When you participate in-network with a payor, your reimbursement rates may be lower than fair-market prices, but they are typically fixed and reliable. However, when you provide out-of-network services to a patient, your reimbursement can vary widely based on how they’re determined, your region, and even trends in pricing.
Sometimes out-of-network rates are determined as a percentage of national Medicare rates. However, in other circumstances, they are determined by a third-party pricing company—whose goals are to reduce out-of-network costs for payors. By understanding better how these companies work, you can better navigate out-of-network reimbursement.
How Third-Party Pricing Companies Work
Third-party pricing companies are typically contracted with a commercial payor to determine the price of out-of-network claims. They may do this in a few different ways:
In this circumstance, third-party pricing companies use contracted rates from a network that both the provider and payor have in common. For instance, if your out-of-network patient has insurance from Payor 1 and both your facility and Payor 1 participate in contracts with Network 2, you’ll get paid according to the rate that Network 2 has negotiated with Payor 1. Essentially, you’ll be paid the in-network price that payor has negotiated with other groups.
Contracts for a percentage of billed charges
This payment method sounds promising, but rarely pays as well as you would hope. In this instance, a payor may promise to pay between 70 and 90 percent of the billed claim. However, pricing companies usually only use this method on high-reimbursement plans and all claims are likely to be flagged for review of medical necessity, slowing down your payment.
Another rare, but promising, form of pricing is front-end negotiation. In seemingly random cases, you’ll receive communication from a representative to negotiate the claim amount before the services are offered. This method does offer fast payment, as you won’t have a review for medical necessity, and may allow you to negotiate a good rate.
However, it is unclear which claims get selected for this process and it does require you to understand the patient’s policy well before agreeing to a rate. Otherwise, you may agree to too-small an amount.
This one is a bit tricky. Here, insurance carriers use third-party pricing companies to take huge discounts on the allowed amounts of claims without contacting the provider, at all. When the check and EOB arrive, there may be a small adjustment note indicating that the claim was processed/priced through [Company X]. The claim may also provide a phone number for any inquiries, with a note to contact them before balance billing the patient.
Some carriers will not post an adjustment note. In these cases, it is up to the provider to know the patient’s benefit ahead of time and catch the applied discount. From here, you will have to call the third-party pricing company and open a case to either negotiate a new rate or have the claim sent back for reprocessing at the patient’s correct benefit level. The negotiators may use terms such as “geographic practice cost indices” and “conversion factor” to justify a lower payment. Many providers, especially the ones that count on electronic remittance posting, do not notice when a third-party discount is applied, and consequently leave money on the table.
How to Solve Third-Party Pricing Problems
Not all third-party pricing companies are the same, so it’s important to learn who to trust. For instance, Multi-plan is a third-party company that tends to work well with patients and facilities. Viant, however, is well known for severely under-pricing claims—which are difficult to appeal.
One way you can navigate the constant flux of third-party pricing is call the payor and request they only send their claims to their pricing department. They may work with you on this request and help you avoid dealing with third-party companies altogether.
Another way is to really learn about their pricing methods and negotiation techniques. Remember, unless you have agreed to a rate in writing, the insurance company is legally required to process a patient’s claims according to their benefits. You have the right to appeal claims if you feel they are incorrectly denied or paid.
You can also seek out help from an experienced billing company like Datapro. Our experts can work with you to navigate third-party pricing companies and out-of-network reimbursement rates to help you receive better rates whenever possible. Contact the Datapro billing team today for a complimentary unpaid claims review and to learn more about our services.