According to a 2002 report by the national center for Health Statistics, 173 million Americans are covered under private health insurance plans. Yet to the average HME supplier, this same group represents only a small portion of its patient base. To tap this potential market, some suppliers are increasingly marketing to patients covered by private insurance carriers as well as to the private payor sources themselves.

“We have taken an aggressive approach to marketing private payor sources,” says Keith Davies, president of Tidewater Medical Supply in Virginia Beach, Va. “We recognized the number of patients requesting products from our company that we were unable to service because we did not have relationships with their insurance companies, and we decided to take a proactive approach. The results have not only increased our patient base but enhanced our bottom line.”

If your company is not already marketing to private payor sources, there are several good reasons to consider doing so. In my experience, private payor sources routinely offer a higher level of reimbursement than federal and state insurance programs. In addition, private payor documentation requirements are usually less cumbersome, and denied or problem claims can often be corrected with a telephone call as opposed to a lengthy resubmission or review process. Finally, coverage verification is, in most cases, relatively painless, and authorization and payment amounts may be obtained or negotiated in advance.

Qualifying the Patient
The secret to successful and timely reimbursement from private payor sources begins with the patient intake process. A clean, legible copy of the patient insurance eligibility card (front and back) provides invaluable information—patient identification number, date of eligibility, co-pay amounts, etc. More important, the back of the insurance card will list addresses and phone numbers critical to the reimbursement process.

The next step is to contact the carrier to verify eligibility and determine claim-filing requirements. Develop a standardized, user-friendly form for the insurance verification process to ensure all information is obtained. Questions you may want to include on the form are:

• Is the patient eligible on the date of service?

• Is the equipment/supply ordered covered under the patient’s insurance plan?

• Is there an established schedule of benefits (fee schedule)?

• Is there a separate deductible for DME, and, if so, what is the amount of the deductible and has the deductible been met?

• What is the reimbursement percentage?

• What are the documentation requirements? For example, is a certificate of medical necessity (CMN), a physician order, or a letter of medical necessity needed?

• Is prior authorization required?

• What are the claim-filing requirements? (Will the payor accept an invoice, does it require a HCFA-1500 claim form, and will it accept electronic transmission?)

• Will the payor accept faxed claims?

• Does the payor cover rentals or purchase, and is rental coverage capped at the purchase price?

• Has a case manager been assigned to this patient?

• Is this payor a preferred provider organization (PPO) or a health maintenance organization (HMO), and is it a closed or open network?

• Is payment made directly to the supplier or only to the patient?

• What is the average payment time?

If possible, fax a copy of the completed insurance verification form to the carrier for review and signature. This can provide invaluable documentation should a claim payment dispute arise.

In addition, by obtaining this information at the start of the process, you are empowered to negotiate payment terms and make educated assignment decisions.

Filing the Claim
As of the 16th of this month, all but a few exempt companies are required by the Health Insurance Portability and Accountability Act electronic transactions and code sets provision to file their claims electronically. For most suppliers, this means using a national supplier clearinghouse to file private payor claims. The clearinghouse accepts the provider’s insurance data and reprocesses the information into the specific claim formats required by various private carriers. Amazingly, just 36 insurance carriers represent 85% of the nation’s private commercial group health claims reimbursement dollars, and all of these 36 carriers are actively receiving electronic medical claims.

As a rule, clean claims to private payor sources are seldom denied if they are filed in accordance with the carrier’s guidelines, but payment tracking is essential. Electronic claims do “get lost” because transmissions can fail or not be processed by the insurance carrier. In addition, claims may be denied if information is missing or incorrect, or if the carrier has requested additional information that was not supplied in a timely manner. Fortunately, in most cases, a phone call to the carrier may be all that is required to identify lost or incorrect claims and correct them for processing and payment.

If there is a controversy over an unpaid claim that the supplier feels is unjustified (eligibility and coverage were verified prior to claim filing and/or a prior authorization was obtained), the supplier should notify the patient and ask him or her to contact the insurance carrier. Keep in mind that the contract is between the patient and the insurance carrier, and the carrier may be more forthcoming to the patient (its customer).

After all avenues of review or appeal for unqualified claim denials have been exhausted, a supplier may request assistance from a state insurance commissioner. (A listing for the state insurance commissioner may be found in the telephone directory under the “Government, State” heading.) Some states have prompt payment laws that can help suppliers, but depending on the state, the supplier again may need to involve the patient if the insurance commissioner is unwilling to respond to the supplier.

The best way to contact the insurance commissioner is with a brief letter explaining the situation and with copies of the disputed claim, the insurance verification form, any documentation required and sent to the carrier, and any correspondence or communications received from the carrier.

However, in my experience, these types of situations are not the norm. In general, private insurance claims represent the least difficult types of claims to file and collect, if patient eligibility and insurance verification are completed accurately and in advance. As a result, soliciting private insurance carriers and patients covered under their plans has brought increased revenue and financial stability to many HME providers.

Helen M. Farrell is a reimbursement consultant and chief executive officer of MARS (Medical Accounting & Reimbursement Services) in Chesapeake, Va. Contact her at (757) 410-1732.