One area we have repeatedly found to be a source of leakage or at least obscurity is insurance write-offs. As most practice managers know, insurance carriers do not stand behind their estimates. Even if they have robust data systems to track available and remaining benefits, they are all careful to disclaim that any estimate given is just that—an estimate. Any practice that wants to avoid exposure there should make sure their service agreement includes clear language that the insurance coverage estimate is an estimate, and that insurance is accepted like any other form of payment. If the carrier ends up paying less than the original estimate, the patient is liable for the unpaid portion as if it were any other failed form of payment. When a carrier pays less than the estimate and is unwilling to accept an appeal, that amount should shift to the patient balance and be added to the patient’s payment plan. After all, why should you earn less for your services because a carrier agent misstated benefits?
Seems simple and reasonable, right?
Well, we regularly see that many of the over 250 practices we’ve onboarded think they have that policy in place, but often don’t enforce it. When faced with having to call a patient to inform them they owe more money than what was originally planned, team members will often shy away and simply write that amount off (average underpays range between $200 and $400). One recent 300-start practice owner had as much as $8,000 of insurance adjustments annually from underpays without knowing it. That’s not as much an outlier as it is an average.
How could amounts like this slip through so regularly? The answer lies in the data or, more accurately, the lack of data. I normally like to have more comparative data and charts in my articles, but in this case I am limited by the lack of good industry information and any leading management system reporting. Leading practice management systems do not break out insurance underpay adjustments, instead lumping them in with all other production adjustments including post-contract courtesies, etc. So there is no smoking gun, and no ability for any consultant to easily pinpoint that as a leakage factor unless overall adjustments are running high enough to raise a flag. Since OrthoFi is accountable for claims management and performance, we report any and all payment plan adjustments from insurance ledger to patient ledger as part of our monthly balance sheet, so we can show that there was an underpay, and that we are moving to collect on that balance from the patient. So what can you do? How can you know if you are leaking in this area? Here are a few things to consider:
1. Contract: Review your contract language for clear language around the patient’s liability for insurance underpayment.
2. Clear Message: Make sure your TC takes a moment to spell out the above policy when patients sign. If they don’t, it can cause friction later.
3. Clarify Policies: Make sure your team is fully aware that you intend to enforce this policy except in extreme cases (deep financial hardship, small
4. Create Visibility: If you don’t have a software that tracks and breaks out these insurance underpays, have your team log any and all insurance variances and report on how these were transferred to patient ledgers.
Once you put some due focus in this area, I can almost guarantee you that you will be shocked at what you find. This is just one of many areas of leakage in the average practice that add up to large gaps in lost income. Stay close to the numbers, even when they’re harder to find. OP
About Inside the Numbers: Answers to questions submitted to Inside the Numbers are based on data collected by OrthoFi™, and presented by CEO David Ternan. The data pulls from 250,000+ consults and over 200,000 patient starts in over 250 practices, including patient demographics and preferences, risk profile, and payment performance on over $200 million in receivables. Inside the Numbers aims to help you make informed decisions about patient financing and to dispel myths that can hinder growth.
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