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Reasonable
And Customary,
or Just Arbitrary? |
| Because of our
expertise in surgical coding, fee-schedule setting and dealing with many
third-payor carriers, Center for Health
Insurance Claims Advocacy recently had the
opportunity to work with a durable medical equipment provider (DME) in
Phoenix, Arizona. The Center for Health
Insurance Claims Advocacy was responding to this provider's
complaint as a result of inconsistent "Reasonable and Customary"
billing decisions. |
| We all know, of
course, that most insurers today do not actually pay on fees charged by
physicians or healthcare providers. Rather, they pay what they call
"Reasonable and Customary" (R&C) or prevailing fees.
However, when asked to provide the data from which they have developed
their variable and elusive reimbursement standards, the insurers
decline. Instead, they simply tell the insured that the provider of
health services is charging above R&C, thereby coming between the
trust of a patient and doctor. They use this methodology along with
others — such as bundling procedures not meant to be bundled — to
reduce their fee-reimbursement outlays.
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| Our experience in
consulting with a DME provider is that with insurance
companies R&C
reductions, more physicians and healthcare providers than not are charging above that criterion
— that is, above R&C. How is this possible? To be valid, an
average must have as many charges above it as there are under it. Why,
then, is the R&C so variable? And finally, why does it often vary
even within one insurer? One hypothesis is that the insurance companies
are including the negotiated, lower fees from managed care contracts
into the R&C to skew it downward. This is unfair and certainly does
not represent average fees for straight fee-for-service relationships.
However, under their contracts with their customers, the insurance
companies can set these R&C fees at any level, thereby reducing the
benefits they pay. |
| If
patients knew what was
going on, the insured community would be up in arms about the
fee-evasion that is being foisted on them. Indeed, patients are
continually having to pay more and more out of their own pockets even as
premiums keep climbing. In essence, patient coverage is going inexorably
down and the insured have no control over the progressive reductions
they are experiencing. In any other contractual environment this kind of
"fulfillment" would be considered fraud. |
| Compounding the
situation, patients are not rising against the insurance giants.
Instead, they are venting their ire on the providers of medical care. They believe that providers should write off anything
not covered by the insurance, since the contested fees are
"obviously" not reasonable. |
| However, this is the
reality. Billing staffs are constantly having to explain to patients
that the provider or physician does not work for the insurance
company, and that
they do not set his or her fees. As a consequence, much ill will is
being engendered in client-patient relationships in those very
circumstances where trust above all is needed. Meanwhile, more and more
physician labor hours are being spent fighting with the insurance
companies. Finally, doctors' incomes are going down because their fees
are being reduced to help maintain patient good will. |
| How can the physician
cope with these pulls and tugs on the reimbursement purse-strings?
First, he or she has to become more knowledgeable in setting fees. This
can accomplished fairly and equitably by broader reliance on
authoritative industry resources. These include historical charges, the amount of time, effort and risk
involved in a procedure, and establishing a single office policy on fees
and adjustments, along with patient education, are also vital elements
the provider must take into account in establishing acceptable fees. |
| It is important that
all of these components be considered, as omitting any can result in
fees that are too low, too high, or simply erratically projected. Common
sense also comes into play: just because Medicare reduces a second
surgical procedure’s fee by 50% does not mean that the provider must
do so for non-Medicare patients. |
| Increasing
reimbursement through better coding, follow up and valid insurance
appeals will have a dramatically positive effect on the bottom line of
the practice as well as on patient morale. This means that as your
levels of reimbursement goes down — and your fight for patients gets
harder because of more and more managed care — your survival in the
21st century may well depend on the allocation of more and more
high-level resources on the reimbursement aspects of your practice. |
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