Resource Corner Blog

Billers Can’t Be Shy with Contractual Charges vs Contractual Payments


There’s no time to be bashful when your job is to bill claims on behalf of a behavioral health agency. To ensure your agency is getting paid for all the services you’re providing it is imperative that you’re willing to pick up the phone and make a call.  But before you can start making calls, you need to start with the right measurements.

Contractual Charges vs Contractual Payments

The Contractual Charge is the portion of the billing claim that you expect the insurance company to pay.  Despite what your agency charges for the service, you have a contractual agreement with each insurance payer that has predetermined what they will pay for that service.

Contractual Payments are simply the amount that your agency actually received from the payers.

In Gerry Speranza’s earlier post: Ensure your First Time Claim Acceptance Rate is above 95%, he discussed the importance of watching the front-end claim submission process to prevent claim rejections.  Monitoring your Contractual Charges against your corresponding Contractual Payments is how you can protect your agency from losing revenue as a result of claim errors that go unchecked.

On a daily basis, the Billing Manager should be monitoring this measurement for the previous week.  The relationship between the contractual charges sent out to insurance payers and the corresponding payments received should always be 1:1.  Whenever the Payments show lower than the Contractual Charges your claims management personnel should spring into action. 

Agencies that cannot commit resources to monitoring these reports daily or take immediate action should consider a Revenue Cycle Management service to assist.

Consider the average timeline for a claim to be returned as rejected:

  • Service takes place (0 Days)
  • Weekly billing (upto 7 Days)
  • Insurance Returns Rejected (15 Days)
  • Total days to rejection (up to 21 Days)

If you consider that most insurance companies only pay on claims within 30-45 days of the date of service, time is against you when it comes to resubmitting claims with enough time to get paid.  Again, it is important to seek to improve your first time claim acceptance rate to avoid as much re-submitting as possible, but a claim rejection is no reason on its own not to get paid.

When you’re daily monitoring of Contractual Charges and Contractual Payments reveals a discrepancy, it’s time to roll up your sleeves and get to work.  The size of the discrepancy will dictate the type of investigation you do. 

  1. For small discrepancies, you can identify the rejections and begin to work them. Analyze why they may have been rejected and prepare to resubmit them. 
  2. For larger discrepancies (you judge this by having a good handle on your average weekly and monthly payments) you want to dig for patterns. Looking for consistent and common irregularities are good ways to find bulk discrepancies, including:
    1. Missed payments for a single day of service. Human error happens, you may have missed a day of services when creating your batch of claims.
    2. Missing payments common to a single payer. The insurance company may have missed the electronic transmission for any given day. When you have confirmation that the file was received by the insurance carrier and you call the carrier because you haven’t received payment and you’re told that there is “no claim on file”, the carrier should check to see if the file transmission was processed through their system. 
    3. Missing procedure codes or rejections of the same code. Changes by payers to procedure codes can result in a pattern of rejections, and procedure codes are a common miss when preparing claims.

After you analyze your rejected claims and identify those that you were unable determine why they were denied, it’s time to pick up the phone and call the insurance companies. It’s important to be ready with all of your claim information on hand for quick reference when you make your call, and while you’re waiting in the queue for the next available representative you can use a headset to keep two hands free for working on other tasks.

Start with the payer that represents the largest portion of the rejected claims, then group them by denial reason to ensures you are working through as many claims as possible in one phone call. Some payers will reprocess a whole group of claims together if denied for the same reason.  Then work your way down the payers list until you have addressed all outstanding claims denials.  Staying on top of your Contractual Charges to Contractual Payments ratio will enable you to complete this exercise on a regular basis to prevent a backlog that will eventually become dead claims that will age out past their payment deadline.

Don’t be afraid to call the insurance company twice in a day, two days in a row, three times in a week, whatever it takes to get paid for the services you are providing.  It’s their job to help you work your rejected claims, and it’s your job too.

TenEleven has developed a series of interactive outcomes dashboards designed to help you measure and analyze this type of information.

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