Insurers in Three States Forced To Disclose Payment Practices

Insurers in Three States Forced To Disclose Payment Practices

Thanks to a successful court case, Georgia physicians soon expect to see an improvement in one of the most frustrating aspects of practice management — insurers’ frequent refusal to release detailed reimbursement information. Insurers in Texas, California and Washington, D.C. may soon be forced to follow suit, if proposed regulations and laws take effect.

Physicians want insurers’ pricing information not only to make sure that individual claims are paid properly, but also to evaluate their entire books of business with various insurers. “Without knowing what the fee schedule is, you really have a difficult time knowing whether you want to participate with that insurer or not,” California Medical Assn. President John Whitelaw, M.D. tells AIS’s Managed Care Week, a sister publication to PCR.

Georgia: Info Coming Soon

Georgia appears to be the state furthest down the road of legally compelling insurers to disclose pricing information. On April 29, a state judge in Atlanta ordered Blue Cross and Blue Shield of Georgia, the state’s largest health plan, to mail detailed reimbursement information, including fee schedules and methods for calculating payments, to its entire provider network.

The Georgia Blues plan, a subsidiary of WellPoint Health Networks, Inc., is not appealing the ruling, says Charlie Harman, vice president for public affairs. An appellate court has already ruled on the case. The plan initially won the case, first filed in 1997, at the trial level. But a January 2001 decision by the Georgia Court of Appeals found that physicians signing contracts with health plans should be able to calculate how much they will be reimbursed.

“We’re going to mail out to approximately 18,000 participating providers in Georgia material which will include 13,000 codes, the methodology that Blue Cross Blue Shield of Georgia uses to determine reimbursement payments, and the maximum amount that we will reimburse providers for each code,” Harman says. Basically, the plan uses Medicare’s Resource-Based Relative Value Scale. The insurer also hopes to post the information on its Web site by the first quarter of 2003.

But Harman warns that the ruling could actually raise overall health care costs if “maximum” reimbursement becomes the standard amount billed. For example, he says, take a service for which the Georgia Blues plan reimburses a maximum of $100. A physician who billed $110 for the procedure would be paid the maximum of $100. But another physician might bill only $90 for the procedure, and would be paid $90. If the maximum allowable rate is freely available to all physicians, those billing $90 would have no reason to send us a claim for less than the maximum, he says.

Company officials also are concerned about allowing competitors to see their rate schedules.

Texas Wants Greater Detail

Meanwhile, Texas Insurance Commissioner Jose Montemayor published on June 3 draft regulations in the Texas Register requiring insurers to disclose payment policies. In so doing, Montemayor noted that a lot more detail than just fee schedules is needed to replicate health insurer pricing procedures (see article, p. 1).

Montemayor drafted the regulations in conjunction with state health plans, physicians and hospitals through the Clean Claims Working Group. “Through this group, we have obtained the voluntary release of summary information on fees, downcoding and bundling from the Texas Assn. of Health Plans (TAHP) and other groups,” Montemayor said in a statement.

TAHP said in its own statement that “due to contractual licensing, confidentiality and copyright provisions, we are unable to provide further details” beyond the summary information provided already, the process for claims reimbursement appeals, and the reasons for coding decisions on individual claims.

In addition to insurers’ concerns about software licensing agreements, TAHP Executive Director Leah Rummel says another fear is that disclosure of coding rules could trigger more false claims. She estimates that, using currently available coding information, about 3% of claims are fraudulent.

But the detailed coding and reimbursement information sought by physicians also could provide dishonest providers with a road map to more successful fraud schemes.

Texas amended its prompt-payment law in 1999, including a provision that instructs insurers to furnish participating providers with “copies of all applicable utilization review policies and claims processing policies and procedures, including required data elements and claim formats.” The proposed rule is based on the 1999 statute.

California’s Rule Similar to Texas’

In California, a new regulation proposed by the state Department of Managed Health Care would force insurers to disclose fee schedules for the most common claims submitted by physicians. The proposed rule, like the one in Texas, would implement a state prompt-payment law. The California law was enacted in 2001. Other parts of the proposed rule would make it more difficult for insurers to delay payment by denying or disputing claims.

Physicians already know the fee schedules for Medicare and Medi-Cal, the state Medicaid program, as well as certain PPOs, Whitelaw says. By contrast, most major commercial health plans don’t release fee schedules or information on reimbursement practices.

In Washington, D.C., Mayor Anthony Williams (D) signed the Prompt Pay Act of 2002 late in May. It defines coding guidelines and requires insurers to disclose them to providers.

Call Harman at (404) 842-8980 or Rummel at (512) 476-2091.

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