Paul Sanchez
Disputing reimbursement rates for insurance can be a complex process, but it is not impossible. With the rise of national insurers and the squeeze on margins for both providers and payers, it is becoming increasingly important for healthcare organizations to negotiate fair reimbursement rates. While most health plans operate with fixed fee schedules, it is possible to review and analyze your fees and health plans' reimbursement data to identify areas for negotiation. The introduction of the Independent Dispute Resolution (IDR) process by the No Surprises Act provides a forum for providers and insurers to resolve disputes about out-of-network charges and determine payment rates. Additionally, factors such as license type, location, and demand can influence reimbursement rates, and healthcare providers need to understand the money math involved in their contracts with insurance companies.
| Characteristics | Values |
|---|---|
| Process for disputing reimbursement rates | Independent dispute resolution (IDR) process, established by the No Surprises Act |
| Who can use the IDR process? | Providers (including air ambulance providers), facilities, and health plans |
| When to initiate the IDR process | After a 30-business-day open negotiation period with the health plan |
| Deadline for initiating the IDR process | Within 4 business days after the open negotiation period ends (unless extensions are granted) |
| How to initiate the IDR process | Contact the Departments of Health and Human Services, Labor, and the Treasury |
| Strategies for negotiating better reimbursement rates | Review fees for each CPT code, calculate fees as a percentage of Medicare's rates, standardize fees at a percentage of Medicare, and organize data onto a spreadsheet |
| Factors influencing reimbursement rates | Type of provider (e.g. psychologist vs therapist), location, demand and availability, license type, and specialty |
| Challenges in the IDR process | High volume of disputes, complexity of eligibility determination, and backlogs resulting in delays |
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What You'll Learn
Independent dispute resolution (IDR)
The No Surprises Act established a new process called Independent Dispute Resolution (IDR), which is managed by the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury. This process helps determine the payment rates for certain out-of-network charges.
When a provider or facility receives a payment denial or an unsatisfactory initial payment from a health plan for out-of-network services, a 30-business-day open negotiation period with the health plan begins. If the provider and the health plan cannot agree on a payment amount during this period, either party can initiate the IDR process within 4 business days after the negotiation period ends.
During the IDR process, disputing parties can choose a third-party entity, known as a certified IDR entity, to resolve their dispute. Both parties must submit payment offers and supporting information to the IDR entity. The IDR entity then selects one of the payment offers, and both the provider and the health plan must abide by the decision and make the payment within 30 calendar days.
If the disputing party experiences extenuating circumstances that prevent them from meeting deadlines, they can request an extension by completing a form and emailing it to the Departments at [email protected]. Additionally, if the parties agree on a rate after initiating the dispute, they can continue negotiating until the IDR entity makes a determination. Once a decision is made, the initiating party must notify the Departments by emailing [email protected].
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Out-of-network balance billing
The No Surprises Act , which came into effect on January 1, 2022, offers new protections against out-of-network balance billing. It limits the amount patients pay out of pocket for out-of-network charges, aiming to ensure costs are similar to what they would pay with an in-network provider. The Act also establishes an independent dispute resolution (IDR) process to handle payment disputes between providers and health plans.
When a provider or facility receives a payment denial or an initial payment from a health plan for out-of-network services, a 30-business-day open negotiation period begins. If the provider and health plan cannot agree on a payment amount during this period, either party can initiate the IDR process. The IDR entity will select a payment offer, which both parties must accept, and payment must be made within 30 calendar days.
To dispute out-of-network balance billing, patients can utilize the protections provided by the No Surprises Act. If a patient is uninsured or self-pay, they can obtain a good faith estimate of costs before receiving care. If the final charges exceed the estimate by at least $400, they may dispute the charges. Additionally, patients should receive an easy-to-understand notice explaining their billing protections and the process to follow if they believe their rights have been violated.
It is important to note that protections against out-of-network balance billing may vary by state. Some states have their own patient-provider dispute resolution processes, which may apply if they meet or exceed the minimum requirements of the federal process. Patients should be aware of the specific protections and dispute resolution options available in their state.
