Despite payer pushback, there’s been a huge increase in the number of out-of-network (OON) providers over the last several years. Market consolidation, ever-narrowing networks, and declining in-network reimbursements are driving some providers out of network. Others are tempted by the prospect of bigger paydays. Either way, providers face myriad out-of-network billing risks.
You can’t contract with every single health plan, so chances are good that you treat patients for whom you are out of network. If patients are visiting your practice or facility out of network, that’s likely a good thing. It may mean that patients are choosing to pay more to come to you due to your great reputation or the unique expertise your practice offers. Or, they may have been referred to you by their in-network PCP. By having compliant policies and procedures in place—and following them 100 percent of the time—you can protect yourself from out-of-network billing risks, like allegations of improper billing and fraud.
3 Major Out-of-Network Billing Risks
At the Ambulatory Surgical Center Association’s 2017 annual meeting, attorney Mary Jean Geroulo emphasizes avoiding the most dangerous “trifecta” of out-of network billing risks: waivers/fee forgiveness, increased payer charges, and payments to referring physicians. Here’s what she recommends:
- Providers should never tell patients that any obligations will be waived.
- Never advertise that your facility will waive or forgive payments.
- Advise your providers that the facility will collect patient payments unless the patient qualifies for a hardship or prompt pay discount.
- Have clear, written policies regarding hardship or prompt pay discounts. Ensure there is appropriate documentation in the patient record when applying these discounts.
Increased Payer Charges
- Be cautious about inflating your facility’s rates. “Charges that are grossly inflated compared to similar facilities tend to draw unwanted attention,” Geroulo warns.
- Use the same charge amount on claims as you do to calculate patient payments.
- Be careful when contracting with marketing companies, especially those with physician entities behind them. Ensure the marketing company discloses what, if any, type of physician arrangement it has. If you are paying a marketing company a percentage of the revenue that their marketing generates, that could be interpreted as a kickback in some circumstances.
“The more egregious you are with [these] big three, the more likely you are to get pegged by the government or insurance company,” Geroulo notes. “It’s a good time for everybody to step back and look at how you’re doing [OON]if you’re doing it, and make sure you’re not committing any of these big errors.”
Strike a Balance
When a patient wants to see you but you’re not in-network with their health plan, you have two choices:
Charge the patient a market rate and leave it up to him or her to file an OON claim with their health plan. The benefit is that there’s no paperwork on your end, and you get your payment up front—if you’re diligent about collecting at the time of service. The downside? You may not get those OON patients in the first place. They may simply choose a less expensive, in-network provider.
Submit the OON claim to the patient’s health plan, wait for reimbursement, then bill the patient for the rest. This is called balance billing, and it’s one of the biggest out-of-network billing risks.
If you’re still uncomfortable talking to patients about finances—and many physicians are—balance billing is going to be a big problem. No one likes a surprise bill, especially a substantial one. It results in delayed payment, negative feelings, negative word-of-mouth or online review, and probably losing that patient’s business.
Start with transparency by always fully disclosing your OON status to patients. This should be done verbally as well as in writing. It’s simple to include an OON explanation form in your patient registration materials. Most importantly, make every effort to inform patients of estimated payment obligations prior to their visit.
Eyes Open: In some cases—since you have no relationship with the patient’s payer—the payer sends the OON reimbursement directly to the patient. You must depend on your patient doing the right thing by forwarding the payment to you. Most do, though maybe not as quickly as you’d like. If they don’t, you’ll have to employ time-consuming, costly, and sometimes ultimately unsuccessful collections practices.
When Bad Debt is More Than Bad Debt
A good collections policy does more than get you money. It protects you from the minefield that is out-of-network billing. “Waiving any part of [the patient’s payment] is, in the carriers mind, enticing your patient to come in, and that’s a kickback. This has been litigated,” warns Lisa Rock, president of National Medical Billing Services, who also spoke at ASCA 2017. If an insurance carrier targets your practice for an audit and finds that you’re writing off a lot of out-of-pocket payments, you’re going to have some issues, she notes.
Geroulo agrees. The key thing regulators are look at is “did you make a good faith effort to collect, or were these bills just submitted pro forma and you had no real intent to collect?” she explains. (Example: at Forest Park Medical Center, billing staff were actually telling patients to ignore the bills they received, claiming the patient responsibility was an error that just needed to be ‘corrected,’ meaning: written off.)
The best way to protect yourself and your practice from accusations of improperly waiving patient payments or practicing fee forgiveness is by making reasonable and consistent efforts to collect patient payments. “You have to have a really strong collection policy today,” emphasizes Rock. “You can’t just send three bills that get thrown in the trash and then write it off.
7 Elements of a Compliant Collections Policy
Specific, written internal collections policies will help you hold patients accountable as well as protect you from accusations of fraud. That policy should include things like:
- Who will screen patient accounts for financial assistance or hardship options.
- How and when you’ll flag patient files for collections.
- When and at what intervals will you make collections phone calls or send letters.
- At what point your practice will offer a payment plan.
- Who is authorized to offer and approve payment plans.
- What happens if a patient doesn’t meet payment plan obligations.
- When you will forward a balance to an outside collections agency (if you use one) or write it off as bad debt.
Keep in mind that out-of-network charges are a larger financial burden for patients. Unless you are really diligent about estimating the amounts these patients will owe and collecting them at the point of service, your practice may need to spend additional time, effort and money following up on those bills. Over time that could negate any financial benefit you received from the higher OON reimbursement.