A new healthcare provider of medical appliances who turned to ClaimCare for billing and other matters was confused about Medicare Allowables. The primary question this provider had was, “What will I collect from Medicare for my services?”
This provider was confused because sources had been saying that Medicare only pays 80% of the published rate. In a way, this is true. However, as more established healthcare providers know, it’s not the whole story.
Original Medicare publishes the allowable amounts for a given Current Procedural Terminology (CPT) code. How much of that specific procedure Original Medicare pays depends on where a patient is in meeting his or her deductible for the year. According to the Center for Medicare and Medicaid Services (CMS), the annual deductible for all Medicare Part B beneficiaries in 2020 is $198.
If a patient has Original Medicare only (with no additional Medicare-related plan, which we’ll cover later on in this post) and has not met any of the deducible, the patient is responsible for that $198 plus the remaining 20% of the procedure cost. As you can imagine, with such a small deductible, Medicare patients tend to meet it early in the year.
Once an Original Medicare patient has met the deductible, the patient will owe 20% of the allowed amount and Medicare will pay the other 80% of the allowed amount. For example, if you billed a code that would allow $100 and the patient had met the deductible, you would get a payment of $80 from Medicare and be told to bill the patient for the other $20.
ClaimCare would then send the patient a bill. If not duly paid, ClaimCare would follow up with a call and, if needed, a collection letter. I imagine your next question would be, ”How much of the patient’s balance will we likely collect?” The answer is, “It depends.” Assuming the patient has only Original Medicare, it depends on some following factors:
1. Patient-population Demographics.
- If you are in a financial area with a middle-class population or higher, we would expect to collect around 85% to 90% of the patient balances owed. This demographic tends to pay bills and to be concerned about credit scores.
- At the other end of the spectrum, offices with many Medicare patients who have Medicaid as a secondary insurance will result in almost no patient payments. This is because when Medicaid is secondary to Medicare they will tell us that Medicare has already paid more than Medicaid would allow. Thus, Medicaid will not pay the balance and you cannot bill the patient. This also applies to patients who have Medicaid as the primary insurance. You must accept only what Medicaid allows for these patients. You cannot bill a Medicaid patient.
- As I am sure you can see, the more you trend away from the regions described in category (a) above and toward category (b), the less your patient collections yield will be. If you are providing the patient with something that costs you, such as some appliance or test, you could consider requiring the patient to provide you a credit card number when the appliance or test is ordered. You could charge the expected amount the patient will owe before you provide the extra appliance or test. If you are a ClaimCare client, we could help you update your form with the info needed to do this. If it ends up the patient owes less than charged, then you could refund what was overpaid. If too little was paid, you could charge the credit card for the rest. We could help with this in our patient services area. However, keep in mind: You cannot do this for Medicaid patients.
2. Typical size of the balance you will be owed.
It is best that the balance owed by a patient not be too big or too small. You want it to be in the Goldilocks Zone (just right). Balances that are really small (less than $10) can be a problem because people don’t want the hassle of making a call or writing a check to pay such a small balance, and most folks know that balances this small will not impact their credit report. On the other hand, if you get balances that are in the hundreds-of-dollars range, patients may be trying to avoid paying simply because they cannot afford such a big balance.
Of course, ClaimCare creatively presents payment plans to these patients with large balances, empathizing with them, but emphasizing the importance of making payments at a rate they can afford. Balances in the $10 to $200 zone are in the Goldilocks Zone. I am not saying ClaimCare will not collect payments outside this range. I am just saying the yield is best in the Goldilocks Zone.
Will they even owe money?
The additional Medicare-related plans to which I referred earlier will sometimes cover 100% rather than just 80% of the bill. They will also sometimes cover things that traditional Medicare will not pay. This is why getting into these plans is important. The percentage of people who have these plans has continued to grow exponentially, especially among patients in category (a) under the Patient-population Demographics above. Most practitioners and facilities are already familiar with such plans, but for the sake of information for newer providers, and review for experienced providers, here are some at-your-fingertips links to give insights into the various plans and terminologies:
Medicare Advantage Plans
Medicare Supplement Insurance
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