Stethoscope with Insurance Billing Statement

A Very Brief History of Medical Insurance

In the 1930’s, the earliest form of medical insurance was for certain expenses that people couldn’t realistically prepare for – but it wasn’t in widespread use. Plans were limited, didn’t cover much, and responded to the law of supply and demand. As time progressed, mid-level plans were offered that covered a wider range of incidents but cost more.

Then came the “Cadillac” plans. Do you want or need more coverage? Then just pay more. More companies got in on the insurance action, leading to healthy competition which allowed the best to flourish and forced the worst companies out of business. As it should be. Supply and demand.

Legislation Stifles Competition

However, this risk/reward dynamic became corrupted. The biggest companies had the means to influence politicians and laws were passed to their advantage. Seen in the most favorable light, politicians had good intentions to protect their constituent’s interests and ensure insurance plans provided baseline levels of service.

But this opened up companies to increased risk, so even though service levels went up, so did premiums. Laws were passed that made it harder for the smaller companies to compete with the larger companies who could more afford to offer the levels of service now being legislated. It went from risk/reward to only focusing on reward.

From the 1970s through to the early 2000’s, legislation was passed to pack more and more transactions, services, and coverage into every level of plan. This caused a shift from plans that were based on actuarial numbers and had a little bit of profit, weren’t too expensive but also didn’t cover a lot, to plans based on a differing levels coverage. Legislation forced plans to include certain services, which increased the plan price for each level. 

The smaller plans becomes more expensive, but because it’s cheaper than the next level up, people at that level dropped down to the cheaper level and created a bloating of the number of people on the cheaper plan. This phenomenon (not exclusive to the medical insurance industry) is called adverse selection.

The Affordable Care Act Tosses In a Monkey Wrench

2010 saw the introduction of the Affordable Care Act (ACA) aka “ObamaCare” – a mandatory health insurance with penalties for not purchasing the insurance. The coverage rules favored the big companies but edged out smaller companies. 

The ACA also reduced the annual increases in payments to hospitals under the traditional Medicare Medicare program and reduced the payments to Medicare advantage plans. Annual incremental step ups in payments made for inflation adjustment were reduced and/or eliminated, resulting in 20% reduction in revenue.

Medicare recipients are disproportionate users at 10:1. The ACA also extended the payment period which further burdened the health care providers. Obamacare also imposed another 190 million hours of new paperwork per year which must be done by a human, raising business costs significantly.

Big Insurers Underpay Billions Yearly

This burden on smaller clinics, hospitals and doctors contributed to the collapse of Primary Care with the number of Primary Care Physicians further decreasing after the pandemic. As Baby Boomers aged, GenXers entered the category Boomers were in when ACA started, compounding the problem. At the same time, medical providers in the United States are losing over $125 billion yearly due to underpaid and improperly denied insurance claims.

Medical underpayments occur 100% of the time in each batch of payments. Medical practices, medical groups, hospitals, urgent cares, and surgical groups are not getting paid what they are owed by the big insurers. The largest medical payers are very creative in finding ways NOT to pay their doctor’s offices, urgent care facilities, surgery centers, hospitals, and the like what they contractually owe them.

In fact, insurance companies seem to change the rules on a weekly basis in terms of what they’re going to pay for. Medical providers are discovering that procedures that were covered even six months ago are now being denied, despite no evidence of abuse and having used the same protocols for years.

Billing companies are already overburdened and don’t have the time, resources, or expertise to go after the big insurance companies to recover the payments contractually owed them.

And the clock is ticking- underpayment recovery is usually contractually limited to the past 12 months, so every day of delay can equate to tens of thousands of dollars lost!

The Underpayments Solution

Our ADHC Underpayment System Analysis Audit is a proprietary technology system designed to identify and recover underpayments, manage denials and overpayment fines and responses, automate appeals and requests, and is a contract modeler essential to negotiating more favorable contracts. 

ADHC automatically reviews every payment received over the past 2 years to verify that you were paid in full according to the payer agreements. Their team of experienced contract specialists will analyze, load, and verify all contract details have been entered correctly into the platform.

Once your Electronic Claims are uploaded into the platform, the engine will provide the following details:

  • Any claim setup issues
  • Breakdown of Underpayments by Payer according to the Claim Adjustment Reasoning
  • Group all Underpayments by collectability
  • Begin collections on past underpaid claims
  • Goal is to initiate collections within 10 days of receiving all relevant information

ADHC finds when their contract is not being adhered to, is outdated, and when their contract is not in line with other similar medical practices. They analyze their procedures- sequencing, classifying, coding, billing, and inform the client how changing their procedures can allow them to charge more.

ADHC works on a 100% contingency basis so there’s no upfront fee for the audit, and only minimal time is needed on the client’s end. Their clients get on average, a 10-20% increase in revenue recapture through their payor underpayment recoveries, and another 6 to 8% increases in Medicare payments that were underpaid. 

Find Your Medical Underpayments Now