Contrary to popular belief, the goal of most tight-fisted insurance, payor, and managed-care organizations isn’t to cheat physicians out of reimbursement money. However, it does seem as if their sole purpose is to string docs along for the maximum possible time before cutting them a check. The reason? Simple economics.

“The longer they hang on to that money, the longer the payors can earn interest from it,” says Ruth Tesar, executive director of Northern California PET (Sacramento) and a past president of the Academy of Molecular Imaging (Los Angeles). Tesar has waited as long as 2 years before collecting reimbursement dollars due her enterprise.

By some estimates, this heel dragging adds up to millions of dollars in extra unearned income for payors each year.1

Banking on Your Inaction
Today, perfunctory denial of submitted claims represents the simplest and most widespread tactic that payors employ to gum up the workings of their own reimbursement machinery. For instance, the nation’s emergency rooms, heavily dependent on imaging services, find that approximately 65% of their claims to managed-care organizations are rejected on first submission, no matter how clean.2

“It seems as though payors like to kick back clean claims just to see what you’ll do about it,” says Tesar, whose freestanding center is outfitted with fixed-base and mobile PET as well as a CT scanner; the facility performs nearly 3,000 PET studies a year. “They’re betting that you’ll just let it go and not bother with an appeal. Often, the amount in question is small, so they assume you’ll think it’s not worth the hassle to try collecting on it.”

Then there’s the game playing that transpires with the quest to obtain precertifications.

“We’ve noticed payors taking longer to process the precert request and then coming back to the provider with a demand for more supporting info—typically chart history that has to come from the referring physician,” says Trish Kuhn, VP of financial operations for Universal Imaging Inc (Ypsilanti, Mich). “They’ll tell you they need this information to resolve a question as to whether the case involved should be forwarded to the workers’ comp system or to a personal injury attorney. It’s a way to assign ‘pending’ status to a claim” so that it can gather cobwebs.

A related tactic entails letting claims and supporting documentation idle interminably in a processing queue, stamping it approved only after you make noise about the delay. That’s happened a few times to Kuhn. The payor wasn’t forthcoming with precertification, so Kuhn called to find out about the hold up: “The person I spoke with said, ‘Oh, yes, all the records are here and it’ll now go straight to processing,’ ” she remembers. “It was left unstated but mutually understood that nothing would have been done about it had I not called.”

Sometimes payors make it difficult to collect in a timely manner by creating clerical errors. Tesar explains the scam: “Say you submit a charge of $3,800. The payor then notes the charge on its books as $380 by ‘accidentally’ dropping the last zero, then they’ll base the percentage they pay you on that incorrect number. From there, you have to go through a whole process of having them correct the error. This works out great for the payor because it will be additional weeks or maybe even months before they have to issue you a check.”

As a protective measure against this scheme and others, Tesar’s receivables handlers now verify as soon as the check is in hand that the amount paid by an insurance company is correct.

“Our practice-management system includes a feature that shows for each payor exactly what the contracted rate is for our services,” she says. “With this

  • , we can readily spot discrepancies and immediately take action.”

    At Universal Imaging, prompt follow-up on every denied claim, no matter how small, has become standard operating procedure.

    “A lot of payors put provisions in their contracts that give you a short time limit on resubmitting claims or filing appeals,” Kuhn says. “Once that deadline comes and goes, the denial stands. There’s nothing you can do about it. Your opportunity to collect what you’re owed on that individual claim is then over. That’s why we like to jump on denials right away.”

    Fighting the Good Fight
    Some imaging providers make it company policy to pursue each unpaid claim for as long as it takes to collect what’s owed. Universal Imaging exhibits this resolve.

    Launched in 1993 by entrepreneur Phil Young and business partner Mark Lauhoff, Universal Imaging performs between 75,000 and 100,000 procedures a year at its freestanding, outpatient diagnostic centers. Insurance reimbursement accounts for at least 98% of Universal Imaging’s income stream. Not long ago, the enterprise stood to lose almost $100,000 of that flow to a payor that had incorrectly processed of a sizable number of claims.

    “We decided to fight to the finish for our money,” Young says. “It was too big a sum for us to write off.”

