How to Resolve Medical Billing Disputes with Contract Payers

By Karen Smiley from Medical Billing and Coding For Dummies

In medical billing, most, if not all, disputes arise when the provider, your employer, is underpaid, and these disputes must be dealt with. Ideally, payer contracts clearly define a firm payment structure. Often, these contracts are based on Medicare fees, and as long as you’re participating in the patient’s plan, all is good.

Sometimes a contracted payer processes a claim incorrectly, a kind of dispute that is easily remedied. Other types of disputes require more work.

You can prevent many issues by verifying the patient’s coverage prior to the encounter. Some plans require that certain procedures be authorized prior to being performed, for example; other plans (HMOs especially) may require a referral from the primary care physician before seeing a specialist.

When you verify coverage, make sure you understand what, exactly, has been approved. A referral may be just for a visit, for example, and if surgery or another procedure is deemed necessary, the patient may need another referral to be treated. So check because a little effort on the front end may save a lot of effort on the back end.

Contract payers are those with whom your provider has a contract or who are part of a network with which the provider has a contract. The contract identifies the payment structure for each procedure and defines such issues as the following:

The number of procedures that are to be paid per service date
The reduction formula, often referred to as the multiple procedure reduction

With multiple procedure reduction (MPD), the first procedure is paid at 100 percent of contractual allowance; the second may be paid at a reduced rate, often 50 percent; and the third at whatever percentage is deemed appropriate per the contract.

Medicare sets the standard by stating that the first procedure is paid at 100 percent and additional procedures are paid at 50 percent of the allowance. Some payers reduce subsequent procedures to 25 percent of the allowed amount, and others may limit the number of procedures that will be paid.
Other payment guidelines, such as revenue code allowances, implant allowances (implants are plates, screws, anchors, and other hardware used to secure orthopedic repairs)
The timely filing limit (Medicare is 180 days, but many commercial payers are less)
The appeals process

If a payer fails to pay a claim as defined by contract, the appeals process is pretty simple: You simply write a letter that details the way the claim should have paid according to the contract. If the claim didn’t pay as expected due to an ambiguity in the contract, you need to outline your expectations, refer to the contract, and stand firm. A well-structured contract averts any ambiguous processing.