For most Americans, access to beneficial health care is primarily dependent upon insurance reimbursement. However, despite the importance of these payments for covered expenses, physicians face numerous challenges with receiving reimbursements.
Issues include fluctuating reimbursement schedules, audits of payments, billing code errors, unexpected denials, lengthy appeals, and services that are not covered. These types of issues can delay proper care, impede continuation of services, and leave medical providers without reimbursement for the provision of necessary services.
Although navigating challenges that are faced during the reimbursement process can be cumbersome, both physicians and patients can take certain steps to improve insurance reimbursement procedures.
Current Reimbursement Process
The federal government plays a key role in the reimbursement process in the United States. In particular, the government’s responsibilities include1,2:
- Establishing national strategies and legislation;
- Facilitating and paying for the Medicare program;
- Establishing standard regulations and requirements for the Medicaid program;
- Providing health insurance funding for federal employees, active and veteran members of the military, and their families;
- Administering federal marketplaces for public and private health insurance companies;
- Offering premium subsidies for private health insurance marketplace coverage; and
- Regulating medical devices and pharmaceutical products.
The US Department of Health and Human Services is the federal government’s principal agency that is involved with health care services. However, apart from the Indian Health Service and the Veterans Health Administration, the federal government only plays a negligible role in directly funding and supplying medical providers. Instead, the Affordable Care Act (ACA), established in 2010, implemented a shared responsibility policy among the government, employers, and beneficiaries to ensure that all Americans have access to quality health insurance that is affordable.1,2 Under the ACA, states are allowed to establish patient cost-sharing requirements, eligibility thresholds, and benefit package criteria for public and private insurance, as well as Medicaid programs. State officials also help finance health insurance coverage for state employees, regulate private insurance sectors, and govern licensure for health professionals. In addition, most states manage health insurance coverage for low-income residents, outside of Medicaid. This process allows for wide variation with regard to the reimbursement process for physician payments.3,4
In particular, under the private insurance sector, both employers and employees typically share premiums and medical service costs, which means that physicians must navigate receiving insurance reimbursements as well as partial payment remittance from patients.3,4 Challenges such as billing code or documentation errors are not within the responsibilities of the federal government or the American Medical Association (AMA). Similarly, reimbursement issues that may arise due to services that are not covered are not regulated by governing bodies.3,4 Therefore, physicians are often responsible for mitigating insurance reimbursement issues on their own. Medicare also poses distinct challenges, as the coverage plans may fall under federal programs, or individuals may choose to receive coverage through a private Medicare Advantage Health Plan.5
The Medicare Physician Fee Schedule (MPFS) is the primary payment method for health care professionals who accept Medicare.6 The MPFS lists more than 7000 billing Healthcare Common Procedure Coding System (HCPCS) codes and the standard payment rates. Furthermore, the MPFS uses the following 3 relative value units (RVUs) to calculate payments:
- The work RVU, which reflects the effort and time associated with providing a Medicare-related service;
- The practice expense RVU, which represents the costs related to maintaining a practice; and
- The malpractice RVU, which represents the costs of malpractice insurance.
In addition, the MPFS accounts for variations in practicing costs across different geographic regions and uses a specific conversion factor formula to adjust the final payment. For most of the listed codes, the MRFS pays approximately 80% of the service charge, and the patient is responsible for the remaining 20%.
Medical providers who are enrolled in this program and sign the Medicare Participating Physician or Supplier Agreement, also known as the Centers for Medicare & Medicaid Services form CMS-460, agree to charge no more than the Medicare-approved deductibles, service charges, and coinsurance amounts. The provider submits an insurance reimbursement claim on behalf of the patient, and Medicare issues payment directly to the provider.
Health care professionals who are enrolled in the Medicare program but who chose not to sign form CMS-460 are referred to as nonparticipating providers. Physicians who choose this option accept reimbursement assignments on a case-by-case basis and are subject to a 5% reduction for services paid under the MPFS. There is also a limiting charge, which restricts the amount a provider may charge a patient under the nonparticipating option, and the payment is issued to the patient, who must remit the funds to the health care professional.
Barriers That Medical Providers Face
Public and private insurance companies typically have different reimbursement deadlines and schedules, which makes it difficult for physicians to determine when they will receive compensation for services rendered. In certain instances, an insurance company may deny specific claims or request supplemental information (eg, diagnosis explanation), which requires clinicians to submit detailed appeal forms to obtain reimbursement.4 When surveyed, most physicians report claim denials and appeals as their greatest challenge to providing quality health care, followed by fluctuations in reimbursement schedules.4
There are also situations in which outdated or incorrect billing codes lead to denied insurance claims or delayed reimbursement. In addition, health insurance companies may conduct audits to review submitted claims for accuracy, which may also lead to delayed or reduced compensation. When a review or audit indicates that a physician provided a service that was not covered under the insurance plan, the medical provider may be left with no reimbursement for those services, particularly for Medicaid-related services.
These challenges often mean that after the tedious process of submitting an insurance claim is complete, physician payments are not always guaranteed. In some cases, providers must endure several rounds of denials and appeals before receiving reimbursement. If an insurance company ultimately decides that a certain claim will not be paid, the provider is then tasked with having to bill the unsuspecting patient for the unpaid service or else must accept the loss of payment.
