ern ncra aaham nocal ucr legislative update.5.14.10

ERN/NCRA 2010 Annual Legislative Update

USUAL, CUSTOMARY AND REASONABLE CHARGES

Ed Norwood

Annual Legislative Update

ERN / The National Council of

Reimbursement Advocacy


The Sign of the Times

“Our greatest glory is not in never failing, but in rising up every time

we fail.”

-Ralph Waldo Emerson



Healthcare is a law to be defended.



Health PlanRevenue (in millions)

Net income (in millions) Earnings Per Share

2008 2009 2008 2009 2008 2009

Aetna $30,950.7 $34,764.1(12.3%)

$1,384.1 $1,276.5 $2.83 $2.84(0.4%)

Cigna $19,101.0 $18,414.0(-3.6%)

$292.0 $1,302.0 $1.05 $4.73(350.5%)

Health Net $15,366.6 $15,713.2(2.3%)

$95.0 -$49.0 $0.88 -$0.47(-153.4%)

UnitedHealth Group $81,186.0 $87,138.0(7.3%)

$2,977.0 $3,822.0 $2.40 $3.24(35.0%)

WellPoint $61,251.1 $65,028.1(6.2%)

$2,490.7 $4,745.9 $4.76 $9.88(107.6%)


Underpayments by health care service plans and their capitated providers exacerbate an already fragile health care delivery system.



On September 14, 2009, the DMHC expanded itsroutine audits to specifically address claim paymentissues pertaining to plans and capitated providers, withan emphasis on claims for emergency services.

The DMHC's regulatory efforts will initially concentrate onthe health plans and capitated providers who meet one ormore of the below criteria:



1. Health plans and capitated providers that have lowered their payment methodologies since October 15, 2008. Any decrease in claim payment levels will need to be justified.

2. Health plans and capitated providers whose claim payment methodologies result in the lowest payment levels to providers.

3. Health plans and capitated providers that are the subject of substantive and/or repeated complaints regarding their reasonable and customary methodologies.



4. Health plans and capitated providers that routinely have low initial payments.

5. Health plans and capitated providers that have no meaningful dispute resolution processes, or have other unfair payment practices.



Recent courts have determined that payors cannot setreimbursement rates in an arbitrary and capricious manner. In the California Supreme Court's Prospect decision, the Court stated:

"Prospect has provided no authority, statutory or otherwise, for this court to conclude that it can set the rate of emergency rooms physicians pursuant to any across-the-board mechanism, whether the Medicare rate or any other rate." (Prospect Medical Group, Inc. v. Northridge Emergency Medical Group et al. (136 Cal. App. 4th 1155, 2006.))



The Prospect decision makes it clear that any fee dispute involving emergency services rendered in non-contracted facilities must be resolved pursuant to the promulgated six-part regulatory test cited in 28 CCR 1300.71 (a)(3)(b) which states:



“Reimbursement of a claim” means: For contractedproviders without a written contract and non-contracted providers,except those providing services described in paragraph (C) below:the payment of the reasonable and customary value for thehealth care services rendered based upon statistically credibleinformation that is updated at least annually ANDTAKES INTO CONSIDERATION: (i) the provider's training,qualifications, and length of time in practice; (ii) the nature of theservices provided; (iii) the fees usually charged by the provider; (iv)prevailing provider rates charged in the general geographic areain which the services were rendered; (v) other aspects of theeconomics of the medical provider's practice that are relevant;and (vi) any unusual circumstances in the case.

OUR CONCERN IS: WHO IS MONITORING THIS?



In a recent compliance audit, ERN/NCRA has discovered thattwo of the largest health plans in the State of California utilizethe following methodologies in determining emergencyreimbursement to non-contracted providers:



HEALTH NET:"Health Net uses the greater of the OSHPD or the Medicare reported cost to charge ratio for each facility to calculate the maximum allowable amount. The OSHPD cost to charge ratio is calculated as follows: Total Operating Expenses-Other Operating Revenue/Gross Patient Revenue. Health Net will pay a facility the maximum allowable amount based upon the greater of: (a) 165% of a facility's OSHPD cost to charge ration; or (b) 165% of a facility's Medicare cost to charge ratio; provided, however in no event, will Health Net pay more than 100% of a facility's charges."



