Massachusetts Gov. Deval Patrick signed a bill that aims to save $200 billion over the next 15 years by linking health care cost increases to the growth of the state’s economy. The bill passed overwhelmingly in the House and unanimously in the Senate.
Under the new law, hospitals and doctors will have to cut their rate of cost growth about in half. For example, Kaiser Health News explains, instead of going up 6 to 8 percent, costs would be allowed to rise 3.6 percent per year. The bill is a follow-up to Massachusetts’ famous health reform signed into law by former governor Mitt Romney. That law, like the Affordable Care Act (ACA), focuses mainly on insurance coverage, while the new legislation addresses health care costs that drive up insurance premiums.
No other state has tried to tie health care costs to the state’s economy,” said Massachusetts Association of Health Plans President Lora Pellegrini. “This is going to be really revolutionary and very important, and I’m sure the nation’s watching.”
The Massachusetts Hospital Association praised the bill. “We have great hopes and expectations that the bill will be successful and we are committed to working with the state to ensure that success,” the association said in a statement.
Michael Widmer, with the Massachusetts Taxpayers Foundation, says he thinks the health care industry will embrace the bill’s spending goals, even though they are what he considers aggressive.
August 9th, 2012
U.S. Reps Allyson Schwartz, D-Pa., and Joe Heck, DO, R-Nev., reintroduced on May 9 legislation that would repeal the sustainable growth rate (SGR) and award annual payment updates to physicians for providing seniors with high-quality care.
“For far too long we failed America’s seniors and created a long-term fiscal nightmare for Medicare by maintaining the status quo of the broken Medicare physician payment system,” said Schwartz in a press release. “Now is the time to fix the broken system once and for all by moving forward with a payment system that rewards quality and value, saves lives, and assures seniors’ access to the care they need.” (more…)
May 11th, 2012
Don’t wait for effective legislation to pass; quiet the threat to your bottom line now.
By Cynthia Stewart, CPC, CPC-H, CPMA, CPC-I, CCS-P
“Silent PPO” is the term used to describe when a non-contracted payer or plan administrator applies a contracted payer’s fee schedule to services rendered by a provider, without the provider’s prior knowledge or consent. Silent PPOs have been affecting providers’ bottom lines since the early 1990s. Today, the practice of leasing or brokering a contracted payer’s fee schedule extends beyond preferred provider organizations (PPOs) to include other parties, such as third-party administrators, managed care organizations or health maintenance organizations, self-insured employer’s plans, and other Employee Retirement Income Security Act (ERISA)-protected health plans.
This is a very real concern for all providers; so much so, states are considering legislation to protect providers against the effects of silent PPOs. Whereas legislation could take years, however, there are steps practices can take to protect themselves today.
How a Silent PPO Happens
The practice of applying a contracted payer’s fee to a non-contracted administrator’s or payer’s claim adjudication begins when a contracted network leases, for a fee, its contracted rates to a non-contracted network or administrator. Fees paid to the contracted network typically are based on a percentage of the savings to the non-contracted payer. When a current fee schedule lease agreement does not exist, the non-contracted payer may contact a silent PPO fee schedule broker to access its negotiated rates.
The negative impact to the provider’s bottom line may be made even greater if the non-contracted payer employs “cherry picking” when selecting payment rates, which involves brokering or leasing with multiple networks, and then applying the lowest discounted rate to the charge. In this way, the non-contracted payer consistently is paying the lowest amount for services rendered by the unsuspecting provider, reducing revenue and increasing what the provider believes to be valid contractual adjustments.
Further loss to the practice comes in the form of lost incentives to the provider for contracting with payer networks and plan administrators. A major incentive for providers to enter into any form of managed care network contracts is the promise of increased patient volume. To fulfill the promise of increased patient volume, contracted payer networks encourage patients to receive medical and health care services from in-network providers through financial incentives (lower co-pays, co-insurance, or deductibles). Non-contracted “networks,” having no such agreement with the provider, are under no obligation to encourage their patients to receive care from a particular provider or group.
One additional negative impact to the provider’s bottom line from this non-contracted reduced fee patient population is the increased cost of bringing each patient into the practice through advertising.
