Your Money or Theirs???
Although this column is usually focused solely on coding and reimbursement issues, I thought it was necessary to address a hot topic of recent discussions that is related to reimbursement in the realm of compliance. As most of you know, your documentation drives coding, which in turn drives your reimbursement and your compliance risk. While most Emergency Physicians rely on their billing and coding vendor to provide coding for their charts, the risk (i.e. fines and penalties) associated with incorrect coding and billing practices still resides with the physician as it is your provider number submitted with each claim. Since you have the audit/compliance risk as well as the lost reimbursement due to poor coding and billing practices, it is imperative to know how your billing and coding vendor handles the issue of Refunds.
Refunds present a huge liability to the physician group if not handled appropriately. Refunds should be processed timely and in accordance with federal, state, contractual, and carrier specific guidelines. As you might guess, there is no consistent policy among the different carrier or even states; therefore, it is important for both you and your billing and coding vendor to know the rules for each carrier and each state. Furthermore, some carriers recoup the payments as offsets of future payments while others force you to issue a refund check. Recently, we even discovered that some carriers force you t go on-line and complete a refund form and they subsequently perform an offset of future payments. Refunds are costly to issue and very cumbersome. If I had to estimate, I would guess that the billing vendor spends an average of $10-12 to generate a refund check. This cost is important for the physician because not all vendors provide refund check issuance as a part of their normal services. Make certain that you ask their vendor if they provide this service, whether it is a part of their base fee, and what they charge for it if it is not included as this becomes your cost otherwise.
Just as important as the issuance of refunds is how and when they are requested and whether the refund check is cashed by the refunded party. Many states now have guidelines that determine how long an insurance company has to request a refund and under what circumstances they may or may not ask for a refund. Check you State Laws and incorporate these into your managed care contracts. These laws are important as I have seen insurance companies routinely request refunds on claims that are in excess of two years old. At this point, you may or may not be required to refund the plan; however, your ability to collect from the patient is very low as a number of variables (mainly time) will create obstacles. The last check point in the refund process is making certain the check is cashed. This is very important because many states have very specific regulations for escheat property.
From a billing and report viewpoint, several billing company reports I have reviewed in the past few years fail to adequately account for refunds. Accounting for refunds adequately is necessary from a financial and compliance standpoint, it is also important to account for from a billing fee standpoint. Since many physician groups compensate their billing vendor on a percentage of collections, you should make sure that the total collections number you are paying a billing fee on is net of refunds. Furthermore, you should ask your billing vendor to walk you through the process of billing to make certain that their billing practices are not designed to create refunds or create situations that put you out of compliance with your managed care plans. One example of such is billing a patient at the same time you bill their secondary insurance. First, this will generate a plethora of $10-25 duplicate payments. Secondly, this may be out of compliance with your managed care contracts that usually mandate that you not bill the patient until you receive their explanation of benefits/remittance advice. Lastly, the reports will overstate collections and average patient collection as a result of these refunds unless the billing company accounts for these properly.
In conclusion, refunds do affect your total net reimbursement and should be accounted for and refunded in a timely, properly fashion to make certain you are in compliance. Don't' be duped into thinking refunds are only due when requested by the patient or insurance company. Legitimate refunds due are their money rather than yours .