About four years ago I had a problem with my cable bill. You see, for the longest time I just assumed that my cable bill cost what it cost and I was auto-paying it. That was until I was taking my annual inventory of expenses, and I noticed that every few months my bill seemed to go up just a little bit. I wasn't buying a lot of on-demand movies, so it gave me pause.
I called the cable folks and they started rattling off a litany of reasons for my bill "adjustments"—there were tax increases, rate increases, promotional channels (that I'd never declined and thus were added automatically)—all because I wasn't paying attention. I should've. I estimated that I lost about $150 that year with all their shenanigans, but it was all completely legal and it was my fault for missing it. Needless to say, now I check my cable bill every month and I will likely never autopay that one again.
Keep my cable bill tale of woe in mind because I'm about to offer you a hard pill to swallow; as many as 40% of your payers are likely underpaying you AND they aren't doing it intentionally AND they aren't violating your contracts. In fact, what's happening is actually your mistake and it's costing hospitals and practices approximately $1.5 billion, or roughly $300,000 annually per hospital.
IMA Consulting, a Chadds Ford, PA firm, offers some insights on what mistakes hospitals are making that cause losses through contractual underpayments in Manage Your Payer Contracts to Optimize Collections. The fact is that payer contracts are complex and with healthcare reform taking effect, your contracts are likely to become much more complex in the next several years. Some hospitals and health systems are already using contract tracking software and that's very useful in preventing underpayments—the thing is the software is about to be outpaced by these new and improved payer contracts. So your contract software "failsafe", if you've been fortunate enough to have one in place, is about to give way.
Now, missing one or two contract payments isn't much money, but missing a lot can add up to hundreds of thousands to millions over time. What makes this area so confounding is that contractual underpayments are difficult to identify—they simply aren't obvious, not only to the hospital but also to the payer—which is why I say this isn't intentional on their part. After all, most payers are also using older systems and software, but even if they did discover that they were underpaying you, do you think they would alert you to it?
Robert Sutton, partner at IMA Consulting and co-author of the article looking at this problem offered his strategies for remedying this situation.
These strategies can mean the difference between unaccounted for net losses in revenue and your hospital bringing in thousands more this year. What my cable bill taught me a few years back is this: when you rest on your laurels, you lose money. It's unfortunately but no one is going to point out where your hospital is losing money, it's up to you to find the problems and fix them.