US Healthcare - Payment Posting

Payment posting and denial management are two extremely critical steps of the revenue cycle management of any solo practitioner or a healthcare organization. Streamlining these processes improves the RCM cycle leading to lesser delays in the A/R’s, ultimately guiding the way to increasing revenues along with patient satisfaction.

Payment posting and its factors:

In this process, the payment records of patients are recorded in the billing management software. It also includes attention to be given to claim denials — for identifying the problematic areas and their reasons along with apt actions to be taken on resolving the issues.

Insurance Payment Posting: All payers either send an EOB (explanation of benefits) or ERA (electronic remittance advice) towards the payment of a claim. The medical billing staff posts these payments immediately into the respective patient accounts, against that particular claim to reconcile them. The payment posting is handled according to client-specific rules that would indicate the cut-off levels to take adjustments, write-offs, refund rules etc.

When the client’s office delays in either depositing the Payer checks or sending the ERAs and EOBs for posting, then a negative balance prevails for that claim, which is a false representation of the actual scenario. This false representation would show an inflated AR, resulting in the Physicians not knowing exactly how much revenue is due to them.

Patient Cash Posting: There could be several reasons why the patient needs to pay a part of the expenses including co-pays, deductible and non-covered services. If the amount due from the patients is very minimal, the Provider can set a mandate for taking write-offs. If the amount is quite large, then it should be collected from the patients either prior to or after rendering the services. Patients typically pay through checks or credit cards (via patient portals) and these need to be correctly accounted against the claim to avoid any inflated AR and proper closing of the claim.

Accurate and efficient payment posting and denial management systems can lead to revenue cycle profitability bringing valuable returns.

Insurance Terms:

• Premium: The monthly fee for your insurance.
• Deductible: How much you must kick in for care first, before your insurer pays anything.
• Co-pay: Your cost for routine services to which your deductible does not apply.
• Co-insurance: The percentage you must pay for care after you’ve met your deductible.
• Out-of-pocket maximum: The absolute max you’ll pay annually.
• EOB: Explanation of Benefits
• ERA: Electronic Remittance Advice
• EFT: Electronic Funds Transfer
• AR: Accounts Receivable

Premium

Your premium is the amount you pay into the insurance plan on a regular basis.

If you belong to an employer-sponsored plan, the premium is likely deducted from each paycheck as pre-tax dollars.

If you purchase your own health insurance plan, you may have the option to pay your premium annually, quarterly, or monthly.

Health insurance premiums vary greatly depending on what medical expenses the plan covers, which doctors you can see, and how much you’ll have to pay in other ways when you use services.

Deductible

Your health insurance deductible is the amount that you will have to pay annually for your healthcare (such as surgical procedures, blood tests, or hospitalizations—but not some routine care) before the health insurance pays anything.

For example, if you have a $2,500 deductible and undergo three $1,000 procedures in a year, you will have to pay the full bill for the first two procedures and $500 of the third … your insurance will cover half of the third procedure.

Increasing your deductible is the easiest way to lower your premiums and, if you’re mostly healthy, might be a good idea. Just understand, however, that if you have a $10,000 deductible and get sick, you could end up with $10,000 in medical bills in a year.

Typically, your deductible does not apply for preventative health checkups and many routine health services … you’ll just pay a co-pay instead.

Embedded vs. aggregate deductible

If you’re on a family plan, then you’ll want to know whether you have an aggregate or an embedded deductible.

An aggregate deductible means that’s the amount that has to be paid out of pocket on any (or all) of the people covered by the plan before insurance starts paying for anything. If that overall deductible is $10,000 then it doesn’t really matter how the family gets to $10,000 in spending, whether from one person or from several different people’s medical care.

An embedded deductible, on the other hand, means there’s the overall deductible for the entire group (the family deductible), but then there’s also an embedded deductible for each individual. Let’s say the overall deductible is $10,000, but the deductible for each individual is $5,000.

If Person A has a major emergency and gets at least $5,000 in care, then any further care for Person A will be covered by insurance (and won’t apply to the family deductible, though any co-insurance will apply to out-of-pocket max). If Person B then gets a $1,000 bill for something else, the family will still have to pay that $1,000 out of pocket, and will still have $4,000 left on the overall deductible.

With an embedded deductible, insurance kicks in sooner for individuals who rack up large bills. 

However, under such a plan, it may take longer for the family to meet its overall deductible.

Plans with an aggregate deductible tend to have lower premiums than those with embedded deductibles.

Co-pay

Your co-pay is the fixed amount you pay for using routine services defined by your plan. For example, some plans charge you a co-pay for visiting your primary care physician, or an emergency room, or purchasing a prescription drug.

In most cases, the payment is the same regardless of the extent of the visit or the cost of the drug. For example, a plan may require co-pays of $20 for office visits, $100 for emergency room visits, $15 for generic prescriptions, or $30 for name-brand drugs.

If your plan charges a co-pay for certain services, this means you’ll pay much less for these services right away (and long before you hit your deductible).

Co-insurance

Co-insurance is similar to a co-pay, although co-insurance generally applies to less routine expenses, and is expressed as a percentage rather than a fixed dollar amount.

Your co-insurance kicks in after you hit your deductible.

If your plan has a $100 deductible and 30 percent co-insurance and you use $1,000 in services, you’ll pay the $100 plus 30 percent of the remaining $900, up to your out-of-pocket maximum.

You may find plans with no co-insurance requirements, some with 20/80 or 50/50 coinsurance, or other combinations.

Out-of-pocket maximum

Your out-of-pocket maximum is an important feature of your health plan because it limits the total amount you pay each calendar year for healthcare including co-pays, deductibles, and co-insurance.

If your policy carries a $2,500 out-of-pocket maximum and you get sick and require a lot of healthcare services, the most you will pay in a year is $2,500. After that, insurance picks up the rest of the tab, presuming you stay in-network.

Deductible vs. out-of-pocket maximum

The difference between your deductible and an out-of-pocket maximum is subtle but important.

The out-of-pocket maximum is typically higher than your deductible to account for things like co-pays and co-insurance.

For example, if you hit your deductible of $2,500 but continue to go for office visits with a $25 co-pay, you’ll still have to pay that co-pay until you’ve spent your out-of-pocket maximum, at which time your insurance would take over and cover everything.

New in 2016: embedded out-of-pocket maximums

One change in 2016 is that, even with an aggregate deductible, one person cannot pay more than the individual out-of-pocket maximum within a family plan, even if the aggregate deductible is more than the individual out-of-pocket maximum, which is $6,850 for 2016.

For instance, even if the overall aggregate deductible was $10,000, a single person in that family plan could not incur more than $6,850 in out-of-pocket expenses. (In 2017, the out-of-pocket maximum will increase to $7,150.) After they hit that number, insurance covers everything for that person, even as the rest of the family is still subject to the deductible.

A note about lifetime maximums

Insurance plans used to frequently have lifetime maximums, often of $1,000,000 or more. The Affordable Care Act made these illegal.

These lifetime maximums could be devastating if you ever required intensive surgery or cancer treatments, which often can cost up to $500,000 a piece. If you needed more than one, you could basically run out of health insurance when you needed it most.