E-Mail Bulletin #6, October 1999
Downcoding and Payment Delays
Hello, everyone.
My thanks to those who responded to the recent request for downcoding and payment "horror" stories. To put it mildly, they've been interesting.
In this e-mail bulletin I'll give you a synopsis of the replies -- remarkable examples of questionable, sometimes outrageous behavior from third party payors across the nation. (Note: in some cases the identity of specific payors has been "sanitized.") I'll also tell you a little about automatic downcoding and provide some updated information on prompt pay laws currently on the books. Finally, for those who stick with me through this rather lengthy bulletin, I'll give you some tips -- suggestions and strategies for dealing with downcoding and payment delays.
1) Downcoding and Payment Horror Stories -- A National Problem
Providers across the nation continue to have difficulty collecting monies owed by healthplans. Over the past 18-24 months we've heard a steady stream of news detailing payment problems and delays (or even defaults) from some big name payors including Oxford Healthplan in the northeast, HIP in New Jersey, and numerous PPMCs and IPAs in the southwest and on the west coast. And there is unsettling news regarding alleged wholesale downcoding practices initiated by Humana (in Florida, Texas, and Kentucky effective July 1st, and effective nationally August 1st), by United Healthcare in Florida, and by BC/BS in North Carolina, to name just a few.
In Florida, lawsuits against HIP and United Health Care, a pending suit against Prudential, and a government audit of Physicians Healthcare Plans of Tampa are just the tip of an immense iceberg in that state. Prompt, accurate payment and unacceptably extended receivables have become such problems in so many states that legislators are finally stepping in.
As of Summer 1999 the Blue Cross/Blue Shield Association reports 27 states have prompt payment laws on the books (see list at end). The toughest are in Georgia and Nebraska which require 15 day payment, denial, or request for additional information (e.g., substantiation when a claim is downcoded). In Florida, considered by many as the nation's managed care snake pit, a recently passed law gives 35 days for payment of "clean" claims and 120 days for disputed ones.
But even with laws on the books mandating fines for slow payment or processing of the paperwork, many claims are not being processed promptly, or paid as submitted, or sometimes paid at all. Why? In part because the fines, when imposed, have not been sufficient to stop some payors from continuing to process claims outside the allowed time frames.
For example, Modern Healthcare reported (June 21, 1999) that New York regulators had fined 16 healthplans a grand total $188,000. That amount is almost laughable when divided among 16 multi-million dollar corporations, and considering that 10 of them were repeat offenders. And the Miami Herald reported (July 29, 1999) that Physicians Healthcare Plans of Tampa was hit with a $13,500 fine and ordered to reprocess its Medicaid claims. One is understandably inclined to view such slaps on the wrist with skepticism.
And many payors have discovered that they possess another simple yet highly effective cash flow tool -- they may also downcode claims as a means to reduce or delay full payment. The means by which some payors accomplish this are many and creative, and I'll share the "horror" stories with you in a moment. But understand that beneath the entire process of claims delay and downcoding is the simple fact that payors can cause a claim to be unpayable or underpaid as submitted by declaring it not "clean" -- that data is missing or insufficiently documented to justify the service level indicated.
Unfortunately, a clear definition of "clean" seems to have slipped through the cracks when these prompt payment laws were adopted. Without a uniform standard to which all plans in a state are held accountable providers and administrators have to deal with numerous, plan-specific requirements. And since most third party payors don't define "clean" claim in their provider agreements (and some not even in their provider manuals), it's hard for providers and administrators to know what's expected contract to contract. That, obviously, creates processing inefficiencies and leads to errors and/or misunderstandings. Hopefully my suggestions at the end will help make changes for the better.
How Ridiculous Can Things Get?
Just getting your claims to the payor can be an arduous task. One physician wrote to me:
"There are at least two insurers that have changed their post office box numbers (from P.O. Box ***01 to ***02) without notifying the post office of the change. The claims get returned after 10-15 days, delaying the payment. One company has changed its phone number, too, so that you can't even call to find out where to send the claims."
And when the claim finally arrives on the claim examiner's desk that still may not get it paid quickly. This physician told me in the same letter: "I now receive paper referrals before I see patients. This because of the fact that the PCPs may want me to see the patients on the basis of a phone request. Now a new twist. Even if I receive a paper referral by fax or by mail, the insurer will not pay if the claim for the services arrives before the PCP can get his or her copy of the referral sheet to them so they can 'authorize' it. I have called the Medical Director of the culprit insurer and he has agreed to pay some claims but he is getting tired of my calls. It was easy to get him on the phone last month. It is not so easy now."
Adventures In Downcoding
Once the claims examiner has the claim and any necessary referral the downcoding issue raises its ugly head. Here is a sampling of stories from practices with a variety of specialties.
One administrator wrote me: "We are a practice limited to retina. Virtually all of the HMOs in our area have been downcoding consultations since the first of the year. They do this without investigation or request for documentation. I have been given a variety of reasons for the downcoding such as:
- The decision was made by the Director of the Utilization Committee. If your doctors don't like it they'll have to take it up with him personally.
- Not supported by diagnosis (No request for documentation, or any other form of investigation).