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Reimbursement rates for psychotherapy
Psychotherapy reimbursement rates are difficult to determine as insurance companies do not release contracted rate information. These rates are not "set" and can change daily depending on various factors, including location, license, education, and specialization. For example, if you are one of the few providers in a specific area, you may be able to negotiate a higher reimbursement rate.
To improve reimbursement rates for psychotherapy, healthcare providers can take several steps:
- Review fees for each CPT code and calculate them as a percentage of Medicare's rates. If insurance companies are reimbursing some charges in full, consider raising your fees or standardizing them at a certain percentage of Medicare.
- Focus on codes with the highest volume and dollar value, as they will yield the most return for your effort.
- Negotiate with payers for fairer payments. While they may not grant large increases, it is possible to secure better rates with the right data and a reasonable approach.
- Join peers in calling out payers on their bad behavior to advocate for fair and sustainable compensation.
- Consider working with a reputable insurance billing service that can help navigate the complexities of billing and contracting.
In the case of out-of-network charges, the No Surprises Act established a process called Independent Dispute Resolution (IDR). If payment disputes arise, there is a 30-business-day open negotiation period. If no agreement is reached, either party can initiate the IDR process, and a certified IDR entity will select a payment rate from the disputing parties' offers.
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Fee schedules
A fee schedule is a list of prices that healthcare organisations offer for their services. It outlines the maximum amount a payer will reimburse for each procedure or service rendered, creating a reference point for billing and payments. Each payer has its own set of rates and reimbursement policies, which will be outlined in the contract with the insurance company.
There are two types of fee schedules: the first is a practice's fee schedule of cash rates, set by the practice owner for any patients who are not using insurance. There is a lot of freedom in setting these rates, but it is important to set realistic amounts based on considerations such as what competitors in the area are charging, the target demographic and their spending limits, and any areas of specialty.
The second type is an insurance company fee schedule of allowed amounts, set by each insurance company, and is the rate that a provider agrees to accept as payment for any clients with that insurance. This is the breakdown of what the insurance company will pay for specific services, otherwise known as the contracted rate or allowed amount. It is usually sent as part of the contract with the insurance company, but it could be a separate document.
Healthcare organisations do not have to stand for a "take it or leave it" approach from insurance companies. Negotiating reimbursement rates with insurance companies is critical. When establishing a new contract or renewing an existing one, it is possible to review fee schedules, claims processes, payment timelines, and other contract terms to ensure fair and sustainable compensation for providers.
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Payment timelines
If the negotiation period concludes without a consensus, either party can initiate the Independent Dispute Resolution (IDR) process, which is overseen by the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury. This process provides a forum for healthcare providers and health plans to resolve payment disputes for out-of-network charges. It is worth noting that the IDR process cannot be started until the 30-business-day negotiation period has ended, and it must be initiated within four business days after that period, unless extensions are granted due to extenuating circumstances.
Once the IDR process is initiated, a certified IDR entity will be responsible for reviewing the payment offers from both parties and making a final determination. This entity acts as an arbiter, and its decision is binding on both the provider and the health plan. The payment must be made within 30 calendar days of this determination.
While the IDR process provides a valuable mechanism for resolving payment disputes, it has faced challenges due to a higher-than-expected volume of disputes, resulting in backlogs and delays in payment determinations. As of June 2023, over 490,000 disputes had been submitted, with approximately 61% remaining unresolved. This highlights the importance of timely engagement in the negotiation process and proactive communication with the relevant departments to address any potential delays.
To ensure a smooth and timely resolution, it is advisable for both providers and health plans to be well-versed in the IDR process, including the required timelines and the potential need for extensions. By staying informed and proactive, both parties can work towards a swift and satisfactory conclusion to their payment disputes.
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Frequently asked questions
The first step is to review your fees for each code. Note your current fees for each CPT code and calculate your fees as a percentage of Medicare’s rates.
The No Surprises Act created new protections against out-of-network balance billing and established a new process called independent dispute resolution (IDR), which is managed by the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury.
The IDR process is a voluntary forum for healthcare providers and health insurance issuers to resolve disputes about how much should be paid for out-of-network care. Payment determinations are made by certified dispute resolution entities, which serve as arbiters.
Reimbursement rates for therapists can vary depending on location, demand, availability, and license type.
