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Are Payors Changing What They Pay For Medical Billing Codes To Adjust For Supply and Demand?

Startup Mojo from Rhode Island writes:

Hey there, maybe THCB readers can weigh in on this one. I work at a healthcare startup. Somebody I know who works in medical billing told me that several big name insurers they know of are using analytics to adjust reimbursement rates for  medical billing codes on an almost daily and even hourly basis (a bit like the travel sites and airlines do to adjust for supply and demand) and encourage/discourage certain codes.  If that’s true, its certainly fascinating and pretty predictable, I guess.

I’m not sure how I feel about this. It sounds draconian. On the other hand,  it also sounds cool. Everybody else is doing the same sort of stuff with analytics: why not insurers? Information on this practice would obviously be useful for providers submitting claims, who might theoretically be able to game the system by timing when and how they submit. Is there any data out there on this?

Is this b.s. or not?

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8 replies »

  1. Big time insurance companies relying more on analytics for adjusting the reimbursement rates , providers need to analyze how they will implement sound practices in medical billing with an assessment of the claims adjudication mandates. Well written and informative content for healthcare industry enthusiasts in particular.

  2. I’m still thinking… How would this work? Would they say to themselves: we’ve got a lot of claims from hospital x. We see they are not doing so well from a news article. Therefore we think they will take less money for the next month?

    Or would it be seasonal? Our summer is coming up. This large IPA has fewer URIs for sure. Their volume is surely down. They will accept lower reimbursement for a few weeks.

    Or, we see there is some regulatory activity about 635.9. We can screw this claimant on this for awhile until this is clarified?

    Or…we see this provider is using a new biller who we believe is a neophyte from the claims she has sent. We can surely fudge on some of our reimbursements for awhile.

  3. I’m not following the logic. An insurer can’t reimburse a bill until it’s sent to them by the doctor. Billing is not real-time, and is always retrospective because doctors don’t bill for a service until the service is provided. So how would a payor changing reimbursement every day or every hour drive usage of services weeks or months in the past?

    If they were adjusting pre-services estimates, it would make sense, assuming that a significant number of providers or members requested pre-service reimbursment estimates, but I don’t see how it would even work if adjusting payments.

  4. If they are doing this then they are very likely violating contracts with physicians. How physicians can ever run a practice and plan for the future
    Would be an impossible task.
    It is probably and rightfully so illegal.
    How could physicians agree to a contract with an ever varying reimbursement
    Schedule?

  5. If they have contracts in place then these would be illegal (unless someone was CRAZY enough to sign a contract allowing this).

    However, if they don’t they could be doing some kind of UCR algorithm but that seems unlikely as most prefer to use Third Party UCR data to reduce the risk of being sued.

  6. Doctors have negociated contractual fee schedules with insurers, so I don’t think this is likely.

  7. It would shock me if somebody had not developed an algorithm to do this. There’s too much money at stake. On the other hand, this isn’t necessarily draconian.

    I’m sure they also have algorithms to flag who is billing them more than they want to pay and costing them money …

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