- This has been downcoded per our coding consultant group in accordance with HCFA.
In no case have we been asked for copies of records or any other evidence to support the code we submitted. I have even been told that there is no reason for the downcoding. It is so prevalent on our EOBs that it inundates my A/R staff trying to do the follow up, refiles, appeals and grievances. We've even gotten the doctors involved, but have only had reversals on a case by case basis."
A second physician wrote: "XYZ healthplan will preauthorize a visit based on a patient's initial complaint. Then, when an exam is completed and a medical diagnosis is provided, they will not reimburse at that level, but may reimburse just for a refraction 00001 code which really does not exist. Also, when we see patients in the hospital they will reimburse not as an inpatient consultation but just for a routine visit. We are living a nightmare."
Yet another physician described this interesting scenario: "Going through this right now with a healthplan re: CPT code 92286 in pre-phaco patients insured commercially. First we got letters saying this was experimental/investigational. When I pointed out that Medicare allows it if supported by a relevant diagnosis, and they (the payor) pick up the 20% of the allowable, the correspondence changed. Now they say it is bundled with the A scan! They still refuse to pay. They have agreed to review, but who knows!"
The president of a state society wrote: "We are facing a new downcoding policy by QQQ healthplan. All EM level 4 and 5 codes are downcoded to a level 3 by an 'independent' agency called (...). They have singled out general surgery, ENT, and allergy. So far the effects are what you might expect. We intend to file a complaint with the insurance commissioner."
A physician from the mid west wrote: "However, with our Medicaid HMOs we are seeing many denials because of the way they want things coded. We then have to resubmit. It is very confusing when to use E&M or eye codes."
And an administrator from the same state wrote to describe her practice's concerns with E&M and eye codes: ""We are starting something this week in response to the increasing number of insurance companies who are bundling the refraction (92015) with both E/M codes and ophthalmic codes. We are having patients sign a waiver. It states they understand their insurance has changed the way they are paying and if they want a refraction they will assume responsibility for payment for that service. We explain we will be happy to have that service provided by one of our optometrists (who are not providers for the healthplans). We are posting this charge as a separate bill, collecting the payment at the time of service, and not submitting it to the insurance company at all. Since our optometrists are not providers under these plans, I see no reason to submit a claim to them for that refraction. Ironically, I was just in an OB/GYN office this week. They're having patients sign a similar waiver for the new Thin Prep Pap Test. It's happening all over town!"
Is A Payor Really Free To Do Anything It Wishes To Delay Or Reduce Claims Payments?
Though payors may seem to have a free pass to create whatever mischief they may wish, it's not entirely a one way street. I think we all recognize that there are certain providers in the community who habitually code "creatively" and tend to be otherwise unexplainable outliers compared to the rest of the community. Certainly we can't fault a third party payor for appropriately monitoring service intensity and for appropriately investigating a stream of claims seemingly "out of sync" with those of other providers.
But there just seems to be so much random or clearly wholesale downcoding that it's almost as if nearly every provider is being labelled an outlier. And when those wholesale downcodings become standard practice then every provider has a very serious financial issue that needs immediate attention at the highest levels.
Humana has developed a reputation as one of the most aggressive healthplans when it comes to downcoding. AMA News (August 23-30, 1999) reported that starting July 1st Humana sent letters to physicians requesting copies of patient charts on all level 4 and 5 claims in Florida, Texas, and Kentucky. If the information were not received in 14 days those claims would automatically be downcoded one level. And on August 1st Humana expanded the program to include all states, with physicians required to send patient records to a chart review company in Florida.
Note: in a follow-up dated October 11, 1999 AMA News reported that Humana, in response to pressure from physician organizations and regulators, had backed off and would review level 4 and 5 claims only when the physician's profile was "...outside the norm."
Some Positive News?
It's encouraging to see some instances where state regulators or other authorities have stopped certain practices. A former senior HMO executive told me: "*** healthplan had a $250,000 fine as I recall -- it was directly associated with arbitrary recoding of claims made by physicians. Among the rules that *** put into place was one that allowed for only one comprehensive specialist visit to be billed in a given year. This caused a lot of dissension. Ultimately the state said *** could not do this unless it published the guidelines ahead of time. *** also had a number of other coding rules in place that did the same thing -- not paying for complex surgery but only paying the uncomplicated, etc."
And in a bulletin issued September 3, 1999, Florida regulators told payors that they were not to automatically downcode claims since the practice violated Florida's Unfair Claims Settlement Practice law (which, among other things, mandates that providers have no less than 35 days to provide supplemental information in the event of a disputed claim.) For the full text of this very interesting bulletin see:
http://www.doi.state.fl.us/companies/memoranda/99-901m.htm
So What Is To Be Done?
First and foremost, recognize that there are no simple solutions to force change. Sadly, nothing will make this payment nightmare go away quickly.
Third party payors are always going to act in their own best interests, particularly if it's a for-profit, publicly held company concerned about Wall Street performance and quarterly reports. Current prompt payment laws are well-intentioned but, vis-a-vis motivating change among payors, considerably lacking in "pain" when it comes to enforcement. Until legislators and regulators in all states are put under so much public pressure that they force change on payors, providers are almost, but not quite, on their own.
