fee schedule to the one your practice most commonly employs is also an option, though a group would have to have considerable pull to exact that change.

Considering that insurers generally pay the lower of the charged amount or contracted rate, it behooves a practice to know if it's even charging what it can, Priddy said.

Big Thompson Medical Group, a 45-physician group based in Loveland, Colo., is in the process of implementing a contract management system with the expectation it can save the group up to $125,000 each year.

In the past, the group kept track of its most expensive procedures and treatments, but for the common services, "we probably didn't have a very good ability to get paid what we thought," said Larry O'Brien, the group's chief financial officer.

Arash Tirandaz, MD, an internist in Plano, Texas, said doctors at his four-physician group heard stories about discovering large discrepancies and losing revenue by not tracking their contracts. Though his group did not know how much money it was losing, it decided to invest more than $25,000 in technology upgrades to load fee schedules into its practice management software. It also hired a contractor to input the fee schedules.

The group still is unsure what discrepancies it will find, but the doctors are convinced the contract management system was a sound investment. But Dr. Tirandaz was skeptical of the group's ability to collect the revenue even after finding errors. "It's not like there's some process by which you can easily remedy that," he said. "A $2 or $3 discrepancy, as individual physicians, you can't fight that."

Chapman said contract management might not help doctors win the small battles, but it could help them correct the egregious errors -- even ones committed by the practice itself.

"I noticed one office was always being paid its charges, which was a bad sign," Chapman said. "It turns out it never raised its charges because the IPA was doing the negotiating. The charge was so low, the practice was getting that instead of the correct amount."