Underbilling & Missed Billing: Understanding Two Avenues for Lost Revenue in Oncology

It’s hard enough that oncology practices are continuously fighting the battle of uncovering payer underpayments. But oftentimes, practices don’t realize they are cutting themselves short by billing less than the payer’s allowed amount for a service or are missing billing for services provided, which leads to losing out on significant revenue.

Do you know how much your practice is losing in revenue by underbilling or by misbilling for your services?

Understanding the Effect of Underbilling

Often these underbillings don’t seem like much revenue loss on a case-by-case basis. When it’s just a few dollars here and a few hundred there, it may seem like the juice isn’t worth the squeeze. Going after these small amounts couldn’t possibly be worth the time it would take.

But the aggregate of lost revenue through underbilling is significant for most oncology practices, often adding up to hundreds of thousands of dollars.

For one oncology practice, AC3 found $150,000 in underbilled drug charges within one month for one payer alone. In this situation, the practice was unaware they weren’t billing enough due to the chargemaster being less than that payer’s allowed amount.

In a different scenario, AC3 identified $200,000 in underbillings for a midsized practice over a period of just two months. No matter what size your practice is, that’s a sizable amount of lost income.

But even there, the real cost was significantly higher. At this midsized practice, that $200,000 in underbilling wasn’t an outlier or an unusual case. It was all revenue from normal scenarios that occur countless times in a year. Without identifying this underbilling, that practice would have continued missing out on $200,000 or so every few months with no end in sight.

Imagine what your practice could do with $1M in additional revenue each year.

Having a system in place that knows every contractual fee schedule for every payer and continuously audits all transactions will help ensure revenue integrity and provide your team peace of mind.

The Impact of Missed Billings & Why They Happen

There are numerous ways missed billing occurs. Most have to do with a lack of documentation. For example, office visits sometimes don’t get billed because dictation isn’t done in a timely fashion. In other cases, hospital charges sometimes don’t make it back to the billing department (or don’t make it in time to be entered).

Detecting Errors with Drug Administration

Some systems have checks and balances built in to detect errors with drug administration, which are supposed to flag discrepancies between what was dispensed and what was billed. But who is making sure the checks and balance systems are actually in balance?

There can be a variety of disruptions in data and workflows, which can lead to missed billings. On top of charging code issues and charting issues, system discrepancies can cause missed billing. Trying to coordinate different systems’ data, between dispensing systems, practice management systems, and billing systems, all who speak a slightly different language, things are bound to get lost in translation and cause errors.

Drug dispensing and documentation issues can also impact your revenue. All drugs should be accounted for in billing, but frequently both drug waste and drug that was dispensed and utilized are not — further increasing the revenue impact on oncology practices.

Are missed billings or errors in pharmaceutical dispensing putting your inventory in jeopardy?

We found over $200,000 in missed billed drugs within 6 months for one practice. The drugs had been charted correctly, but the drug did not show as being charged out of the drug administration system nor billed out for reimbursement.

In an ideal scenario, a practice should ensure that dosage, any applicable dosage waste, and drug administration all remain consistent and accurate in the chart. This, of course, is challenging to do perfectly and consistently. But the closer a practice can get to 100% accuracy, the fewer billing errors and missed billings they will encounter, and the less compliance risk from charting errors.

Protecting Your Practice

Implementing a system to regularly and automatically check for errors is the ultimate way to protect your practice.

Regular Data Audits

Conducting regular fee schedule audits and ongoing claims maintenance checks is foundational to ensuring revenue integrity. Utilizing a tool that unties and automatically detects for anomalies allows your team to work with cross-referenced data from different systems (practice management, dispensing and billing) and will save your team time-and-time again.

Continuous Team Education Plan

Investing in continuous education will pay dividends. Educating your team on code updates so that they can ensure proper charge codes are being utilized will optimize revenue for services rendered, particularly, but not be limited to, E&M codes and carve out codes. Also open communication and knowledge sharing on common charting and posting errors will not only ensure full allocations are rendered, but helps mitigate potential future discrepancies.

Fee Schedule Management

We all know fee schedules change regularly.  And unfortunately, it is easy for practices to miss some of these changes or fall behind on updating. But it is imperative to take the time to maintain the updates, or guaranteed, you will be leaving money on the table.

Once you have control of your fee schedules, confirm your practice management system is correctly mapped to all the contractual fee schedules.

Carve Out Code Maintenance

Carve-out codes require a slightly different approach. With the everchanging pricing, it’s not uncommon for a $50 carve-out code to go up to $75 on the Medicare reimbursement side, but it’s easy for a practice to miss nor make the manual the change on the billing side.

We found $250,000 in underpaid carve-out codes for a small 4-provider practice within 8 months.  Until a practice brings up a change like this one, payers will likely continue to pay at the lower carve out code rate. And the practice continues to miss out on $25 (or more) every time that carve out code is billed.

Taking the time to regularly run carve out codes against your practice’s plan language can feel like a hassle. But doing so can create a significant cumulative effect for your oncology practice over the long term. Learn more about how your negotiated carve out codes can be hurting your practice.

Underbilling and missed billing can happen to any oncology practice, but by participating in regular data audits, continuous team training, fee schedule management, and carve out code maintenance, your team can avoid billing issues and prevent revenue loss for your practice.