Avoiding Traps in Payer Contracts

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There are a number of land mines that could significantly lower your payer contracts' reimbursements if not handled properly.

"Lesser of billed charges" Language
The "lesser of billed charges" language can be found in almost all payer contracts and is typically worded like this: “Payer will pay provider the lesser of its billed charges or its payer allowable for each codes’ reimbursement.”

Here’s an example: If your payer contracted rate at 100% including patient co-payment is $80 for current procedural technology (CPT) code 99501—a home visit postnatal code—but your billed charge is $60 for this code as defined in your chargemaster, you will be paid $60 per office visit rather than $80, your contracted rate.

What can you do? It is recommended that you set your chargemaster at usual, customary and reasonable (UCR) levels for your company. 

Make sure your billed charges exceed the highest payer allowable rates in any of your current payer contracts.

Read the full article from HomeCare.


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