    Here’s what happened: The payor—in an effort to reduce operational costs while increasing efficiency—had farmed out the chore of assigning precertification numbers to an independent company. However, an apparent software glitch prevented migration of validated precertification numbers from the contractor’s computer to the mainframe system operated by the payor. So, when Universal Imaging submitted claims with the precertification numbers that the contractor had supplied, the payor rejected them because, as far as its computer knew, the numbers were bogus.

    Kuhn alerted the payor to the problem, and that should have been the end of it. But it was only the beginning. Three weeks of silence from the payor passed before Kuhn received a reply, which turned out to be not an apology or even a “we’re-looking-into-it” advisory; rather, it was a reiteration of the original notification that Universal Imaging’s claims had been rejected.

    Kuhn then made a series of telephone calls to representatives of the payor at increasingly higher levels of authority. Each time, as Kuhn explained the problem, the contacts expressed regret and pledged to straighten things out. However, bureaucratic inertia prevented that from happening. It was only when the provider threatened to make a case before the state’s insurance commissioner that things shook loose. And fast.

    Through sheer tenacity, Universal Imaging collected what it was owed. But the long months of battle took a toll—so much so that the enterprise found it necessary to tap into its line of credit in order to pay its bills.

    “It was as though we were being punished for doing everything exactly right,” Young laments. “Worse, there’s always the worry that this could happen to us again.”

    Lobbying for Change
    Insurance companies normally shrug their shoulders in response to provider complaints of fiscal mistreatment because, of course, providers are not their customers. As Young reminds, “The payors’ customers are, by and large, employers and benefits managers” interested mainly in the price of a plan, not whether individual providers are being paid on time and in full. But employers also are interested in keeping their employees—the health-plan beneficiaries—happy. With that in mind, Universal Imaging tries to transform beneficiaries into advocates by, when all else fails, sending them the bill that the insurance company wrongly refuses to pay.

    “As soon as the patient calls to find out why we sent them the bill, it’s our opportunity to educate and encourage them to tell their benefits administrator what the insurance company is doing to create problems,” Kuhn says. “The idea here is to get the employer—the one paying for the insurance company’s services—to use its leverage to effect positive change.”

    In Tesar’s view, a viable strategy is to start out—and remain—on a payor’s good side. For some time now, she’s sought to do just that by meeting with payor medical directors and consultants to explain not only the newest indications for PET but also to convince them that her enterprise is the best provider in the market for the performance of all such tests.

    “You have to be careful not to make too strong a pitch for yourself, otherwise they’ll turn off on you,” Tesar cautions.

    It can be helpful as well to staff your billing department with specialists who previously worked for a payor, she adds. Such individuals will be well acquainted with the ploys that payors pull; thus, they can show you how to successfully counteract. These experienced staff members also might still have friends within their former employers’ ranks who would be willing to do favors, such as shepherding a claim through processing.

    Lobbying for change is another way the problem can be addressed, suggests Tesar, who, in working with a pair of professional societies, hopes to eventually prod payors to cover PET in all instances in which its use is indicated. “We’ve been helping the organizations supply decision-makers with all the latest data concerning PET indications,” she reveals.

    That’s important for PET providers because, as Tesar notes, the modality continues to experience problems with coverage. “Medicare and private payors still don’t pay for all PET indications—and that’s a big source of the problem for us,” she says. “For example, PET for small-cell lung cancer isn’t covered by Medicare, whereas for non–small-cell lung cancer, it is. Sometimes, the referring physician—who knows about this coverage issue but nevertheless wants the test performed on a patient—will [deliberately] give us wrong information [which leads us to believe we’re performing a test for a covered indication]. Only after the study is performed do we discover it’s something other than an indication for which we can be reimbursed. When that happens, we’re out the money.

    “Progress is slow,” she continues, “but we’re making headway—specific indication by indication—in the bid to get across-the-board coverage for PET.”

    Young, for his part, sees little likelihood that payors’ elusiveness will cease in the years ahead.

