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We all know what we went through during sequestration last year. As if the cuts were not enough, we had the accounting nightmare of what to do with the related deductibles and coinsurance differences.

Adding insult to injury, your Medicare Advantage (MA) plans followed suit and reduced their payments. You have to scratch your head and wonder if that makes sense (in most cases, no, it doesn’t). You also may have been hit with reductions to your Medicare payments for readmissions. 

You might have thought the MA plans would have followed suit, but they took it one step further. Most MA plans refused to pay readmissions at all. Even odder, they all did these things in lockstep at the start of July. 

What Can You Do?

Start by reading your contracts. Some terms that should not be in your contract include:

  • Payment is limited to lesser of charges or Medicare reimbursement.
  • Payment is determined by Medicare rates in effect at time of service.
  • No reimbursement for readmissions.
  • Payment rate is 100 percent of Medicare base rate (not Medicare allowable – tricky!)

Next, look at the appeal rights in your Medicare Advantage contracts and incorporate them into your revenue cycle. If you have 120 days from the payment date to file appeals, make sure the appeals are getting filed. By the way, during contract disputes this may require you to appeal every paid claim.

Make sure you have good communication with your patient accounting department. Discuss key performance indicators with them, such as net revenue per day and per case. Make sure you know your clean claim and denial rates and that they fall into industry averages.

You also will want to look at your MA contracts. A bad contract may be worse than no contract. I regularly see providers contracting for less than Medicare rates when they could get Medicare rates as a non-contracted provider.

Medicare Advantage plans likely will continue to send patients to you even if you are not contracted.

Finally, consider legal action when appropriate, particularly on issues that affect multiple providers (like sequestration). Here is a list of potential underpayment scenarios associated with MA plans that may warrant the big guns:

  • The contract says they pay Medicare rates, but the plan deducted sequestration amounts.
  • The DSH payment percentage the MA plan paid is wrong (sometimes because the database from Medicare called the “pricer” data is wrong).
  • The plan denied claims or appeals submitted more than 120 days after discharge or payment, but you are not contracted with them and find no reason to indicate why they are doing this.

Finally, as I said before, all of this does not work unless you have your revenue cycle humming.  You need to be tracking clean claim rates and denials, by payer, to even find out with what you are being hit. 

About the Author 

Timothy Powell is the Director of Managed Care and Reimbursement for the Health Care District of Palm Beach County, Florida.

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Timothy Powell, CPA

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of the RACmonitor editorial board and a national correspondent for Monitor Mondays.

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