In April 2006, the clinic implemented software that analyzes payments from insurance companies to identify claims underpaid or overpaid. The software also includes decision support and workflow functions to manage the process of appealing payment decisions.
The practice pays $9,000 a month for the Phynance software from Medical Present Value Inc., Austin, Texas, plus the cost of two existing employees who now dedicate a significant part of their time to being insurance analysts and working the disputed claims, says Shane Irving, service line director of business services and information systems at Bend Memorial.
Further, implementing and using the software is relatively easy, he adds. "It was probably the easiest implementation I've been through with external software."
The Phynance software extracts payment data from the clinic's practice management system and compares reimbursement against the terms of the appropriate insurer's contract with Bend Memorial.
A "variance report" flags potential underpayments, and decision support software gives the reasons a particular payment was flagged. For example, an insurer may have paid a claim using the incorrect relative value unit or conversion factor payment schedules established for a visit. A simple 10-minute office visit, for instance, might be 1.02 RVUs and billable at $81.60, while a slightly more complex 15-minute visit is 1.66 RVUs and billable at $132.60, Irving explains.
Another way a claim may be underpaid is if the payer bundled a series of services into one payment, although that payer's contract does not authorize bundling for these types of services, he adds.
To start using the software, the clinic sent copies of its insurance contracts and fee schedules to the vendor. The vendor scanned the documents into a data repository and worked with the clinic to resolve any questions or issues about contract terms.
The vendor also loaded Bend Memorial Clinic's claims payment data for the past year into the repository, a common practice because many insurers permit appeals on payments up to a year old.
As the clinic continues to use the software, it can tweak analysis of claims going to particular insurers based on their payment patterns. "The analysts will start seeing particular items flagged that don't appear consistent with the contract," Irving says. "So they can create specific filters for specific CPT codes to specific payers."
Validation The Key
Bend Memorial Clinic analyzes payments from insurers covering 80% of its business, including Medicare, which is the most accurate payer, Irving notes.
The clinic has not gotten much resistance from insurers. One wanted to see the practice's data "so they could see what we were seeing and could monitor their payment system," he adds.
But the low payer resistance, he believes, is because the practice took the time and attention to validate the system's accuracy.
The validation stage took the most work during the implementation phase. The practice used live data to determine if flagged payment variations were accurate and not false positives and to calibrate the modeling functions in the analysis software.
"We don't want to be appealing incorrect items because that's when you start to get a lot of resistance from payers," Irving says.
Training Bend Memorial Clinic's two analysts to use Phynance only took a few days, but it took a month for them to become confident with the application, Irving says.
And these analysts had substantial backgrounds for their new positions, he notes. One had experience working with insurers in the billing department and the other had good analytical skills and experience in data mining, extracting information and generating reports.
Other Tricks
Bend Memorial Clinic also checks for overpayments above a certain threshold, because it doesn't want insurers coming back to the practice and asking for refunds. Less than 1% of flagged claims are overpayments, usually resulting from an incorrect RVU loaded into a code, "so it stands out pretty quickly" and is easy to fix, Irving notes.
Since the clinic started using the Phynance software, its communication with insurers has significantly improved, he adds. "Insurers know if they make a mistake, 99% of the time we're going to catch it and they'll have to fix it."
About 70% of the clinic's physicians are specialists, and the practice also uses the Phynance software when projecting the return on investment of adding a new service. "We can run new services through the software and see how they will be reimbursed," Irving explains.
Being able to conduct that analysis also speeds the process of deciding whether to add a service or procedure because senior administrators have the data to make a decision sooner. Irving estimates the adding of four or five new procedures in the past 18 months was aided by being able to analyze expected payments.
Since October 2006, the clinic has used an additional module of the Phynance software, called Contract Analysis. The module enables administrators to see how new or renegotiated contracts with insurers will affect the practice's bottom line.
Having that data aids in negotiating better contract terms, Irving believes. Last year, for instance, Medicare reduced reimbursement for certain diagnostic imaging procedures by 40%. That was an even bigger problem because commercial insurers often follow Medicare's payment decisions.
But the practice was able to use the software to identify the codes for these imaging procedures, showing the number of procedures done and the community need for them, and then negotiate for better reimbursement with commercial insurers.
Being the largest multi-specialty clinic in the region helps at negotiating time, Irving acknowledges. "We do have certain specialties that aren't otherwise available on this side of the Cascade Mountains."
Early this year, the clinic also started a rollout of a third application from MPV, called Patient Portion Pricer. Targeted toward high-dollar departments, such as surgery, imaging and gastrointestinal, the software uses contract information in the database to estimate the patient's part of the bill before a procedure is done.
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