In the past, suppliers could reasonably estimate the profitability of a patient based on primary insurance coverage only. Intake personnel presumed secondary coverage would always lower the risks of not collecting amounts due from patients. These presumptions are no longer supportable.
As Medicaid, Tricare, and Medicare Advantage plans adopt allowable amounts less than Medicare or many commercial insurance plans, suppliers are essentially committing to deliver equipment for nothing more than the amount the primary insurer is obligated to pay. When the secondary allowable is less than that of the primary, the secondary payer approves the secondary claim with a calculated amount due of zero because the primary payment exceeds the secondary allowable.
Say a supplier delivers a covered item to a patient with primary coverage through Medicare and secondary coverage with Medicaid. The Medicare allowable for the item is $100 and the Medicaid allowable is $80. Medicare will pay $80 (80% of the allowed amount) and pass $20 to the secondary payer. Medicaid, in our example, will approve the claim, but calculate the payment due as $0 because Medicare paid 100% of Medicaid’s $80 allowable amount.
Sneaky, eh?
To make matters worse, the supplier is barred from collecting from the patient.
Though certain Medicaid programs have enjoyed this loophole for decades, they did not historically account for a significant portion of most suppliers’ patient populations. With the trend growing, however, suppliers that do not change their intake policies will suffer severe decreases in cash inflows and profitability.
MiraVista recommends suppliers discuss this new risk with intake staff. Evaluate setups in the context of all insurances involved. Keep a short list of payers that have particularly low fee schedules, whether primary or secondary, and alert staff to the unique threat they pose to the revenue stream.
If you have any questions, give us a shout.
SOURCE LINKS
https://www.cgsmedicare.com/jc/pubs/pdf/chpt11.pdf
(Medicare secondary payer payment calculation - Section 7)
As Medicaid, Tricare, and Medicare Advantage plans adopt allowable amounts less than Medicare or many commercial insurance plans, suppliers are essentially committing to deliver equipment for nothing more than the amount the primary insurer is obligated to pay. When the secondary allowable is less than that of the primary, the secondary payer approves the secondary claim with a calculated amount due of zero because the primary payment exceeds the secondary allowable.
Say a supplier delivers a covered item to a patient with primary coverage through Medicare and secondary coverage with Medicaid. The Medicare allowable for the item is $100 and the Medicaid allowable is $80. Medicare will pay $80 (80% of the allowed amount) and pass $20 to the secondary payer. Medicaid, in our example, will approve the claim, but calculate the payment due as $0 because Medicare paid 100% of Medicaid’s $80 allowable amount.
Sneaky, eh?
To make matters worse, the supplier is barred from collecting from the patient.
Though certain Medicaid programs have enjoyed this loophole for decades, they did not historically account for a significant portion of most suppliers’ patient populations. With the trend growing, however, suppliers that do not change their intake policies will suffer severe decreases in cash inflows and profitability.
MiraVista recommends suppliers discuss this new risk with intake staff. Evaluate setups in the context of all insurances involved. Keep a short list of payers that have particularly low fee schedules, whether primary or secondary, and alert staff to the unique threat they pose to the revenue stream.
If you have any questions, give us a shout.
SOURCE LINKS
https://www.cgsmedicare.com/jc/pubs/pdf/chpt11.pdf
(Medicare secondary payer payment calculation - Section 7)
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