Do not let the insurance company brainwash you and your people.

It appears that the insurance companies have succeeded in brainwashing a whole generation of reimbursement people. We used to see many cases of claims against insurance companies where they paid half or less than the billed amount. Now we see none. Why? The explanation of benefits simply says that the insurer is paying THEIR "usual and customary" rates. We have written previously about this phenomenon, but to no avail. The reimbursement staff should know that if the insurer pays less than the full amount of the invoice, and the staff closes the file, they have just given away the whole unpaid portion: Thus, if the invoice is for $10,000.00, and the insurer pays, for instance, only $4,000.00 saying that this is according to their 'usual and customary', then $6,000.00 has been denied. That $6,000.00 unpaid should be immediately appealed. If it is not appealed, you have given away to the insurance company $6,000.00, needlessly; and you have caused your company a loss of $6,000.00. You cannot cause your employer to sustain such a loss and be comfortable in your job. These losses mount up, and eventually cause the mass layoffs that we have continue to see in the health care field.

But these losses are avoidable. Appeal immediately, and continue to appeal every one of these denials as soon as they happen. And do it relentlessly. Let the insurers know that you will not tolerate these "automatic" discounts.

We had a similar situation recently, against CIGNA. For one patient, they had been billed at the health care company's usual rates. CIGNA paid at the Average Wholesale Price. The difference between the provider's usual rates and the Average Wholesale Price came to about $160,000.00. And CIGNA stated that their AWP rate was their "usual and customary" rate. Luckily, the provider appealed, and appealed. Then they sued. A Federal Judge decided in favor of the provider. He did not believe that the wholesale price was the "usual and customary" rate. But not only did he decide in favor of the provider, he awarded counsel fees to the provider as well.

Of course, not every claim ends up that way. The huge majority of claims wind up as a writeoff, and mostly the CFO or the Vice President for Reimbursement does not even see them. They are not appealed (within the insurer's appeal system), the provider does not sue, and they are simply written off without comment. If the reimbursement person is asked, they simply respond, "Great, we received the 'usual an customary', or "that's all we can get, usual and customary". The provider has been RAPED, and all that can be said is 'that's all we can get'!!! But if this situation persists, no health care provider can operate at a profit.

That is not good enough, Every reimbursement person should examine this more carefully. The term 'usual and customary', or 'reasonable and customary' has been defined by the courts. They usually say that the 'usual' part usually means the rate that the provider usually charges his 'average' customer. That certainly is not what the insurer pays, in most cases. The term 'customary' usually means the usual charge made by most other providers in that locality. Indeed, if the insurance policy defines 'usual and customary' , that is how they define it. Certainly CIGNA d(~fines it that way. Also, the ERISA plans, usually define the term that way. That definition does not allow the insurer to choose its own rate, except by a local survey of some kind among the local providers. I have never heard of an insurer conducting such a survey to determine what it will pay. They will simply take an arbitrary discount, or pay AWP, and add a few dollars. But that is not what their own insurance policy or health plan says. They must follow their policy or plan. If you allow them to pay AWP, or to take an arbitrary discount, you are allowing them to RAPE your company.

If your company fails to show a profit on its next annual report, think back on how you may have contributed by accepting the insurer's 'usual and customary' payment without protest, or appeal, and without showing the vice president of reimbursement that you did not get enough payment on these claims.