The insurance industry has invested billions of dollars developing software for processing claims. The software, with 45 million separate codes for medical procedures, sifts claims for inflated charges, errors or inconsistencies that could provide grounds to deny or delay payment.
ecause most physicians use paper billing records, many say that challenging the insurers is like going into a gunfight with a butter knife. To even the odds, some doctors, clinics and hospitals are investing in software of their own or outsourcing their billing to national companies that aim to pool enough providers to match the insurance industry's muscle.
Companies such as Boston-based AthenaHealth and National Healthcare Exchange Services (NHXS) in Sacramento examine disputed charges to help doctors and hospitals support their original claims. The companies typically charge up to 10% of doctors' revenue.
NHXS, founded in 1999, represents 7,000 clients in 33 states. The company uses a database of insurer payment rules to analyze reimbursement patterns.
Mark Rieger, president of NHXS, said the data showed that insurers denied at least partial payment about 30% of the time on the first bill and ultimately denied appropriate payment in 6% of cases.
Insurers "are processing millions of claims a day," he said. "If they save a few dollars per claim, that's real money. They can say it's no big deal. But how often is your paycheck wrong? And if it was, would you allow it?"
In June, the American Medical Assn. released its first rating of insurers' billing patterns. It found that United Healthcare paid physicians the contracted fee 62% of the time, Aetna paid 71% of the time and Medicare paid 98% of the time.
The new owner of Centinela Hospital, a for-profit company called Prime Healthcare Services, has grown rapidly in Southern California by withdrawing from most private insurance networks. The company gets most of its patients through its emergency rooms and admits many for further care. Prime Healthcare then bills the patients' health plans at rates much higher than the insurers' negotiated rates for member hospitals.
Crockett, Centinela's CEO, defended this approach, which has sparked controversy and lawsuits. "What other choice do we have?" he asked. "Insurers have tied our hands."
Last fall, Dr. Michael Hurwitz, a general surgeon at Hoag Memorial Hospital Presbyterian in Newport Beach, dropped out of Anthem Blue Cross of California, a WellPoint subsidiary, after the insurer reduced reimbursements for his procedures by 30%. If he treats a Blue Cross patient at the hospital, he bills the patient directly.
Hurwitz, president-elect of the Orange County Medical Assn., said he had no choice.
"My bills go up 4% or 5% a year just to pay my staff, my rent, my malpractice insurance. All these continue to rise, but what am I getting back? The disproportionate advantage insurers have is astounding."
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lisa.girion@latimes.com
michael.hiltzik@latimes.com
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