Case Study 2 — Line One: A Composite

Constructed. The practice and the figures are not real. The mechanism — a claim paying less because of the order of its lines — is real, it is arithmetic rather than judgment, and it is the smallest, cheapest, most easily fixed finding in this book.

It is also the one most likely to be true of your organization right now.

Background

Section 18.8 ended with a worked example and a parenthetical. The example showed \$400 lost on one claim from three lines in the wrong order. The parenthetical said that many payer systems re-sequence by value before adjudicating, and that not all of them do, and that the ones that do not will not tell you.

This is what the parenthetical looks like when someone finally checks.

The composite

Constructed.

A multi-specialty surgical group. Competent billing office, low denial rate, clean claims.

Their practice management system built claim lines in the order procedures were entered by the surgeon's charge-capture application — which was, reasonably, the order the procedures were performed.

Surgeons do not operate in descending order of relative value. They operate in the order the operation requires. For a meaningful share of multi-procedure claims, the highest-valued procedure was not on line 1.

How it was found

By someone doing a completely different job.

A billing supervisor was building a report on average reimbursement per surgical case for a contract negotiation. She needed clean per-case totals, so she pulled remittances for multi-procedure claims and started comparing them to the contracted rates.

Most matched. Some did not — and the ones that did not were short by amounts that looked like a percentage of a specific line.

She sorted the mismatches. Every one of them was a claim where the highest-valued procedure had not been on line 1.

The arithmetic

Three procedures, allowed amounts \$1,200, \$800, and \$400, with a 50% reduction on the second and subsequent:

   CORRECT — highest first          INCORRECT — as performed

   Line 1  $1,200 × 100% = $1,200   Line 1  $  400 × 100% = $  400
   Line 2  $  800 ×  50% = $  400   Line 2  $  800 ×  50% = $  400
   Line 3  $  400 ×  50% = $  200   Line 3  $1,200 ×  50% = $  600
                          ───────                          ───────
                           $1,800                           $1,400

                                    Difference:  $400

Not every payer. Most of the group's payers re-sequenced by value before adjudicating, and for those, line order was irrelevant. Two did not.

(Constructed.) Across those two payers' share of the group's multi-procedure volume, over the period the supervisor could examine, the shortfall was substantial — and every dollar of it had been paid, posted, adjusted, and closed.

Why nothing caught it

The claims paid. Not one denial, not one edit, not one rejection.

Each remittance was internally consistent. The allowed amounts, the adjustments, and the payments all reconciled. Nothing on the remittance was wrong — the payer applied its methodology correctly to the claim it received.

The claim was correct too. Every code was right. Every modifier was right. Every diagnosis was right. The only thing wrong with the claim was the order of three rows, and no scrubber in existence checks that.

And the loss is invisible without the contracted rates. You cannot see it on the remittance. You can only see it by computing what the claim should have paid — which is Chapter 28 §28.8's underpayment identification, and which almost nobody does.

What it cost to fix

One configuration change. The practice management system could sort claim lines by charge amount descending before submission. It was a setting. It had always been a setting.

(Constructed.) Roughly two hours, including testing.

The recovery was a different story. Corrected claims could be submitted inside each payer's timely filing window — which recovered a fraction. The rest had aged out, exactly as in Chapter 14's Case Study 2, and for exactly the same reason: a silent underpayment accrues indefinitely and its recovery window is short.

What it shows

First, a claim can be entirely correct and still be built wrong. Every previous failure in this book was a defect in content — a code, a modifier, a level, a measurement. This one is a defect in form, and the distinction matters because every control a billing office owns checks content.

Second, the default was reasonable and nobody chose it. Building lines in the order procedures were performed is a sensible default. It was not selected for its billing consequences; it was selected because it is the order the data arrived in. This is the fifth or sixth configuration in this book that made a decision nobody made — Chapter 17's Case Study 1 collected the earlier ones.

Third, it was found by someone doing something else. Chapter 14's Case Study 2 was found by a new employee. Chapter 15's was found by a supervisor building a productivity report. This one was found by a supervisor building a contract-negotiation report. Three of this book's findings came from people who were not looking, which is worth being honest about: it means the organizations' actual detection mechanism was luck.

Fourth, the two payers who did not re-sequence were under no obligation to. They adjudicated the claim they received under a published methodology. This is not a payer behaving badly, and framing it that way — which billing offices reliably do — prevents anyone from looking at the claim.

And fifth, this is the cheapest finding in the book. Two hours of configuration. The reason it ran for years is not that it was hard. It is that nobody had a reason to look at line order, because line order has never appeared on a report, in a training, or in an error.

The lesson

Check the order of your claim lines. It takes one afternoon and it may be worth more than any coding change you make this year.

Three carry-forwards:

Sort claim lines by descending value before submission. It is almost always a configuration setting. If your system cannot do it, that is a question worth asking your vendor, and the answer determines whether this is a two-hour fix or a workflow one.

Then verify it against a real remittance. Do not trust the setting. Take one multi-procedure claim, confirm the line order on the submitted claim, and confirm the reduction was applied to the right lines on the remittance. Configuration and behavior are different things.

And compare payments to contracted rates on a sample, monthly. Chapter 14's Case Study 2 said this. Chapter 28 §28.8 will say it again with a method. It is the only control that finds any of this, and it has now found three separate failures across three chapters of this book.

Discussion questions

1. This failure is a defect in form rather than content. Name two other places in the revenue cycle where the form of a correct claim could cost money. Are any of them checked?

2. The supervisor found it while building a report for a different purpose. Design the report that would find it on purpose. What does it need, and what is the hardest input to obtain?

3. The two payers who did not re-sequence adjudicated correctly. Should they re-sequence? Argue it from the payer's side.

4. The fix took two hours and the loss ran for years. What does that ratio tell you about where an organization's attention actually goes, and is that irrational?

5. Three findings in this book came from people who were not looking for them. Is "hire curious people and give them time" a control? Answer seriously — say what it can and cannot substitute for.