3 Types of Insurance Reimbursement
Insurance Pay Day
The hard part is over. Your sessions and notes are complete, you’ve submitted the claim with all of the proper billing codes and information, and the claim has been processed by the insurance company. It’s payday! In this article, we will cover the various ways that you could be reimbursed by an insurance company. Some insurance companies offer options when it comes to how you will be paid, and others are less flexible. By understanding the different types of insurance reimbursement, you can make the best choices for your private practice.
How you get paid is typically established during the credentialing process, but you can always make updates to your payment method by reaching out to the Provider Services Department of the insurance company. Each insurance company does things differently, so be sure to clarify all steps of the process with the representative to get your payment preferences updated accurately.
Type 1: Paper Checks
Once a claim has been processed and is ready to be paid, many insurance companies will issue paper checks that get mailed directly to the billing address of your organization. The paper checks will typically come with a paper EOB (Explanation of Benefits) detailing which claims were paid, and more importantly which claims were not paid and why. This helps to post payments to the appropriate claims, and to be able to correct any denied claims if possible. Paper checks are often the default method of payment for insurance companies. Checks can then be deposited by traditional bank deposit methods.
Many people like the traditional paper check because they feel it gives them a more hands-on approach to their money.
Pitfalls of Paper Checks
In order to reliably receive paper checks, your billing address must be accurate with the insurance company. If your company has moved, or is planning on moving, there can be some unreliability in getting the address updated in time before checks are issued.
Additionally, if you were previously credentialed under a group practice but have transitioned to working in your own Private Practice, there is a chance that paper checks could be mailed to your previous group practice if you were credentialed using that group practice’s address.
The last pitfall is the reliance on the U.S. Postal System. We’ve all got a story of something that’s been delayed or lost in the mail, particularly with the impacts of Covid-19. If funds are needed in a timely manner, you may be better off with the second type of payment.
Type 2: Electronic Funds Transfer (EFT)
There has been a rise in the availability of EFT payments from insurance companies. An EFT, or Electronic Funds Transfer, is a direct deposit into your bank account from the insurance company. This method typically tends to process faster, and there are added security measures with electronic payments. Different insurance companies use different methods of setting up the EFT payments, but these are typically set up through online portals that require an account with a username and password. Typically you will need a voided check with routing number and account number for the bank account that you would like payments directed to in order to get this set up. Again, reaching out to the Provider Services Department of the insurance company and asking how you enroll in EFT is the best way to make sure that all steps of the process are completed properly.
Sometimes enrolling in EFT is required in order to receive ERA, or Electronic Remittance Advice. This is the digital version of the EOB mentioned earlier. The ERA will outline which claims have been paid, which ones have not and why, and can be directed right to your EHR for streamlined payment posting. Having both of these in place can make record keeping a lot easier.
Pitfalls of EFT
Although you don’t have to worry about the reliability of the postal system or having your check delivered to an incorrect address, you do need to make sure that your banking information is up to date with the insurance company. If you ever have any changes to your bank account, or you decide to start using a new financial institution, that information needs to be updated with the insurance company to keep receiving payments properly.
Getting the EFT payments set up can sometimes be a bit more complicated, and can involve working with the insurance company as well as your bank to get things functioning properly. Since each insurance company has a slightly different enrollment process, it can feel tedious to get set up. Add this to the list of Reasons Not to Credential with a Lot of Insurance Companies.
Type 3: Virtual Cards
The final payment type that we will be discussing in this article is a Virtual Card. This is the least common type of payment, and is usually the least preferred. These payments are sent in a format similar to a credit card, with an account number and security code. It can come in a digital or paper format, and will include an image of a card. The intent with these payments is that you would charge the “card” in your credit card processing system as if it were a credit card payment using the information provided to you.
These types of payments are processed through a third party program, the most common one being Zelis.
Pitfalls of Virtual Cards
As mentioned above, these payments are usually not preferred for several reasons. Firstly, it is assumed that you have a credit card processing system to run the information through. If you are using TherapyNotes, there is a built-in credit card processing system for an additional charge that would allow you to run the payments.
Whether you are using TherapyNotes' credit card processing system, or a credit card processing system outside of TherapyNotes, there are typically fees to process card payments which applies to the virtual card payments as well. This means that you would not be receiving your full contracted rate after paying the credit card fees.
The last challenge with the virtual card payment system is that it can make record keeping difficult. The insurance company needs to be added as a “client” in your system in order to process the payment. It can then be difficult to match the payment back to the corresponding session to reflect a paid status. Any amounts would also need to be reconciled for credit card processing fees as well.
Navigating the insurance world can be complex. We at Practice Solutions do what we can to serve as a guide. If you need additional help with insurance billing, use one of the contact methods below to find out about how we can help you with insurance claim submission, payment posting, eligibility and benefit checks, and more!
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