Out of network problems are probably costing you money. Therefore, many
physical therapists choose to become in network providers. The benefits of
being an in network provider include;
- The opportunity of increased referrals
- Claims are processed more quickly, assisting with your cashflow.
- The payment for services goes directly to you, bypassing the patient.
- Claim denials are reduced.
As good as this arrangement may appear, the biggest caveat is that in-network
providers are reimbursed less for services rendered.
Some physical therapists are deciding that out of network is preferred due to
the reduction of in-network payment amounts. It is important to recognize
the consequences of this action. As an out of network provider, sometimes
reimbursements are generally higher than an in-network provider. However,
there are negative outcomes associated with out of network providers that can be
adressed with preparation.
Many insurance companies ignore the ‘Assignment of Benefits form with out of
network providers (an AOB form is signed by the patient and authorizes the
insurance provider to pay you directly). Simply stated, when a patient
assigns their benefits to the practice, the payment (checks) are
sent to the practice and not to the insured (patient). But, because the
insurers’ relationships are with the patient and not with the therapist,
insurance companies regularly ignore the AOB, sending the checks directly to the
An investigation by the New York Attorney general into out of network
reimbursement was published in 2009. The document is available at:
. The report concluded, “Our investigation has shown that the conflicts of
interest inherent in the current system have a real impact on working families
in New York. Analysis discloses that for ordinarydoctor’s office visits, the
Ingenix databases understate market rate by up to 28 percent across the
oard. This translates to at least hundreds of millions of dollars in losses for
consumers over the past ten years across the country.” An additional
investigation by U.S Senator John Rockefeller that found these same flaws in the
out of network reimbursement systems is available at:
http://www.omhc.com/download/Ingenix_Congressional_Report.pdf. In January
2009, The AMA settled a suit against United Health Care for $350 million for
‘allegedly’ under-reimbursing consumers nationwide.
What does all this mean? It means that we therapists can obtain increased
reimbursements for out of network claims if we appeal these unreasonable
reductions. When an unreasonable reduction occurs, and the EOB is
received, a written appeal should follow. The letter should contain should
include the following legal precedents:
- The former New York Attorney General's investigation and settlements (cite the
Code Blue Report).
- Sen. Rockefellers investigation and report findings.
- The UHC AMA settlement.
- The various class actions that have emerged since the UHC AMA settlement.
The intention here is to establish that out of network claims are being
under-reimbursed and that an increase in payment is warranted. Though
appealing a paid claim may seem unusual, reduced payments are not unusual.
These lost revenues will never be acquired with a passive attitude, therefore
you should consider the following:
- Have a standard letter that you can use whenever you suspect reduced
reimbursement for out of network patients. Do not reinvent the wheel every time
or you motivation to request additional payment will dwindle.
- Present proof of out of network reimbursements that were reasonable from
other providers (and sometimes from the same insurer), demonstrating that you
- Maintain a paper trail of the opportunities that you gave the insurance company
to behave in a reasonable manner. These documents may be needed in small claims
- Utilize small claims courts if your appeal is denied. By using small claims
court, we therapist establish a precedent that will positively influence current
and future claims sunmitted to that company. You will be taken seriously in
future dealings. Those adjusters and companies that do not want the
inconvenience of attending small claims court will think twice before reducing
your next claim submission.
Another usefull action to consider with out of network reimbursement issues is
to present educational materials to the patient. Inform the patient you
are an out of network provider and that the checks will be sent to the patient.
Instruct the patient to mail the check in the stamped self addressed envelope
that you provide to the patient (make it easy for the patient to comply).
Provide the patient with the name of a billing staff person that can answer any
questions. Advise your patient not to be alarmed by the large patient
responsibility statements that are outlined on the EOB. Inform the patient
that you will appeal the claim.
Health care profit margins are not growing. It is important that we
receive the reimbursement that is due to us. Establish a procedure that
facilitates this task. Every dollar that is recouped directly augments
your cash flow, and hopefully, your bottom line.
Tom Kane, PT