Claim repricing is the application of contracted or agreed upon payment rates to healthcare billing charges. This process begins when the provider submits a claim for payment that includes line items for each service provided.
Initially, the health insurance company will review many factors such as eligibility, timeliness, and various other factors to confirm payment is warranted. After responsibility for payment is established, the claim is repriced to configured allowed amounts which are often different from billed charges. That “final” allowed amount is then divided into the patient responsibility and the plan responsibility.
In the case of a self-funded employer, the explanation of payment would be sent directly to the provider. What is most important to keep in mind is the contract terms often drive pricing for in-network providers. Some examples of contracted rates include: per diem, percent of charge discount, carve outs, and case rates. The claims are processed applying the applicable contract terms, which then culminates in the allowed amount.
The allowed amount is the maximum amount a plan will pay for a covered health care service. It goes by many names such as, “eligible expense,” “payment allowance,” or “negotiated rate.” If your provider charges more than the plan's allowed amount, you may have to pay the difference. This allowed amount is known as the true cost of healthcare. This transparency is significant for self-funded employers and should be understood, monitored, and controlled. Surprisingly, allowed amounts may often be in excess of billed charges!
All in all, self-insured employers need to familiarize themselves with claim repricing as it is critical to running your health plan like any other part of your business. The revenue cycle can become complicated, so it is important to utilize a point solution like 4C Digital Health to give you clarity and control of your health care spend. Reach out to us today to learn more and get started.