Special E-Mail Bulletin #2
November 2000
More on Prompt Payment Laws
Special E-Mail Bulletin
Hello, everyone.
If you've been reading these e-mail bulletins over the past three years, or if you've heard my many lectures on managed care contracting, you know I've been advising practitioners and administrators on prompt payment laws and the many "holes" contained in them. One sub-topic I started discussing three or four years ago was the issue of "clean claims," and how easy it is for a healthplan to manipulate the definition of "clean" to its own advantage and to your disadvantage.
Here's something from the Dec. 4th issue of AMNews. It confirms what I've been saying for all these years and adds some important and disturbing new information.
Gil Weber
BUSINESS
"Clean claim" rules defang state prompt-payment laws
Contradictory and complex definitions of a "clean claim" help explain why claims payments still drag out even as 39 states set deadlines for reimbursement.
By Leigh Page, AMNews staff. Dec. 4, 2000.
Even though 39 states have enacted prompt-payment laws, payments are still delayed, because few of those laws address a key factor -- the error-free or "clean" claim.
Because of health plan lobbying, only 12 of the prompt-payment laws even define a clean claim, and most of those definitions are inadequate, according to the AMA's Private Sector Advocacy unit.
"A clean claim is in the eye of the beholder," said Timothy T. Flaherty, MD, chair-elect of the AMA Board of Trustees, which is working with state medical societies to improve timeliness of payment.
Physician practice billing officers report that health plans have a plethora of requirements that were wide-ranging even before prompt payment laws were passed. They say plans also frequently send back claims for minor errors that the officers believe should not prevent processing.
Health plans insist that all the information they require for claims is necessary, and they agree that claims are denied at high rates.
The Health Insurance Assn. of America reports that a quarter of all claims are rejected because they are not clean. And MedUnite, an electronic claims-processing joint venture by seven large health plans, including Aetna, Anthem and Cigna, claims that 50% of claims contain mistakes.
While claims can be sent back for other reasons, such as uncovered services, nearly 80% of delayed payments at UnitedHealthcare lack "one of the basic pieces of data" on the billing form, said UnitedHealthcare's Mike Strand. He did not specify which data are typically lacking.
Health plans say all the information they require is essential, and they insist that when claims are clean, 90% to 95% are paid within 10 days. But recent surveys, compiled by the AMA, of 18,000 physicians by state medical societies seem to contradict that figure. More than one-third of these doctors said most of their claims were not paid within the 45-day limit stipulated under most laws.
But this contradiction might be explained by the tremendous volume of claims that health plans return for more information. Billing clerks at physician offices say carrying out health plan rules is an onerous task. Besides filling out claim forms, they must attach medical records and other documents for a long list of situations that include everything from certain blocks of CPT codes to verification of secondary insurance.
Even the dozen prompt-payment laws that define a clean claim are of little help. Most laws copy the Medicare definition, which says clean claims must have "no defect or impropriety." They also let plans add requirements for "a particular circumstance requiring special treatment."
Poor definition in Texas
Texas' new definition of a clean claim, which went into effect in August, gives plans a great deal of slack. Based on a law passed last year, the Texas Dept. of Insurance lets plans add their own requirements to the state's list of clean claims as long as they notify doctors 60 days before.
The new rules prompted plans operating in Texas to send physicians a daunting array of requirements.
UnitedHealthcare's May 26 notification reports that it has not added any requirements; even so, its list includes, among other things, requiring that doctors attach medical records for 258 specific codes plus claims with certain CPT code modifiers.
Golden Rule Insurance Co.'s advisory requires medical records for six listed conditions, all claims during the first two years of a patient's service, accident and injury claims, nursing services and experimental treatments.
Humana Inc.'s Aug. 25 bulletin said the company requires seven additional elements filled out on the HCFA 1500 billing form, advises that anesthesia claims must be converted to minutes and requires attachments for 11 situations, such as procedure reports or office notes.
In the pages and pages of requirements from each plan, "there's enough complexity that HMOs can have wiggle room" in what they define as a clean claim, said Don Bishop, MD, chair of a task force on health plan accountability at the Patient Physician Network, a 350-doctor IPA in Plano, near Dallas.
Meeting requirements are putting a strain on office staff. Carus Healthcare, a nine-member neuro-musculoskeletal group in Carrollton, outside Dallas, reports that it spent 80 hours retraining staff, put together a 10-page guide for staff and changed billing software to comply.
