Are Your Healthcare Costs in Roaming? Out-of-Network Claims May Cost More Than You Realize
– By Ian Throne
Does this scenario sound at all familiar? You return home from a long day’s work and among your mail is a cell phone bill swelled three times its normal size and laced with roaming charges. Smoke pours out of your ears as you realize your teenager seemingly called every Facebook friend they had while gallivanting through the forest on a camping trip with friends a few weeks ago. Ah, parenthood.
This headache is one felt every day by self-insured employers everywhere when out-of-network claims are submitted for processing. It is obviously not an employee’s choice to get sick or hurt while traveling, and there are instances in which employees don’t realize that they are seeing an out-of-network provider, even when local to home. Either way, unless your company is accessing one of the few major national networks, these out-of-network healthcare claims typically represent an apparently modest 10% of total claim volume – but this can equate to a significant portion of already skyrocketing healthcare costs.
Rising Costs
According to the Kaiser Family Foundation, healthcare costs in 2008 surpassed $2.3 trillion nationwide, accounting for 16.2% of the GDP. Studies have shown that companies spend approximately 40% of after-tax profits on healthcare benefits. Healthcare costs have tripled since 1999, and the future is uncertain as to whether there is any relief in sight. This upward trend has many individuals and organizations alike concerned over the affordability of care.
In a volatile economic climate, businesses and organizations are looking to cut costs where they can. No one wants to put healthcare coverage on the chopping block during hard times or pass costs on to employees. And while there are hopes that the enactment of the healthcare reform bill will reign in costs, this has yet to be proven.
In the meantime, what are some creative ways to control costs while still offering a robust health plan?
Managing Out-of-Network Claims
So you have affordable network access. Excellent.
But what do you do when an employee is treated outside the coverage area? Without a contract in place, providers are not required to stick to any pricing standards, and typically they will increase their charges as a result. When a physician’s office comes across an out-of-network claim, it will often be viewed as a way to regain some lost revenue due to low Medicare and Medicaid reimbursements.
Effective cost containment efforts can significantly reduce your overall costs. There are many different organizations that offer several different cost management services. They key is finding the solution that is the right fit for your company.
Risky Methods
Silent PPOs and UCR re-pricing were widely used methods until the recent past. UCR has proved to be a flawed re-pricing route in the past few years, leaving significant room for error. Legislation is being introduced in some states to eliminate the use of silent PPOs. Silent, or blind, PPOs access discounts from insuring entities, even if the patient’s health plan does not directly access the provider that the patient received treatment from. Providers end up on the short end of the stick, being shafted with payment and often not realizing it.
If you currently utilize these methods, you may be putting yourself at unnecessary risk. Luckily, there are other options for cost containment.
Cost Containment Options
While there are many approaches to managing costs, some methods are more successful than others in saving your organization money.
Claims Negotiation is a popular tactic, but not all companies do it the same way! Different negotiation firms use different techniques, which can produce different results. Be sure that the firm you choose has a specific formula for garnering the best results. Evergreen contracts or negotiation off of past discounts with a provider can render a decent result, but you may have gotten a higher discount, and thus saved more money, if the negotiation had used data or a formula to ensure that you received the best discount.
Some negotiation firms negotiate strictly off of cost data, or what the cost of the procedure actually was. This may sound like a great tactic, but it is important to ask your vendor where they are getting their data from. Some firms may be using data that is so outdated that it is completely inaccurate, and thus, ineffective. There should be a solid combination of data and relationship behind successful negotiations.
Bill Review services can help you scan bills for errors. No one is perfect, so it’s possible that some of your claims, particularly those of high dollar claims, have duplicate codes, improper codes or mixed up modifiers. Eliminating these errors can surprisingly impact the claim amount and save you money. Navigating the CPT and DRG codes on claims can be nearly impossible for someone who is not familiar with them, so it’s best to trust this to an expert. A risk with bill review services is that the vendor will not stand behind you in court if there were to be an issue that required intervention. Bill review vendors tend to provide their services, and then maintain a “hands off” approach after, leaving you to defend your position in the event that a court hearing would be required.
Secondary and Wrap Networks can be another method for your cost containment efforts. Claims that don’t hit your primary PPO can be re-priced according to a secondary network. The use of secondary networks is great for quick discounts, when turnaround time is imperative. Discounts within this structure tend to be lower, typically only a small percentage off the billed charge. However, some discount is better than no discount, so this is a viable option for many.
When using a cost containment vendor that uses secondary networks, it is greatly important to ask if the vendor owns its own wrap network. Some cost containment firms will offer secondary networks as an option, only to push claims through to their own secondary network, regardless of if they could have obtained a greater discount by using another network. Your vendor should put your savings first, and not try to make a few extra bucks off of your claims. Your vendor should be completely transparent with you, so that you can feel confident that you are getting the best discounts available. Another risk with secondary networks is that there is a greater risk for provider pushback, because the contract being accessed could potentially be 20 years old. If a provider notices a claim being re-priced to an old contract, they may attempt to decline the discount, thus delaying the process.
To reduce your “healthcare roaming” costs – and your entity’s overall expenses – implementing a solid healthcare cost containment plan is vital. Employees are sure to go roaming. Extending your coverage area can save you money and headaches.
About the Author
Ian Throne has been in the healthcare industry since 2007, first as a claims negotiator, where he quickly rose to be one of the most effective negotiators in the department. He recently moved over to the sales department at Consilium, where his experience as a negotiator has proved to be beneficial to his clients. Consilium addresses the needs of clients who are struggling with skyrocketing healthcare costs. Consilium uses groundbreaking techniques to help control and lower healthcare costs through claims negotiation and bill review. Boasting a team of expert negotiators and a visionary process, Consilium is helping clients receive discounts averaging well above the industry norm. For more information on Consilium, please visit asmarterapproach.com. Ian can be reached at ithrone@asmarterapproach.com.
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