BLUE CROSS:"To determine benefits on a customary and reasonable basis for non-contracting institutional providers, a percentile of billed charges from the Anthem Blue Cross (ABC) database is used to calculate the benefits, subject to the following: The allowed benefit WILL NOT BE: 1) less than covered charges multiplied by the cost to charge ratio the institution reports to OSHPD multiplied by a specific percentage; or 2) More than covered charges multiplied by the cost to charge ratio the institution reports to OSHPD multiplied by another specific percentage; or



BLUE CROSS CONT…:3) More than the full 100% of the institution's charges. The ABC database takes into consideration various factors, such as the billed charges of providers for services based on Diagnostic Related Group (DRG) codes for inpatient claims and Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) codes for outpatient claims."



We do not believe that the OSHPD cost to charge ratio(calculated from Annual Disclosure reports) can be usedsolely to satisfy the six-part regulatory test under 28 CCR1300.71 (a)(3)(b) to determine reasonable and customaryrates.



A FEW THINGS TO REMEMBER:

1. The DMHC has very limited resources for reviewing eachhealth plan and capitated provider’s UCR methodology (pg. 2)

THE DMHC WILL NOT REVIEW UCR UNDERPAYMENTS UNLESS YOU BRING THEM

TO THEIR ATTENTION.



2. The DMHC will focus its regulatory efforts on health plans andcapitated providers as identified by the 5 factors (pg. 3.)

YOU MUST ROVIDE THIS PAYMENT DATA TO THE DMHC.

NO ONE CAN IDENTIFY PAYORS WHO MAKE EMERGENCY UNDERPAYMENTS AND MEET

ONE OF THE 5 FACTORS LISTED EXCEPT PROVIDERS.



WE NEED YOUR HELP.

1.) We ask for your identification of any payor UCR paymentmethodologies that fail to consider the Gould factors in1300.71 (a) (3) (b) and result in routinely low payments.

2.) We urge you to file complaints through us or internallywith the DMHC if you have an in-house Compliance Officer.

IDRP VS. ONLINE COMPLAINT PROCESS



The DMHC’s pilot Independent Dispute Resolution Process (IDRP) employs a voluntary "baseball style" arbitration model that encourages the plan and the provider to negotiate realistically before an arbitrator (CHDR), or risk having the other side's proposal accepted. For the IDRP, the provider's original billed amount and the payer's original paid amount will be used to determine which amount better reflects the reasonable and customary value of the services performed.

BUT YOU HAVE TO PAY FOR IT AND THE PLAN CAN REFUSE PARTICIPATION.

THE DMHC COMPLAINT PROCESS – H&S 1371.39



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Untimely payment has a negative effect on patient level of care.

Violation of the Knox Keene Act is a considered a crime against public health

and safety.



The Sign of the TimesTogether, we must be as passionate aboutviolations of health and safety as the Red Cross isabout disaster.


CHAPTER MISSION “To position and strengthen healthcareprofessionals for legislative change and industryadvancement through advocacy, education,training and service.”

Why We Exist


CHAPTER VALUES Advocate passionately for medically appropriate

healthcare in the State of California pursuant to Business and Professions Code §510.

Challenge HMOs, PPOs and Government payors to facilitate change and improvement.

Influence the outcomes including public-policy, reimbursement and quality of care decisions that directly affect American citizens.

Instill an incurable passion for results in others to effectuate change in the healthcare delivery system.

Create strategic networking and volunteer opportunities that fortify member marketability and transfer to paid jobs.

Why We Exist


WE WOULD BE HUMBLED TO HAVE YOU JOIN OUR

MOVEMENT

EMAIL US AT [email protected]

OR CALL (714) 995-6900 EXT. 6926 FOR MORE INFO.

Join Us

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ern ncra aaham nocal ucr legislative update.5.14.10

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