Similarly, for participating and nonparticipating physicians who accept Medicare, navigating the challenges of understanding payment information, looking up HCPCS codes, filing complete and accurate claims, and submitting necessary documentation to receive proper reimbursement can be time-consuming and frustrating. In addition, this process is now compounded by a proposed physician fee, due to Medicare reform, that is scheduled to take effect in 2024, in which a 3.3% decrease in the conversion factor could lead to a reduction in overall payments by 1.25%.7,8 These types of Medicare cuts would worsen the financial strain many medical providers are already facing, thus increasing the risk of physician burnout and reduced quality of care for patients.9
As insurance reimbursement remains the standard payment method for health services, medical providers must find effective ways to navigate the challenges. Implementing consistent strategies can help prevent most of the common reimbursement issues.
Strategies That Help Improve Reimbursement Outcomes
Actionable steps that improve insurance reimbursements include staying up-to-date on policy and industry changes and using technology that optimizes the claim submission process. However, one of the most important strategies involves establishing reliable coding and billing procedures. This may involve using billing code search tools, such as the MPFS look-up tool; speaking directly with insurance companies regarding coding policies; and frequently training personnel who oversee patient billing.6 By establishing precise coding and billing procedures, clinicians can ensure that their claim submissions are accurate and timely.
Another useful strategy entails negotiating reimbursement rates with insurance companies to ensure appropriate compensation for services that are provided. Staying informed about industry and policy changes (eg, Medicare or Medicaid reform), value-based services, or patient-centered care enables physicians to better position themselves for successful reimbursement. Investing in novel technology also helps medical providers streamline administrative tasks, including document management, claim submission, and reimbursement follow-up.
Furthermore, as insurance reimbursement is a key aspect of valuable health care, physicians must have a thorough understanding of the compensation process to avoid common challenges that may arise and implement actionable steps that promote successful reimbursement outcomes.4 Medical professionals can also work with third-party outsourced insurance claim entities that screen and standardize claims before sending them to be processed. Gaining valuable insight into effective reimbursement methods from associates in the medical field can also improve compensation outcomes. Physicians who take active steps to submit accurate claims can mitigate most challenges associated with insurance reimbursements.
It is crucial for medical providers to understand the procedure for insurance reimbursements to ensure fair and timely compensation for rendered health services. Health professionals, particularly physicians, play a vital role in facilitating high-quality services that maintain the health and well-being of patients. However, a clinician’s ability to provide beneficial health care is dependent upon various factors, including premium subsidies. Frequent reimbursement challenges threaten access to proper care and place physicians at risk of experiencing burnout; however, implementing strategic claim submission procedures can improve the reimbursement process. As the costs of health care continue to increase, insurance reimbursements have become even more important for medical institutions to sustain their practices and expand optimal services.
1. Tikkanen R, Osborn R, Mossialos E, Djordjevic A, Wharton GA. International health care system profiles: United States. The Commonwealth Fund. Published June 5, 2020. Accessed July 26, 2023. https://www.commonwealthfund.org/international-health-policy-center/countries/united-states
2. Collins SR, Bhupal HK, Doty MM. Health insurance coverage eight years after the ACA: fewer uninsured Americans and shorter coverage gaps, but more underinsured. The Commonwealth Fund. Published February 7, 2019. Accessed July 25, 2023.https://www.commonwealthfund.org/publications/issue-briefs/2019/feb/health-insurance-coverage-eight-years-after-aca
3. Doty MM, Tikkanen R, Shah A, Schneider EC. Primary care physicians’ role in coordinating medical and health-related social needs in eleven countries. Health Aff (Millwood). 2020;39(1):115-123. doi:10.1377/hlthaff.2019.01088
4. Dunn A, Gottlieb JD, Shapiro AH, Sonnenstuhl DJ, Tebaldi P. A denial a day keeps the doctor away. National Bureau of Economic Research. Published July 2021. Updated January 14, 2023. Accessed July 26, 2023. https://www.nber.org/papers/w29010
5. Center for Medicare & Medicaid Services. Understanding Medicare Advantage plans. Published July, 2022. Accessed August 8, 2023. https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf
6. Centers for Medicare & Medicaid Services. How to use the MPFS look-up tool. Medical Learning Network. Published March 2021. Accessed July 25, 2023. https://www.cms.gov/files/document/physician-fee-schedule-guide.pdf
7. Centers for Medicare & Medicaid Services. Department of Health and Human Services. Medicare and Medicaid programs; CY 2024 payment policies under the Physician Fee Schedule and other changes to Part B payment and coverage policies; Medicare Shared Savings Program requirements; Medicare Advantage; Medicare and Medicaid Provider and Supplier enrollment policies; and Basic Health Program. Department of Health and Human Services. Accessed July 26, 2023. https://public-inspection.federalregister.gov/2023-14624.pdf
8. Centers for Medicare & Medicaid Services. Calendar year (CY) 2024 Medicare Physician Fee Schedule proposed rule — Medicare Shared Savings Program proposals. CMS.gov. Published July 13, 2023. Accessed July 26, 2023. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-proposed-rule-medicare-shared-savings-program
9. Khullar D. Burnout, professionalism, and the quality of US health care. JAMA Health Forum. 2023;4(3):e230024. doi:10.1001/jamahealthforum.2023.0024