NCOIL Legislation May Bring Some Relief
There is no federal legislation—and inconsistent or no legislation at the state level—to protect providers from revenue draining silent PPOs. Ohio and Florida have passed legislation regulating PPOs. Many states, including Colorado, Indiana, and Connecticut, among others, have looked to the National Conference of Insurance Legislators (NCOIL) Rental Network (another name for silent PPOs) Contract Arrangements Model Act to help with creating legislation at the state level.
The NCOIL model legislation act outlines the responsibilities of both the entity directly contracting with the provider and the non-contracted entity.
Responsibilities of contracting entities include:
- having the provider contract with the payer state that the payer entity possibly may participate in an agreement with a third party.
- requiring that all third parties using the provider in-network contract fee also conform to all other terms, limitations, and conditions of the contract.
- making available to the provider a written or electronic list of all third parties the payer entity has given (or may give) rights to use the provider’s contracted fee schedule. This list must be updated no less then every 90 days.
- giving contracted third party enough information regarding the provider’s contact to remain compliant with terms, limitations, and conditions of the contract.
- requiring that third parties identify the source of the discount on the explanation of payment or remittance advice.
- notifying the third party of provider contract termination and requiring that the said party cease discounting the provider’s services.
- discounting of provider’s fees must cease with the date of service when the provider contract terminated.
Act Now to Protect Your Bottom Line
While waiting for effective legislation, mitigate the impact of silent PPOs to your practice’s bottom line by reviewing each payer contract for “all payers” or similar language that permits this practice. Because this language may be incorporated by reference in the provider manual or other documentation in the contract, it is imperative to review these documents for “all payers” language, as well.
If your provider contracts incorporate “all payers” language, request a current list of all affiliated payers entitled to access the negotiated fee schedule to reduce unauthorized adjustments. Keeping this list current also may serve to protect your practice because a provider may breach a payer contract unintentionally by not honoring the contractual rate.
When considering contracting with a new payer network, review the contract language carefully for an “all payers” clause or similar verbiage. Request for the contract to state that the network will provide patient steerage in the form of lower patient out-of-pocket cost, and promotion of the provider though in-network provider list distributed to the networks patient population. Per Healthcare Financial Management Association, “Well-written agreements expressly provide that (patient) direction is the basis of this agreement, explain that it is a material term to the contract, and require that discounted rates be granted only where there has been prior patient direction.”
The negative impact to the provider’s bottom line may be made even greater if the non-contracted payer employs “cherry picking” when selecting payment rates.
Quick tips to reduce the blow to your practice’s bottom line:
- Using a contracted network affiliated payer list, review each explanation of benefit and honor only authorized payer fee adjustments.
- Request updated contracted network affiliated payer list every three to six months.
- Employ “when in doubt, check it out” mentality by contacting the contracted payer network for updated affiliated payer information.
- Be wary of “valid agreement language” used by non-contracted payers. Who is the valid agreement with—the provider or the contracted payer?
- When contracting with new payers, stipulate that discounted rates will only be applied if patient steerage and provider promotion is employed.
- Consider contracting directly with the non-contracted payer. By contracting directly, the provider should receive the benefits expected through network contracting (e.g., patient steerage and provider promotion).
- Know your contract termination date(s), and inform the staff responsible for payment posting of termination date(s) to prevent ineligible discounts from being taken.
Cynthia Stewart, CPC, CPC-H, CPMA, CPC-I, CCS-P, is the president of AAPC’s National Advisory Board (NAB). She has over 25 years of experience in the medical profession. She is a revenue cycle systems manager of coding and charge entry with St. Vincent Health in Indianapolis.
July 1st, 2011
The Congressional Budget Office (CBO) projects that, under current law, payment rates for physician services provided to Medicare beneficiaries will be reduced by 29.4 percent in 2012. The large pay cut follows several years of legislative action to either maintain or increase physician payment rates under the Medicare Part B program when those rates were otherwise scheduled to decrease under the Sustainable Growth Rate (SGR) mechanism. Is it time to pay the piper?
A Medicare fraud bill Sen. Charles Grassley (R-Iowa) presented to the Senate Finance committee hearing on Medicare and Medicaid in early April would have the U.S. Department of Health and Human Services (HHS) publish Medicare claims and payment data on USAspending.gov. Under the plan, all physicians receiving Medicare would have their reimbursement easily accessible, allowing citizens to identify physicians who may be abusing the system.
April 15th, 2011