Payers won't pay? Know your contract's remedies

Recently, a physician contacted me regarding a payment dispute his group practice has with a payer. The group continually receives late payments for all claims submitted, and the payer has now begun to deny payment.

This has placed a huge burden on this practice's cash flow. While it is always in the best interest of physicians to resolve payment disputes under managed care contracts as quickly as possible, the reality is that these managed care/physician disputes often require a lot of effort, resources, and time to resolve.

Systematic delay and underpayment of claims by payers creates cash-flow problems for physicians, who are then forced to expend substantial resources to pursue the correct payments. As any physician knows, payers have used several strategies to deny health care professionals the appropriate reimbursement, including bundling, downcoding, application of the wrong fee schedule, and refusing to recognize modifiers.

Payers also frequently deny claims based upon medical necessity.

The best strategy for resolving these disputes is to read and understand your managed care contracts, which spell out how the plan settles disputes.

Most managed care contracts require the physician to seek written review of the denied or underpaid claim. Make sure you specifically review any provisions that relate to the period for seeking review by the payer, the documentation required by the payer to seek review, and the address and title of the person to whom to direct the appeal or review.

Often managed care contracts will reference plan manuals, program attachments, payment schedules or addenda that may not be attached to the contract. It is imperative that you have all of the documents that make up your managed care contract, including all attachments and exhibits that are referenced in the contract, so you can determine what the process is for challenging a denied claim or slow payment.

Your contract might provide for more than one level of review. You should remember that the burden falls upon the physician to take the next step to obtain the correct amount of reimbursement. Participating in the review process is mandatory, and a physician who does not seek a review with the payer is usually barred from challenging the adverse claim determination in any other forum.

Many states have responded to the physician payment crisis by enacting laws requiring payers to pay claims within specific time frames.

Under these prompt-pay statutes, if the payer does not pay within the mandated time frames, the payer faces penalties, fees, and other administrative and legal remedies. Generally, these prompt-pay statutes require the payer to make payment or a claim determination within 30 to 60 days after a physician submits a clean claim for payment.

Make sure you know the terms and coverage of the prompt-pay statute in your state, because that could provide you with a more direct and efficient means to getting paid in a timely manner and reimbursed for delays. For example, the Illinois Prompt Pay Statute requires payment within 30 days and imposes a penalty of 9% interest if the payer violates the statute.

However, even with prompt-pay laws, you have to make sure you do not give the payer an obvious excuse for delaying your payment. State prompt-pay statutes apply only to properly filed claims.

Most statutes condition the right to prompt payment upon the submission of "clean claims," which is often a defined term in the statute and the managed care contract. You should review these definitions of a clean claim and comply with the payer's submission protocols to take full advantage of your rights.

Also, there should be a dispute resolution provision in your contract for those instances where a dispute arises. If a dispute arises between the payer and physician, the mechanisms for resolution should be straightforward and utilize a neutral party, a mediator, to resolve the dispute in a timely manner. The provision also should dictate how long it takes to appoint a mediator, and how long the mediator may take to make a decision.

Finally, most physicians fail to provide adequate safeguards to address problems with a payer, which may reoccur in the future. If you are involved in a dispute that includes a resolution set forth in a settlement agreement, make sure you require the payer to adhere to specific remedial measures if the problem continues.