Biller’s fee schedule oversight a costly one for Southern pathology lab

May 19, 2016

Problem: A quarterly audit for an independent Southern pathology lab unveiled the lab received $31.94 less for its global 88305 CPT codes (a microscopic tissue examination to provide diagnosis) than its contracted rate with a large commercial insurance carrier allowed on about 50 percent of the codes reviewed. When contacted about the discrepancy, both the lab’s third-party biller and the carrier said they were unaware of the problem and were unsure as to why it was occurring. Since this particular carrier accounts for roughly 38 percent of the lab’s payer mix, the auditor determined the client could have lost up to $82,000 in 2015 if 50 percent of the lab’s total 88305 volume was underpaid as the audit showed.

Process: To confirm the error, our auditor went as far as to locate two different cases that were billed identically (even down to the pre-fix) except for the patient ID numbers. Both were paid different rates, solidifying that there was no discernible reason for the difference. We’re also working to determine how the biller initially followed up on this case since the audit shows they received payment from the insurance carrier for a batch of 88305s and their system automatically accepted the adjustment on the same day. On its face, it looks like the biller was simply accepting what the carrier was paying without question. We are now following up to see if there is any possibility to appeal to reclaim these underpayments.

Recommendations:

  • Follow up with your biller the moment you feel revenue isn’t adding up: In this instance, our client said he felt like he was losing $10,000 a month despite doing more work. His gut feeling was correct.
  • Know the appeal limit in your contracts: Sadly, some contracts with carriers stipulate providers have only 180 days to appeal for an underpayment. After that, any money owed to the provider is lost. Performing a regular quarterly audit will help ensure underpayments are identified in time for an appeal to be made.
  • Most importantly: Your billing staff or company MUST actually compare the paid EOB to the amount you are allowed to collect. This can be difficult since many billers have a “managed care tracking module” in their software that is often rendered useless due to constant fee schedule changes. This comparison takes time and money, but in the end, the client makes more money.

Who’s watching your revenue like this? Is this happening to your practice and you simply are unaware?

Questions about how we can help maximize your practice’s revenue stream? Contact Mick Raich, president of Vachette Pathology and Stark Medical Auditing, at mraich@vachettepathology.com or call us at 517-486-4262.

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