Health care providers, in the constant
effort to collect their invoices, have made increasing use of collection agencies. They certainly are necessary, especially in attempting to collect from patients. But there are pitfalls. Thus, one public company we know of turned over to a collection agency about $1,050,000 of claims. Two years later the collection agency had collected about $54,000.00. Nobody was watching the store, there was no written agreement, and the provider had not kept copies of the files it turned over. The results were disastrous.
In order to avoid such problems we
have put together the following SEVEN RULES for dealing with collection
agencies:
- Always make a written contract with your collection agency. It should contain the following items.
- Never send originals of the claims documents. Send only copies, and keep a copy of every document you send, with a note of which documents were sent.
- Set a time limit, of not more than 120 days for insurance and medicare cases. If the collection agency has not collected within that time they must return the file, without fee. This should not be a hardship because collection agencies can only send letters, and if they have not collected in that time they lose interest anyway.
- Do not allow the collection agency to appeal insurance or medicare or ERISA claims. If they get a denial they must fax it to you immediately, and return the entire file at once. Do not allow them to keep these files to the 120th day because an appeal must be instituted immediately, and they are not equipped to conduct the appeal.
- Do not allow the collection agency to retain an attorney on your behalf. Retain your own attorney. In some states it is a violation for a collection agency to retain an attorney for your claim. There are attorneys who specialize in this field, and they are usually not affiliated with collection agencies.
- If the collection agency reports to you that the insurer, or medicare, or the ERISA plan has denied for "medical necessity", or "experimental treatment", have the case returned to you immediately, do the appeal, and find an attorney who specializes in these cases. Many of them can be collected. Do not waste any time.
- If the collection agency reports to you that the insurer or ERISA plan has paid "usual and customary". Actually, many simply pay what they can get away with. The courts have defined, and indeed many insurance policies define "usual and customary" as follows: "usual" means the usual charge of the provider. "Customary" means the usual charge of the competitors of the provider. But some insurance companies ignore those definitions and simply pay what they think they can get away with. Thus, one national insurance company pays AWP (Average Wholesale Price) plus an allowance for the nurse. That is an absolute violation of the insurance policy, yet they get away with it because the average small provider (as well as some very large ones) do not complain, and let them get away with it. One provider told us that he thought that one insurance company took an automatic discount, even though there was no case management, and no managed care agreement. If then your company bills the lower amount (your usual rates less the discount taken) then there is a big loss, and it cannot be recouped in litigation.
What can be done to remedy this situation. Well, you MUST BILL YOUR TREATMENT AT YOUR USUAL RATES, IN EVERY BILL, WETHER THERE IS A CASE MANAGEMENT OR MANAGED CARE AGREEMENT. YOU CERTAINLY MUST BILL THAT AMOUNT IF THERE IS NO AGREEMENT FOR A DISCOUNT. If a discount was authorized, then show it. If you do that, then if the discount is not authorized, you can get it back in litigation. You should re-examine your billing procedures periodically so as to prevent any unauthorized discounts.
Another rule: you should not case manage your cases. The theory behind case management is that it gives the insurance company the opportunity to see to it that their insured gets the right treatment. That is a joke. Its sole purpose now is to lower the cost to the insurer, and in many cases the cost to the insured is raised. It is rare that the insurer's case manager requires that the charge to the insured be lowered. If you can get away with it, DO NOT CASE MANAGE YOUR CASE!!! Many providers hire a case manager whose sole function is to allow the insurer's case manager to discount your rates. Put your case manager to more functional use, but do not allow case management.
Also, do not allow any unauthorized discounts. Go after any insurer who takes them. Persist. If they do not pay back, then sue them. If they are in the habit of taking unauthorized discounts then they are accustomed to being sued. And, if you do not sue them, they will pay no attention to you, or any of your invoices.
© 1998 by Abraham Wax
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