The onset of managed care has made it increasingly difficult for physicians, hospitals and patients to completely understand the reimbursement process, specifically the contract and payment policies that drive it.

HIPAA rules and new state requirements are standardizing service definitions, payment rules and appeals with the goal of reducing contract ambiguity. However, these contract terms remain staggeringly complex and change constantly. As a result, the average healthcare organization loses up to 5 percent of its annual revenue because claims are paid at less than the contract rate.

Problem

Emory Clinic, part of Emory Healthcare, is a multispecialty Atlanta-based practice. Affiliated with the Emory University School of Medicine, the clinic employs more than 900 specialists, subspecialists and primary care physicians. Each year, the clinic submits more than one million outpatient claims worth nearly $200 million.

When a new contract management process for identifying, appealing and recovering underpaid claims resulted in major recoveries for Emory’s inpatient business in 1997, Emory Clinic management saw a significant opportunity to recover contractual underpayments for the outpatient side of the business as well. In early 2000, we began looking for a solution that would help improve overall contract performance with the goal of increasing overall revenue.

We first opted to hire outside consultants to help us audit and recover contractual underpayments, but the approach soon proved costly. Although our initial recovery efforts were successful–mostly transplant and underpaid cancer drugs–ultimately, this approach was ineffective at identifying the smaller but consistent payment variances that continued to be a drain on practice finances. We eventually agreed that we were dissatisfied with the overall return on investment we were experiencing and decided to take the job in-house in 2002.