Still, despite the fact that healthplans have an incentive not to pay or process the claim on time or in full (downcoding), and the ability to declare your claims unacceptable for processing, there are a few steps you can take to tilt the field back toward level even if level can't yet be achieved. Here are some suggestions:
1) Get something in writing from the payor describing its requirements or standards for the various levels of service. And be certain that such requirements are tied to the provider agreement. For example, precisely what needs to be documented to justify a level 4 E&M? If the payor cannot or will not provide such written documentation be prepared for unending downcoding problems and disputes. You'll be in a no-win situation if you can't be assured that you're doing exactly the right thing.
2) Ask if the payor is using an outside agency to review its claims and make downcoding decisions. If yes, demand written documentation of the standards used by that outside agency to judge the validity of your claims. And be sure you know your rights as to the number of days your state specifies you have to submit any supplementary documentation. Don't automatically accept the payor's statement that you have only "X" days to submit or the file will be closed on a claim.
3) It's essential that "clean" claim is defined in your provider agreement or, at least, in a document incorporated by reference and attached. If it's not defined now then try to have your provider agreement amended as soon as possible (certainly no later than contract renewal time). Close the door on that loophole.
4) Make certain staff knows the specific submission requirements for each and every plan you serve. You may find it helpful to create a submission matrix for each plan and have your claims software automatically "flag" any required field not completed to the payor's standards. Make it as difficult as possible for the payor to hold your payments beyond the time specified in your provider agreement (hopefully not more than 30 days).
5) Use electronic billing. Especially when integrated with a software program that flags "questionable" information or empty fields this should speed up the process and reduce the chances for mischief.
6) Document every claim denied, downcoded, or delayed, and report outrageous behavior to your elected representatives and to the Department of Insurance. Keep very accurate records of claims not paid within the stipulated time frame. If you are asked to provide additional documentation keep records as to if the request is reasonable or not given the nature of the claim, and if the request is made in a reasonable amount of time. (Remember, the prompt pay laws require that in the event a claim is disputed the payor must request additional data within a defined timeframe and then resolve the claim quickly -- they can't drag things on and on over an extended period of time.)
7) Even if your state has a prompt payment law, address the timing of payments in your provider agreement! Far too many provider agreements are signed with payment timing provisions that leave the door open for payor mischief.
Payors can use all sorts of contractual tricks -- words such as "Health plan will use its best efforts to pay all claims by the 10th of the month." What does "...use its best efforts..." mean? How can you prove that the payor is not using its best efforts?
Another trick is "Claims processed by the end of the month will be paid by the 10th of the following month." It's easy for claims to sit on a desk and remain unprocessed until the calendar clicks over into another month. You can't allow ploys such as these to be used.
You must negotiate firm and specific payment due dates including penalties, if possible, for late payment. Don't be reluctant to raise the issue of late payment penalties, especially in states with prompt payment laws. You simply can't afford to allow a payor to misuse your money as its float. And, especially, when payors (arbitrarily) downcode and then force you to submit additional data, that just destroys any chance of your getting paid on time.
Subject to state-specific requirements, negotiate more specific language such as "Claims post marked by the last day of any month will be processed and payments mailed to provider by the 25th of the following month." That's specific, it's tight, and it's fair. It is also possible to negotiate language that the payor loses any contracted discount if payment is late by more than a specified amount of time. Don't be reluctant to raise these issues and put the payor on notice that you expect to be paid on time for services rendered to its members. You can and should be creative here -- it's your money at risk. If a payor won't agree to write tight payment terms in your provider agreement it's showing you a yellow, perhaps red flag. Be forewarned!
(Special note: employer-sponsored plans covered under ERISA are exempt from state managed care laws, probably including prompt payment. Check with your experienced managed care attorney.)
8) Support your state society, the state medical society, and your PAC! You must have a well-capitalized voice to speak on these issues. Humana, in particular, was put under pressure by several state medical societies. Only after organized protest did it back-off on its new coding and payment protocols.
9) Remember that the door swings both ways. Anytime a payor is ordered not to utilize certain downcoding protocols providers should not automatically rejoice. Payors are, after all, charged with detecting fraud. In regards to that the same former HMO executive quoted above gave me these words of wisdom: "I have seen an increase in visit intensity in the last couple of years. Physicians who have too many complex visits should be handled by the HMOs, so physicians need to be very careful with the victory. The moral that I see for physicians is be careful what you wish for, for you may get it. In this case remove the ability of the HMO to administratively make certain decisions and they will move in the fraud and abuse direction." That's certainly something to keep in mind.
10) Be prepared to walk away from a provider agreement. If none of the above suggestions work for you and a payor simply continues to heap frustration, tension, and abuse on your staff (and if collecting a fair and reasonable amount for your work is impossible) then consider dropping the plan. Remember, no deal is better than a bad deal.
States With Prompt Pay Laws (as of Summer 1999)
Alabama, Alaska, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Texas, Vermont, Virginia, Wisconsin, Wyoming
Until next time..... Carpe Diem!
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