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Spring 2010

Out Of Network Penalties: How Your Patients Can Help You Receive Payment In Full

Hal Nelson, CPC
Director of Compliance and Client Services, ABC

When a patient follows their payer guidelines and has surgery by an in-network surgeon at an in-network hospital, why should they be assessed an out of network penalty if their anesthesiologist is non-contracted with the payer? The answer might surprise you – often they do not pay a penalty. United Healthcare and other managed care entities will typically pay your claim on appeal at 100% of billed charge, and getting the patient involved is the most effective way to accomplish this. The issue of non-network penalties has been going on for years. Four specialties are the most involved – radiology, anesthesiology, pathology and emergency medicine. Patients have no advance knowledge of whether one of these specialty physicians is in network or not, even if they choose a hospital and surgeon that are in their member directory.

When a patient has services provided by a non-par anesthesiologist in this scenario, the claim payment will typically be reduced by 45% of billed charges, since the payer software recognizes that the anesthesiologist does not have a contractual relationship with the payer. This means that on the patient’s explanation of benefits (EOB), the insurance company passes the non-covered charges on to “patient responsibility”. Not only is this unfair to the patient, it may also be a violation of the contractual terms that the payer has agreed to abide by when the patient signed up for their plan.

Patients are unaware of the insurance company’s responsibility to pay the charge in full. From personal experience, when I worked for several managed care health care plans, a small percentage of patients would call and complain, and the payer customer service reps were instructed (only at that time) to adjust the claim and pay 100% of billed charges. Unfortunately, the majority of patients would ignore the EOB and eventually get sent to collection. This resulted in lost revenue for many anesthesia practices.

The key to resolving this issue is helping to educate the patient on their rights with their insurance plan. A good billing customer service staff can explain the issue to the patient in simple terms and empower the patient to lobby for full payment on their behalf. A more proactive step is for the billing department to create a form letter explaining the appeal process that is sent to the patient as soon as the initial out-of-network penalty is assessed. The amount of additional collections that are possible by employing these strategies is staggering.

One would think that in today’s hi-tech world, insurance companies would pay the claim at full charge for a non-network anesthesiologist on initial claims submission. Then again, United Healthcare didn’t make 81 billion dollars profit last year by accident. Educating your patients on this issue will not only increase your collections, it will also show good will to your patients and help them avoid being unfairly penalized by their insurance plan.

Hal Nelson, CPC, Director of Compliance and Client Services for ABC is a nationally-known expert in the field of anesthesia, Nelson brings a variety of expertise to ABC clients in helping medical practices resolve anesthesia coding, billing and compliance challenges. His experience navigating through Medicare billing regulations, anesthesia and pain coding, payer audit defense, charge ticket review, compliance plan development and physician documentation analysis ensures ABC clients have a safety net for these challenging issues. He has 20 years experience on both the payer and billing side and is one of the specialty executives in charge of supporting sales, marketing, operations, auditing and compliance initiatives.