    “Absenting government-mandated reform, payors will continue to find it just pays too well to make it hard for providers to collect,” he says. “And to push for that kind of reform is going to require a huge investment of money and energy. I don’t think the imaging industry is organized powerfully enough or financially well-positioned for such an undertaking at this time.

    “I don’t want to sound defeatist,” he goes on, “but the games payors play are something we’re probably going to have to live with for a long time to come. Learning how to play effective defense is perhaps the provider’s best course of action, all else considered.”

    Ones to Watch
    Payors determined to keep money in their hands for as long possible possess a frightening array of tactics that they can draw upon in the service of their ambition. Here are some of the most egregious examples of that cache.

    Card Games. Some payors take their time issuing insurance cards to newly covered individuals, which can make it difficult for providers to verify eligibility. Often, many months elapse before this issue is ironed out.

    Downcoding. With a simple stroke of the pen, a payor can arbitrarily discard the appropriate current procedural terminology (CPT) code numbers on providers’ claims and insert, in their place, substitutes of lesser reimbursement value. Downcoding has become familiar practice for a range of insurers, including Medicare.

    Encouragement of Ignorance. A favorite dastardly time-buying tactic of payors is to have providers’ claims submission questions answered by … well, shall we say, less than optimally trained and knowledgeable personnel. Thus, when they respond to an inquiry, these staff members pass along erroneous information, which results in providers incorrectly completing the claim. We can readily envision what happens next to any such claim.

    Prior Contracts. One way a payor can squeeze providers is by continuing to pay under the terms of an older contract if that previous covenant offered a more miserly rate of reimbursement. It’s up to providers to catch this discrepancy. Instances exist, however, when payors cling to outdated terms despite receiving written requests to honor the newest version of the contract.

    Refiled Claims. Any time a provider refiles a denied claim, it pushes back all the way to the beginning the date when the unpaid reimbursement can start collecting interest. Payors can force providers into the position of having to refile by, among other things, determining that the original claim needs “special handling” or additional signatures. Alternatively, they might purposely mishandle claims they deem “nonclean.”

    Retroactive Denial. Unless a provider’s state has laws on the books prohibiting this practice, payors can pour back through their records from years earlier and determine they’ve somehow overpaid for certain claims. Reasons for the overpayment could be anything from a processing error on their part to an incomplete documentation submission on the providers’. Whatever the cause, they’ll ask providers to repay the amount in question. If said provider elects to ignore such demands (as is sometimes recommended by industry consultants, particularly in instances where the look-back extends 2 or more years), the payor might respond by withholding part or all of the provider’s present-day reimbursements until the alleged loss is recovered.

    Rounding Down. Clearly, it’s a miserly payor when the company sends the provider a check that shorts reimbursement on every claim by a dime, a nickel, or even a penny. Losing a few cents per claim likely won’t have more than a negligible effect on the balance sheet of the provider, who’s unlikely to protest over a matter of pennies. But to the payor, shortchanging claims that number in the multiplied thousands can, over the course of time, add up to serious dollars.

    Strange Code Definitions. Payors have been known to apply their own unique definitions to CPT codes. It seems patently unfair, but there’s no law that requires them to adhere to the letter of the definitions. By changing ever so slightly the conventions used in a code, it’s possible to create perfectly legitimate grounds for denying a claim that otherwise would be well within the bounds of acceptability. Sneaky payors pull much the same stunt by cherry-picking the code modifiers they’ll allow or disallow.

    Unnoticed Notices. Some payors count on providers missing their notification of changes to their procedural requirements. To make sure those aren’t easily spotted, payors will publish the notification toward the back of a voluminous bulletin. Because providers are oblivious to those changes, they’ll continue billing in accordance with the old requirements. It could be months before providers figure out the reason for the ensuing rash of denials.


    Preston SH. Managed care ripoffs: are you being paid less than you should? Medical Economics Archives. Available at:   Accessed April 29, 2004.

    Rick Romano is a contributing writer for Medical Imaging.

    1. Per-S? Technologies. Denial management. Available at: Accessed April 29, 2004.
    2. American College of Emergency Physicians. Practice resources: reimbursement. Available at:,19,0.html. Accessed April 29, 2004.