As a healthcare provider frequently rounding in a long-term post-acute care (LTPAC) facility, you understand the complexities of the billing process. When charts and bills are less than perfect, it may seem like insurance companies have dedicated teams focused on denying claims and disrupting your cash flow. You know how billing errors and other clerical issues can prolong the billing process, making it feel as though getting paid for your services takes forever. You've likely also encountered clawbacks, which happen when an insurance company takes back the funds they initially paid.
Clawbacks differ from standard refunds and billing adjustments. Typically issued by a third party, such as an insurance provider, rather than by your practice, clawbacks often occur long after the service has been provided. They may result from a random audit in which the insurer identifies multiple complex billing codes or believes the service provided doesn’t match the code used.
As an LTPAC provider, many of your patients are likely paying for services with Medicare or Medicaid. With the Centers for Medicare and Medicaid Services (CMS) recently updating payment policies for skilled nursing facilities, you may face an increase in clawbacks as your team adjusts to the new guidelines. Explore the common causes of clawbacks in healthcare and strategies to prevent them from eating into your profit margins.
Clawbacks can happen for various reasons, with the most common being that an insurer doesn’t deem services to be medically necessary. For example, if a patient undergoes an invasive surgical procedure when a less invasive option is available, the insurance company may initiate a clawback.
Other common reasons for clawbacks include:
Just as you have to regularly review your work to ensure compliance with industry regulations, insurance companies also perform routine audits. These audits in medical billing help identify red flags that may prompt an insurer to investigate payments further.
During an audit, insurance companies might notice frequent high-dollar billing codes or other indicators suggesting that they overpaid a bill. Regardless of the reason, they will issue a clawback request to your practice, giving you between 90 and 180 days to respond.
Anyone who spends their weekends watching true crime knows that petty crimes have a statute of limitations, and the same concept applies to clawbacks. For instance, an insurance provider can’t come after you for an overpayment made five years ago. However, each state sets its own limits on how long an insurance company has to issue a clawback. It can range from six months to over two years.
The insurance company will submit a copy of the disputed bill along with documentation supporting that they overpaid the claim.
In LTPAC, clawbacks can significantly disrupt your cash flow. Because they don’t show up until months or even years after you’ve completed a service, you’ve probably already spent the money. As a result, you may need to tap into reserves or be clever with your cash flow to cover the unexpected expense.
Once you receive a clawback, you must reallocate your administrative team so they can dispute or appeal the clawback and adjust patient records. These situations are unfortunate and may impact your relationship with insurance companies. If you encounter frequent clawbacks, you may be tempted to stop working with an insurer. You may also start questioning patients to determine whether they have adequate coverage.
Clawbacks are a tool for insurance companies to combat fraud. If their medical billing audits reveal multiple discrepancies in your bills, your compliance may be at risk. Investigating clawbacks can be time-consuming. However, if someone on your staff is fraudulently billing for services, a clawback can help uncover the issue. You may also end up shelling out more money on legal fees if you choose to contest a clawback.
Your practice isn’t the only one affected when insurance companies issue clawbacks. Patients may become confused when they receive a bill for a service they thought was covered. This uncertainty might make them hesitant to schedule future appointments, as they may question whether their treatment will be covered. If their coverage is denied retroactively, they must shoulder a financial burden that can negatively impact their perception of the care they received.
While clawbacks can indicate potential issues within your practice, they are often the result of coding and medical billing errors. You can minimize your chances of receiving clawbacks by conducting regular audits. Perform chart reviews to make sure codes match with the services provided, and thoroughly train your staff to minimize billing and coding errors.
Examine your patients’ insurance coverage to clarify the terms of their coverage, pre-authorization requirements, and billing policies.
Minimize human errors by using automation tools like those available on the ChartPath Automation Marketplace. This platform connects you with charting software that automatically analyzes your bills against patient records and flags potential coding or billing errors.
Documentation is your best defense against clawbacks. Make sure you’re keeping detailed patient records and accurate treatment notes so you can effectively dispute any clawbacks you may receive. If a clawback occurs, respond in a timely manner and consider calling the insurance company to negotiate a resolution if possible.
Medical billing in LTPAC is complex due to multi-faceted care plans and complicated coding. While you may not be able to eliminate clawbacks entirely, you can significantly reduce their occurrence by implementing strict billing and auditing processes.
If your team is struggling to manage medical billing audits because of their workload, you can use AI-powered automation tools to ease their burden. Tools like Brellium automate chart reviews, auditing clinical and payer requirements to help determine if a service is covered. This automation saves you time during the pre-authorization process. Use it during intake to verify if a patient is covered for a specific service. If coverage is not available, you can offer them alternatives or set up payment options before providing care.
Discover how the ChartPath Automation Marketplace can help you boost your bottom line by scheduling a demo today.