Billing managers at Texas practices say they are most upset by a requirement by the Texas Dept. of Insurance that they document that their patient has no other health care coverage.
This "coordination of benefits" provision requires that offices attach a signed statement from the patient that he or she does not have secondary coverage through someone else, the Texas Medical Assn. reported.
TMA officials say they were dissatisfied with the state's original 1997 prompt-payment law and pushed for the 1999 law, but the final wording favored the health plans. Texas health plans called by AMNews did not return calls or referred calls to their national offices, which were not familiar with the Texas law.
"Now we've got to go back and get a new law," said Connie Barron, a TMA lobbyist. She said the TMA had not decided on specifics, but its general goal would be to limit information to what was necessary to process the claim and to specify attachments.
What can be done
Other states are learning from the mistakes of pioneering prompt-payment states like Texas. For example, New Mexico's first prompt-payment law, passed this year, tries to limit plan requirements to "substantially all the required data elements necessary for accurate adjudication."
Meanwhile, United's Strand says practices can consult plans' administrative manuals to understand prompt-payment rules. And the TMA offered workshops this summer to help office personnel comply with plan requirements.
Physicians report that billing software has increased the percentage of clean claims. But they warn that software can be prohibitively expensive for small groups and cannot guarantee that no claims will be returned.
Electronic claims are supposed to enhance accuracy and speed up payments, but billing experts advise against electronic processing for claims that require attachments. Attachments could be faxed separately, but there is no guarantee that they will be linked to the electronic bill.
Meanwhile, Dr. Bishop at the Plano IPA reports his own problems with prompt payments and clean claims directly to health plan representatives in face-to-face meetings. He said some plans made a lot of promises "to pacify us," but as yet little has changed.
What's a "clean claim"?
Medicare and most state laws don't provide much guidance, but definitions by New Mexico and the National Uniform Billing Committee, a group of payers and providers, may help by limiting information to what is needed to process the claim.
- Medicare A clean claim "has no defect, impropriety (including any lack of any substantial documentation) or particular circumstance requiring special treatment that prevents timely payment from being made."
- Texas Insurers can determine requirements as long as they notify doctors 60 days beforehand.
- New Mexico A clean claim "contains substantially all the required data elements necessary for accurate adjudication without the need for additional information from outside of the health plan's system."
- National Uniform Billing Committee It "can be processed without obtaining additional information from the provider of the service or from a third party."
Lack of definition
Thirty-nine states have passed prompt-payment laws, but only 12 have defined what a clean claim is.
12 with prompt-pay laws that define a clean claim: Arizona, Colorado, Florida, Kansas, Kentucky, Minnesota, New Mexico, Pennsylvania, Tennessee, Texas, Virginia, West Virginia.
27 with prompt-pay laws that do not define a clean claim: Alabama, Arkansas, California, Connecticut, Delaware, Georgia, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Utah, Vermont, West Virginia, Wisconsin, Wyoming.
12 with no prompt-pay laws: Alaska, District of Columbia, Idaho, Indiana, Iowa, Nebraska, New Hampshire, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota.
Source: AMA
Give me more
To comply with Texas law, health plans recently had to notify physicians of all extra requirements for clean claims. In addition to filling out several more spaces on the HCFA 1500 than required by law, here are some examples:
• United HealthCare
- Medical records for 258 itemized codes.
- Medical records for certain CPT code modifiers, such as surgery and anesthesia.
• Golden Rule Insurance Co.
- Medical records for six specific conditions, including "maternity (except routine)" and "sclerotherapy (except spider veins)."
- Medical records for all claims during the first two years of a patient's service.
- Records for accident and injury claims, nursing services, bone marrow/stem cell transplants, reconstructive surgery and experimental treatments
• Humana Inc.
- Procedure reports or office notes for "dump codes," codes ending in 99, trigger point injections, claims submitted by a surgeon and assisting surgeon under the same tax ID number, all claims under six different sets of CPT modifiers.
- Itemized bills when physician's contract contains "a provision for calculation of payment based upon specific dollar threshold."
- Repricing sheets for PPO mental health claims.
• Cigna HealthCare
- Authorization numbers "when appropriate." Documentation for CPT code modifiers, unlisted codes and prescriptions for physical therapy.
- Operative notes for multiple procedures.
- Any "additional information necessary to resolve differences between authorized services and claimed services."
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