Sometimes, local branches make decisions which should properly be made by corporate executives, especially in the area of reimbursement. These decisions can be very, very expensive. Sometimes the home office does not even know that these expensive decisions are being made on a routine basis. The decisions involve closing a patient account, and this is how it works.

A patient is billed, to his insurer, for treatment of, lets say, $30,000.00. The insurer pays only $22,000, claiming that this is their usual and customary. The balance of $8,000 is certainly collectible from the insurance company, but most reimbursement people do not know that. The local office doing the billing also is unaware that the balance can be collected, at least in part. Many of these cases are sent to the home office (to pursue the $8,000 balance), and indeed they frequently are pursued by the more efficient companies. However, there are a certain number of cases that never get to the home office, and are never pursued by the local office either. Those are the cases where the local office decides to "adjust" the invoice, or "adjust" the account. In effect what they do is bypass the home office. They adjust the account so that it shows that only $22,000 was billed, and $22,000 was collected, 100%. The local office looks good, and the home office never sees that they billed $30,000. It is a practice that the home office cannot detect without changing the reporting requirements. But if not aware of the problem, it never changes the reporting requirements.

The practice seems innocent enough when it involves only one patient, and perhaps one insurer. But in high volume companies the losses can be substantial. More important, the company simply does not know anything about it.

The solution: The procedures will have to be revised so that all adjustments will require the approval of a financial executive. At the very least, the home office must require a list of every "adjustment" to any bill, or the accounts receivable, and the details and the reasons for every adjustment. When you get the details on every adjustment each claim must be turned over to an attorney knowledgeable in collecting "usual and customary" claims from an insurance company. And in the future, ONLY THE HOME OFFICE MAKES ADJUSTMENT TO INVOICES.